‘That’s a Wrap’
By Rod Blake
Precious metals investors entered the new trading week feeling somewhat vindicated as after many months of underperformance and disappointment – gold at US$1,795/oz. and silver at US$23.14/oz. are trading at five and 7-month respective highs.
The way I see it – From their recent year lows late this summer – gold bullion has risen by some $170 or 10.5% while silver has surged up by $5.25 or 29.3%. Over the past 3-months silver has clearly outperformed gold, but why does this matter? As previously mentioned in these Wraps – long term precious metals investors look for silver to outperform gold as a confirmation that a true bull market in that sector is underway. The underlying reasons for this are too complicated to get into in this limited space, but it relates to silver’s multi functions as both a precious and industrial metal and coinage. The gold/silver ratio is currently at about 77.5 which is down from about 91 in September. In previous precious metals bull markets, the gold/silver ratio has dropped to about 35 in 2011, and to only 15 in 1980 great breakout bull market. Precious metal investors may want to keep track of this ratio over the next few months. A drop in the gold/silver ratio to below 50 could be the precursor of good times to come.
Three years late but better than never – Tesla Inc. ‘TSLA-N’ delivered its firs long haul battery powered truck to PepsiCo Inc. ‘PEP-Q’. The semi-tractor & trailer vehicle has a fully loaded range of about 500-miles and comes equipped with high-speed chargers.
On a related note – Parkland Corporation ‘PKI-T’ announced the Calgary based company will double the number of its network of ultra-fast charging stations from 25 to 50 in locations from Vancouver Island to Calgary. The ultra-fast stations will charge up most electric vehicle (EV) cars in 20-30 minutes.
Meanwhile, Vancouver, B.C. based Sigma Lithium Corp. ‘SGML-V’ announced positive results from a study to potentially raise battery grade sustainable lithium concentrate production from the current 270-thousand tonnes per annum (tpa) to 768-thousand tpa from the company’s flagship Grota do Cirilo Project in Minas Gerias, Brazil.
Vale SA ‘VALE-N & R’ said the Rio de Janeiro based mining giant would spin off its nickel and copper operations as a separate entity ‘Vale Base Metals’ with a strategic partner next year in order to better unlock the potential of these metals in an accelerating electrification economy.
This as the International Energy Agency (IEA) projects that renewables will account for over 90% of global electrical expansion over the next 5-years and will overtake coal as the largest source of global electricity by early 2025.
AltaGas Ltd. ‘ALA-T’ shares’ rose by $1.04 or 4.56% to $23.86 after the Calgary, AB energy company issued an enhanced operational and financial guidance for 2023 and also increased its quarterly dividend by 6% to $0.28 per common share.
And Calgary’s Tamarack Valley Energy Ltd. ‘TVE-T’ announced an increase in the company’s 2023 capital and operating budget.
Athabasca Oil Corp. ‘ATH-T’ reported the Calgary based company would partner with Entropy Inc. to build a carbon capture facility at its Leismer oilsands operation in northern Alberta.
TC Energy Corp. ‘TRP-N & N’ was forced to declare ‘Force Majeure’ after the giant Calgary based energy company shut down its 4,300 kilometre Keystone Pipeline that delivers 600,000bbls/day of crude to Cushing, Oklahoma due to a detected leak near Steele City, Nebraska.
Crescent Point Energy ‘CPG-T & N’ follows the lead of a growing list of oil patch companies in raising its quarterly dividend by 25% to $0.10 per common share.
All of this as crude oil fell to a 2022 low of US$71.37 per barrel.
The key Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs dropped by 4-rigs to 780, up by 204 from this time last year. On the Canadian side – the number of active rigs rose by 7-rigs to 202, an increase of 25 in the past year.
Canfor Corp. ‘CFP-T’ sighted weak market conditions in announcing the Vancouver based forest company would curtail operations in its B.C. and Alberta facilities for the rest of December and January in order to remove some 150-million board feet of wood from its inventories.
This as lumber fell to a new 3-year low of US$387 per thousand board feet.
Moncton, NB based Major Drilling Group Int’l. ‘MDI-T’ reported an 18% increase in 2nd-quarter revenue over one year ago mainly due to “growth of electrification driving demand for copper and battery metals.”
Silver rose to new 7-month high of US$23.43 an ounce.
For the Week – the DJI lost 2.77% to 33,476 with the S&P 500 off by 3.39% to 3,934 and the NASDAQ down by 3.99% to 11,005. Up north – the TSX fell by 2.63% to 19,947 and the TSX Venture lost 3.51% to 578. The CBOE Volatility Index or VIX gained 19.78% to 22.83.
With currencies – the Canadian dollar fell by 1.25% to US$0.7327 as the U.S. dollar ‘DXY’ gained 0.30% to 104.98.
With commodities – gold bullion gained 0.06% to US$1,796 as silver rose by 1.25% to US$23.43, with copper up by 0.26% to US$3.85, while lithium fell by 1.43% to US$81,977 and uranium gained 1.08% to US$48.50. Crude oil lost 10.84% to US$71.37 and natural gas fell 1.56% to US$6.31. Meanwhile lumber gained 3.79% to US$411. Overall – the CRB Commodities Index was off by 4.64% at 288.
And Finally – Canada’s Auditor General Karen Hogan said she is cynical in how much of the $27.4-billion in suspicious COVID-19 payments and $4.6-billion in confirmed government COVID-19 overpayments that the Canada Revenue Agency (CRA) will be able to recover during the current 36-month eligibility verification window.