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‘That’s a Wrap’

By Rod Blake

As I reviewed my notes at the end of last week (T.a.W. – 5/31st) – two things seemed to stand out amongst all of the rest. In a week where the senior boards were all negative – the lowly TSX Venture Exchange, which usually craters under such pressure – was positive. And in a week where all of the minerals were negative – silver too was positive.

The way I see it – The TSX Venture and silver have a long history of underperforming their more senior counterparts – namely, the TSX Composite and gold bullion. Now, one week does not a trend make, but looking a little deeper one sees that the Venture (+5.4%) has outperformed the Composite (+2.6%) for the month of May, and silver (+14.9%) has also outperformed gold (+1.5%). Even more striking, for the year to date, the Venture is up 10.5% while the Composite is ahead by 6.3%, while silver has gained 29.3% so far this year as compared to the 12.8% advance for gold bullion.

The TSX Venture outperforming is a good sign that money is flowing into the resource sector as the Venture is highly weighted towards resources. The Venture at 611 seems to be nicely above the 550 base it built at the start of the year. Should the rally continue, then a test of the 625 – 650 resistance level established last year could be in the making. Should 650 give – then the next resistance is 900 -1,000 set in 2021 – 2022.  The first 5-months of the year have been good for the Venture and its investors. It would be nice to see that continue into the traditionally negative summer doldrums third quarter.

Silver outperforming gold confirms that more money is coming into the precious metal sector. With gold bullion at or near a record high, investors start to look at silver as a less expensive way to play in that market. Plus, silver at an 11-year high of about US$30 is still some $18 below its all-time high of US$48 established in April, 2011. Silver, catching up to gold and reaching a new record high would go a long way to helping the Venture reach new heights as well.

Everyone likes rooting for the underdog. Now, the TSX Venture Exchange and silver – two perennial underachievers have suddenly become market leaders. How can one not root for that?

However, the optimism didn’t follow through to the new week as resource prices started the week on a negative note going up against a strong American dollar.

Crude oil closed at a new 4-month low of US$72.73 a barrel (bbl).

Lumber dropped to a new 7-month closing low of US$489 per 1,000 board feet (MBF).

Lithium fell to a new 3-month low of US$13,977 a tonne (t).

Which certainly helped the stock price of Century Lithium Corp. ‘LCE-V’ to sink to a new 4-year closing low of $0.325.

While Lithium Americas Corp. ‘LAC-T & N’ stock fell to a new all-time closing low of US$4.24.

Taseko Mines Ltd. ‘TKO-T’ & ‘TGB-N’ shares’ fell by $0.28 or 7.51% to $3.45 after the Vancouver, BC based miner announced that operations at the company’s Gibraltar Copper Mine near Williams Lake, BC had been suspended due to a union-initiated labour strike. (When workers in Canada’s highest paying industry, mining, say they are having trouble making ends meet, one can only imagine how the majority of the working population must feel…)

And on a related note – Westshore Terminals Investment Corp. ‘WTE-T’ shares’ closed at a new 7-month low of $22.59 as notice of possible strike action by employees of Canada’s two major railways Canadian National Railway Co. ‘CNR-T’ & ‘CBI-N’ and Canadian Pacific Kansas City Ltd. ‘CP-T & N’ weighed on the outlook for the west coast’s largest coal export facility.

Denison Mines Corp. ‘DML-T’ & ‘DNN-N.A’ announced the successful completion of an inaugural In-Situ-Recovery (ISR) field test for uranium at the company’s Midwest Uranium Project in northern Saskatchewan’s Athabasca Basin.

Nvidia Corporation ‘NVDA-N’ CEO Jensen Huang told the Computex trade show in Tiawan that the accelerating advancement of artificial intelligence (AI) may cause electrical utilities to source additional supplies of natural gas as AI chips use about 10-times more electricity as conventional chips in use today.

As if on cue – natural gas rose to close at a new 6-month high of US$2.94 per million British thermal units (MMbtu).

This as the closely followed Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs fell by 6-rigs in the past week at 594, down by 101-rigs from this time last year. Across the line – the number of Canadian active rigs grew by 15-rigs to 143, up by 7-rigs from one year ago.  

Investors continued to seek out uranium producers with the share price of industry flagship Cameco Corporation ‘CCO-T’ & ‘CCJ-N’ reaching a new all-time closing high of $75.81.

Calibre Mining Corp. ‘CXB-T’ shares’ fell by $0.08 or 3.98% to $1.93 after the Vancouver, BC based miner reported an abnormal pit wall movement at the company’s Limon Norte Open Pit in Nicaragua that will have a short-term impact on those operations gold production.

B2Gold Corp. ‘BTO-T’ & ‘BTG-N.A’ broadened its potential income stream by selling a portfolio of 10-precious and base metals royalties to privately held  Versamet Royalties Corporation in an all-stock deal valued at some $90-million, giving BTO a 33% interest in Versamet.

This investment interest in royalties no doubt helped the stock price of Osisko Gold Royalties ‘OR-T & N’ to gain $0.89 or 3.91% to a new 1-year closing high of $23.66.

Nevada Copper Corp. ‘NCU-T’ shares’ plunged by $0.06 or 66.67% to an all-time low of just $0.03 after the Yerington, NV based junior miner announced it may seek creditor protection due to funding and liquidity issues.

The S&P 500 Index and NASDAQ Exchange rose to new respective all-time closing highs of 5,354 and 17,188.

Natural gas and lumber were the only resources reporting gains for the week while silver and lithium reported the greatest losses.

All three of the American exchanges were up on the week while the two Canadian resource weighted markets were down.

For the Week – the DJI gained 0.29% to 38,799, as the S&P 500 rose 1.31% to 5,347 and the NASDAQ improved by 2.38% to 17,133. In Canada the TSX lost 1.18% to 22,007 and the TSX Venture fell 3.76% to 588. The CBOE Volatility Index or VIX fell 5.42% to 12.22.

With currencies – the Canadian dollar lost 0.98% to US$0.7266, while the U.S. dollar ‘DXY’ rose 0.31% to 104.94. 

With commodities – gold bullion lost 1.46% to US$2,293 as silver dropped 4.11% to US$29.16, while copper fell 3.02% to US$4.49, and lithium lost 3.79% to US$13,977. Crude oil fell 2.33% to US$75.38, while natural gas rose 13.95% to US$2.94, and uranium lost 2.95% to US$87.25. With soft commodities – lumber rose 0.79% to US$511. Overall – the CRB Commodities Index was unchanged at 342.

And Finally – Due to increased security risks at airports and other mass transit venues – Victorinox, the maker of the iconic Swiss Army Knife will no longer be producing this scarlet piece of equipment with its most notable feature – a knife.

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