A Weekly Recap of All Things Resources to Friday, November 22nd
‘That’s a Wrap’
By Rod Blake
In preparing these weekly commentaries, I browse many market and research reports as well as watching far too many hours of business television. This generally gives me a balanced view of the equity and commodities markets and from there I try to pick out names or themes that stand out or are worth reporting. This past week, as I observed the pundits comments when the major American Equity Markets surged to new all-time closing highs – I thought I was going through one of those déjà vu moments where I’ve heard or seen all of this before. To recap – last week I saw and heard many overly bullish suggestions such as – “Buy and hold as this market is going higher”, “You have to pay up to get quality stocks”, “Expensive stocks can be a smart buy”, “Being risk adverse can cost you money”, and the most bullish of all – “S&P 500 at 10,000 by 2029.”
The way I see it – In my experience, this type of overly excited market enthusiasm usually comes at or very near the top of a big correction or lengthy bear market. My first experience of this type of mania was way back in late 1980 when the Gold Bugs were in full vocals as the price of gold bullion reached the then unimaginable height of some US$850 an ounce. Nary a sell recommendation was to be heard. The market was only going higher. What were generally penny stocks on the old Vancouver Stock Exchange were now trading for dollars, and producers were many multiples of that. Gold stocks made up a good portion of the S&P 500. Gold was in blue sky territory and there was no end in sight – until it suddenly ended, for whatever reason, only a few months later in early 1981, creating a long term bear market that lasted until about mid-2001 with gold down to about US$275, and leaving only one gold company, Newmont Corporation ‘NEM-N’ remaining in the S&P 500. Ironically, this was also about the height of the Dot-Com Market Bubble, which was another “We’re All In” story that also ended badly. Once again – what were levelheaded observers have become market cheerleaders. Warren Buffett says – “If you are sitting at a poker table for 30-minutes and can’t figure out who the patsy is – the patsy is you”. Mr. Buffett’s Berkshire Hathaway Inc. ‘BRK.B-N’ currently has a 28% cash position – its highest since the early 1990s. Take a good hard look at the investment game you’re playing. Are you the patsy?
Uranium equities caught a bit early in the week on word that Russia was limiting exports of enriched uranium to the United States.
Cameco Corporation ‘CCO-T & CCJ-N’ shares climbed to a new all-time closing high of $85.08.
NexGen Energy Ltd. ‘NXE-T & N’ stock rose by $0.735 or 6.62% to close at a new 6-month high of $11.85 after the Vancouver, BC based mineral developer announced the company had successfully completed the final Federal technical review for its prized Rook 1 Uranium Project in Saskatchewan’s Athabasca Basin.
Orla Mining Ltd. ‘OLA-T’ & ‘ORLA-N’ shares’ rose by $0.44 or 7.93% to $5.99 after the Vancouver, BC based gold miner announced an agreement to purchase Newmont
Corporation’s ‘NEM-N’ Musselwhite Gold Mine in Northwestern Ontario for an all-cash and gold price consideration of some $850-million.
Osisko Development Corp. ‘ODV-T & N’ stock surged up by $0.65 or 31.86% to close at $2.69 after the Montreal, QC based mineral developer received British Columbia Mines Act permits for the company’s flagship Cariboo Gold Project near Wells, BC.
Piedmont Lithium Inc. ‘PLL-Q’ and Sayona Mining Ltd. ‘SYA-A’ announced the two lithium companies had agreed to merge on an equal 50/50% basis with Sayona becoming the ultimate parent entity.
This as the price of lithium rose to close at a new 3-month high of US$10,943 a tonne (t).
Enertopia Corporation ‘ENRT-C’ announced the Kelowna, BC based company had received a United States Patent #12149091 for the company’s ‘Energy Management System’ designed to monitor and report on the efficiency of solar panels as they work in harsh conditions.
Faraday Copper Corp. ‘FDY-T’ shares’ rose by $0.04 or 4.49% to $0.93 after the Vancouver, BC based mineral explorer reported drill hole FCD-24-078 at the company’s Copper Creek Project in Arizona returned 57.73 metres (m) of 0.85% copper (Cu) from surface.
Natural gas rose to close at a new 1-year high of US$3.35 per million British thermal units (MM/Btu).
This as the key Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs was down by 1-rig in the past week to 583, down by 42-rigs from this time last year. Across the line – the number of Canadian active rigs rose by 1-rig to 201, up by 9-rigs from one year ago. Â
The price of lumber continued to advance – rising to close at a new 8-month high of US$615 per 1,000 board feet (mbf).
Doman Building Materials Group Ltd. ‘DBM-T’ stock closed at a new 31/2-year high of $9.65.
Natural gas and lithium made the greatest gains in commodities on the week, while lumber and uranium lost the most.
The U.S Dollar Index or ‘DXY’ closed at a new 2-year high of 107.53.
On Friday – the TSX Composite Index and Dow 30 reached respective new all-time closing highs of 25,444 and 44,297.
All five of our North American Equity Markets were in the green going into the weekend.
For the Week – the DJI gained 1.96% to 44,297, with the S&P 500 up 1.67% to 5,969, and the NASDAQ ahead 1.73% to 19,004. In Canada – the TSX gained 2.22% to 25,444 and the TSX Venture rose 2.54% to 606. The CBOE Volatility Index or VIX fell 5.14% to 15.31.
With currencies – the Canadian dollar gained 0.83% to US$0.7154, while the U.S. dollar ‘DXY’ rose 0.74% to 107.53.
With commodities – gold bullion gained 5.78% to US$2,709, while silver rose 3.54% to US$31.30, as copper gained 0.49% to US$4.07, and lithium rose 8.80% to US$10,896. Crude gained 6.36% to US$71.23, and natural gas rose 10.99% to US$3.13, while uranium fell 0.38% to US$78.60. With soft commodities – lumber dropped 2.47% to US$592. Overall – the CRB Commodities Index gained 2.99% to 345.