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‘That’s a Wrap’

By Rod Blake

As the big cap brokers and portfolio managers prepared their clients’ year-end 2023 reports, they were pleased to see that, based on the final closes of the major North American indexes (TSX Composite up 8.1%, Dow 30 up 13.7%, S&P 500 up 24.2% and NASDAQ up an amazing 43.4%), they had once again guided their clients or managed their clients’ portfolios to another profitable year. For the small cap or resource investors, 2023 was another year of fruitless optimism in that even though uranium and gold bullion were at or near all-time highs, the resource sector as recorded by the TSX Venture Exchange ended the year down some 3.0 %.

The way I see it – Large cap brokers and portfolio managers shouldn’t be too proud of themselves. Looking at the year, if not for a surprise late year-end rally after the U.S. Fed commented that interest rates may have peaked, then these markets would have probably ended the year with significant losses. In addition, those interest rate cuts must come sooner than later in 2024 for the big cap markets to continue their run to the upside. For the junior investors – the past year and a half has been no fun at all. Gains have been few and far between as the big money has been chasing artificial intelligence stocks over those of the resource sector. The good news is that first quarter is usually kind to the resource sector. After that it remains to be seen.

A small portion of the year-end 2023 investor enthusiasm carried over early into the New Year with the Dow 30 reaching a new all-time closing high of 37,715.

Canada Nickel Company Inc. ‘CNC-V’ shareholders’ started the year on a positive note as they saw their investment surge up by $0.26 or 22.81% to $1.40 after the Toronto, ON based mineral explorer announced the company had completed a $34.7-million flow-through financing from gold mining giant Agnico Eagle Mines Ltd. ‘AEM-T & N’. The funding gives AEM a 12% interest in CNC and will be used to help develop CNC’s Crawford Nickel-Cobalt Project near Timmons Ontario.

No sooner does the government of Panama government state that First Quantum Minerals Ltd. “FM-T’  Cobre Panama Copper Mine is a no go, then FM shares’ rose by $1.32 or 11.03% to $13.29 on word that Barrick Gold Corp. ‘ABX-T’ and ‘GOLD-N’ was in talks to take over beleaguered miner and work with the government of Panama to restart the Cobre Panama Mine.

The way I see it – They just can’t help themselves. That is – large companies with huge treasuries can’t seem to help themselves. Back in the turn of the century, gold companies were put in the shareholders’ penalty box for investing in anything other than pure gold plays. You see – Gold Bugs always think that the next big run in the yellow metal is just around the corner and they wanted their investment to be pure in its focus so that any upside in the price of gold was magnified by the share price of the company. It was thought that any diversion from this purely gold focus might negate the potential gains of the company’s stock. Eventually, the gold company executives heard the shareholders as witnessed in the low price of their stock and they once again returned the gold sector into a pure gold play, which was reflected in the improved market performance of their stocks. But they just couldn’t stay within their knitting and over time the gold miners once again began to lose their primary gold focus. First, Barrick Gold took a 50% position in the Reko Dog copper-gold project in Pakistan, then Agnico Eagle bought a starting 12% interest (with warrants to earn more) in Canadian Nickel’s nickel project, and now there are rumours that ABX is going deeper into the copper market with a takeover of FM. This trend away from being a pure gold company will probably continue unless gold company shareholders once again raise their collective voices and clearly signal their disapproval of this diversification. It will be of interest how the share price of these more than gold companies compare to the price of pure gold plays going forward.

Sticking with gold – Vancouver, BC based Snowline Gold Corp. ‘SGD-V’ continued to release more outstanding diamond drill hole gold assays from the company’s Rogue Project in Yukon including Hole V-23-064 which averaged 2.15 grams per tonne gold (g/t Au) over 308.8 metres.

And CNBC reported that American retailer Costco Wholesale Corp. ‘COST-N’ sold about US$100-million of gold bars in the quarter ending November 26th. U.S prices weren’t available but the CBC reports that each 31-gram (1-ounce), 24-carat gold bar sells in Canada for about $2,679.99.

Endeavour Mining plc ‘EDV-T & L’ shares’ plunged by $2.91 or 10.07% to $25.98 after the London, UK based gold miner announced the immediate termination of the company’s President & CEO Sébastien de Montessus for “serious misconduct with immediate effect” regarding some US$5.9-million of irregular payment instructions.

Suncor Energy Inc. ‘SU-T & N’ stock price rose by $2.54 or 5.93% to $45.34 after Canada’s largest oil company reported that the Calgary, AB based energy company’s crude oil production averaged over 900,000 barrels per day (bbls/d) in December.

This as the closely followed Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs fell by 1-rig over the past week to 621, down by 151 rigs from this time last year. Up north – the number of Canadian active rigs increased by 39-rigs to 125, down by 64-rigs from one year ago.

The zero-emission vehicle market continues to diversify as Ballard Power Systems ‘BLDP-T & Q’ announced the Vancouver, BC based fuel cell provider had signed a new Long-Term Supply Agreement to deliver a minimum of 100 FCmove-HD fuel cell modules in 2024 to Winnipeg, MD based bus and coach manufacturer NFI Group Inc. ‘NFI-T’.

China’s BYD Company, with 4th-quater 2023 sales of 525,409 units, overtook Elon Musk’s Tesla, Inc. ‘TSLA-N’ with 4th-quarter sales of 484,507 units, to become the world’s largest seller of battery electric vehicles (BEV).

This as the price of lithium fell to a new 21/2-year low of US$13,446 a tonne (t).

All of which helped the unit price of Lithium Royalty Corporation ‘LIRC-T’ to fall to a new all-time closing low of $7.94.

Teck Resources Ltd. ‘TECK.B-T & ‘TECK-N’ reported the Vancouver, BC based miner’s Quebrada Blanca (QB) copper mine in Chile was operating near design throughput capacity with strong recoveries and should significantly increase its copper production in 2024.

Natural gas and crude oil led commodities higher on the week, while silver and copper were off the most.

All of the five North American markets I follow were down for the first week of 2024.

For the Week – the DJI lost 0.59% to 37,466 with the S&P 500 down 1.53% to 4,697 and the NASDAQ off by 3.24% to 14,524. Across the linethe TSX lost 0.10% to 20,938 and the TSX Venture fell 0.36% to 551. The CBOE Volatility Index or VIX gained 6.43% to 13.35.

With currencies – the Canadian dollar fell by 0.83% to US$0.7484 while the U.S. dollar ‘DXY’ gained 1.09% to 102.43.

With commodities – gold bullion lost 0.87% to US$2,045, as silver fell 2.52% to US$23.18, and copper dropped 2.32% to US$3.79, while lithium lost 0.55% to US$13,470. Crude oil gained 3.49% to US$73.81 and natural gas rose 16.87% to US$2.91, while uranium was unchanged at US$91.00. With soft commodities – lumber rose 1.29% to US$550. Overall – the CRB Commodities Index gained 0.10% to 304.

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