A Weekly Recap of All Things Resources to Friday, March 24th
‘That’s a Wrap’
By Rod Blake
Following the previous week’s banking uncertainty – while most investors, brokers and portfolio managers nervously waited for the North American markets to open on Monday morning there was one group – the Gold Bugs – that were eagerly anticipating the action to begin.
The way I see it – Gold Bugs are like the jockeys and gold stocks are like the mudder horses in the horse racing world. For the most part they suffer together and slog in the background as the fleet of breed win race after race. But occasionally, when the weather turns stormy, it is the mudders’ time to lead the pack. Last week – for the first time in almost a year the world’s true currency once again showed its elusive luster with a weekly gain of $109 or almost 6% to US$1,977 an ounce. Could this be the time that gold breaks above US$2,000 once again and perhaps test its previous all-time high of US$2,089? The high of $2,089 was established in August 2020, only to be approached again with a failed attempt in March of 2022. Chart technicians often say that a second approach of an old high will may lead to a breakthrough to another new high as pent up buying finally overcomes long term resistance. The Gold Bugs always feel that their day to shine is just ahead but are often disappointed. This time however, it might be time to bet on the gold stocks, as it looks like the Gold Bugs are letting out the reins and the mudders are about to run.
First Majestic Silver ‘FR-T’ & ‘ AG-N’ shares’ dropped by $2.28 or 22.40% to $7.90 after the Vancouver, BC miner sighted inflationary costs and inefficiencies in announcing the “temporary” suspension of all mining activities at the company’s Jerritt Canyon Gold Mine in Nevada.
This as gold bullion rose to a new 11-month high of US$1,992 an ounce.
Volkswagen Group announced the giant European automaker had picked St. Thomas, Ontario as the site to build an electric vehicle (EV) gigafactory for battery cell manufacturing with a planned production date of 2027.
It seems that starting up an electric vehicle (EV) entity takes more than just slapping a battery on a frame as Ford Motor Co. ‘F-N’ reported the iconic automaker lost US$2.1 billion on its EV unit last year and projects a loss of about US$3 billion on the EV entity in 2023.
And while most of the automakers are targeting EVs in their futures – Porsche in association with Exxon-Mobil Corp. ‘XOM-N’ and Siemens is developing Haru Oni – a wind powered facility in Chile that extracts carbon dioxide from the air and combines it with green-produced hydrogen to form “e-methanol” and other derivatives such as e-gasoline, e-diesel and e-kerosene.
Kelowna, BC based junior explorer Enertopia Corporation ‘ENRT-C’ announced that the first five drill holes of its current program at the company’s Nevada lithium claims had encountered significant intersections of green and dark green to black claystone horizons that have previously produced encouraging lithium assays.
Lithium fell to a new 15-month low of US$40,253 a tonne.
Crescent Point Energy ‘CPG-T’ stock rose by $0.28 or 3.18% to $9.08 on an investment house analyst upgrade.
The influential Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs rose by 4-rigs over the past week to 758, up by 88 from this time last year. In Canada – the number of active rigs fell by 42-rigs to 165, an increase of 25 in the past year.
The markets traded cautiously going into the weekend as banking liquidity issues in Europe weighed on investors’ minds.
For the Week – the DJI gained 1.19% to 32,238 with the S&P 500 up by 1.38% to 3,971 and the NASDAQ ahead by 1.66% to 11,824. Up north – the TSX rose by 0.58% to 19,501 and the TSX Venture gained 1.16% to 612. The CBOE Volatility Index or VIX fell by 14.78% to 21.74.
With currencies – the Canadian dollar lost 0.03% to US$0.7277 and the U.S. dollar ‘DXY’ fell by 0.75% to 103.12.
With commodities – gold bullion gained 0.05% to US$1,978, with silver up by 3.25% to US$23.20, and copper ahead by 4.86% to US$4.10, while lithium fell by 13.22% to US$40,253. Crude oil rose by 4.46% to US$69.40 as natural gas lost 7.63% to US$2.18, and uranium gained 0.90% to US$50.20. With soft commodities – lumber fell by 8.63% to US$413. Overall – the CRB Commodities Index was up by 1.80% to 284.
And Finally – Over the past months, inflation figures seem to be going from getting under control to the extreme. On the one hand – Statistics Canada just reported the country’s annual inflation rate just fell by 0.2% in the past month to 5.2%, while across the pond – Eurostat recently announced that the average price of eggs in Europe rose in the past year by some 30%.