A Weekly Recap of All Things Resources to Friday, November 8th
‘That’s a Wrap’
By Rod Blake
The first full trading week of November began with the equity and resource markets seemingly pulling back from previous near or all-time gains as investors turned to cash ahead of this week’s all-important American Presidential election and U.S. Fed interest rate decision.
The way I see it – There are two terms that every investor should understand intimately – Realized or unrealized capital gains. These two terms both seem to be describing much the same thing but from very different perspectives. As a broker, I tried to make sure that my clients understood the difference. Unrealized capital gains are theoretical gains that come from an asset increasing is value without incurring an actual sale. The current housing market is a perfect example of an unrealized gain. Housing prices have climbed dramatically in the past years and homeowners are feeling quite flush if they own a home that they bought ten or so years ago. It’s a gain on paper but not in the bank. A realized gain comes from the actual selling of an asset. I always encouraged my clients to sell part of a winning position to lock in these gains. To at least sell enough to get their initial investment out. Looking at a realized gain in one’s account can be a good thing. Failing to sell and then watching an unrealized gain fall to zero because the market suddenly turns is not. From the way the current market is reacting, for many investors – this might be a good time to create some realized gains.
Major Drilling Group International Inc. ‘MDI-T’ stock rose by $0.70 or 8.59% to close at a new 2-month high of $8.85 after the Moncton, NB based company announced the acquisition of Lima, Peru drilling company Explomin Perforaciones in a cash & earn-out deal valued at some $115-million.
This old driller’s helper still loves to see exceptional drilling assays and as such – Lundin Gold Inc. ‘LUG-T & Q’ reported drill hole UGE-S-24-145 from the company’s Fruta del Norte gold mine in southeast Ecuador returned 22.67 grams per tonne gold (g/t g) over 41.60 metres (m).
TransAlta Corporation ‘TA-T’ & ‘TAC-N’ shares’ gained $0.99 or 6.92% to close at a new 21/3-year high of $15.30 after the Calgary, AB based energy utility pleased the street with its 3rd-quarter financials.
The major North America equity markets surged ahead following the long-awaited U.S. Presidential election with –
The Dow 30 Index closing at a new all-time high of 43,989.
The S&P 500 reaching a new all-time closing high of 5,996.
The NASDAQ Exchange closing at a new all-time high of 19,287.
The TSX Composite Index climbing to a new all-time closing high of 24,846.
The election also helped the U.S. dollar Index or ‘DXY’ to close at a new 4-month high of 105.12.
Speculators pushed the price of Northern Dynasty Minerals Ltd. ‘NDM-T’ & ‘NAK-N.A’ up by $0.13 or 22.41% to a new 31/2-year closing high of $0.71 on the hope that the incoming Trump administration would be more amicable to giving the company’s giant Pebble Copper/Gold Project in Alaska a path towards production.
Superior Plus Corporation ‘SPB-T’ stock plunged lower by $1.15 or 17.04% to $5.60 after the Calgary, AB based propane company slashed its quarterly dividend by some 86% from $0.18 to just $0.045 a share.
Interest rate sensitive pipeline equities drew some investor attention with –
Enbridge Inc. ‘ENB-T & N’ closing at a new 21/2-year high of $58.93.
TC Energy Corporation ‘TRP-T & N’ reaching a new 43/4-year closing price of $68.83.
The key Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs was unchanged in the past week at 585, down by 31-rigs from this time last year. Across the line – the number of Canadian active rigs fell by 6-rigs to 207, up by 8-rigs from one year ago. Â
Infrastructure company Aecon Group Inc. ‘ARE-T’ shares’ rose to close at a new all-time high of $29.07.
Doman Building Materials Group Ltd. ‘DBM-T’ stock rose by $0.43 or 5.19% to $8.71 after the Vancouver, BC based building materials company pleased investors with its 3rd-quarter financials.
This as the price of lumber continued its bull run by climbing to a new 7-month closing high of US$572.
Uranium continued to be out of favour with the price of U3O8 falling to close at a new 1-year low of US$76.60 a pound (lb).
Copper stocks fell late in the week as the price of the red metal dropped to close at a new 2-month low of US$4.21 a pound (lb).
Zinc fell to a new 11/2-month closing low of US$1.36 a pound (lb).
Crude oil and natural gas led commodities higher on the week, while uranium and silver were the biggest drags.
The American equity markets held their gains going into the weekend, while the Canadian markets retreated along with base and precious metal prices.
For the Week – the DJI gained 4.61% to 43,989, with the S&P 500 up 4.66% to 5,996, and the NASDAQ ahead 5.74% to 19,287. In Canada – the TSX gained 2.08% to 24,759 and the TSX Venture rose 0.83% to 609. The CBOE Volatility Index or VIX fell 31.72% to 14.94.
With currencies – the Canadian dollar rose 0.35% to US$0.7189, and the U.S. dollar ‘DXY’ gained 0.58% to 104.95.Â
With commodities – gold bullion lost 1.79% to US$2,685, as silver fell 3.69% to US$31.29, while copper dropped 0.92% to US$4.29, and lithium dropped 0.82% to US$10,072. Crude oil gained 1.43% to US$70.45, while natural gas gained 0.75% to US$2.67, and uranium lost 3.95% to US$76.60. With soft commodities – lumber gained 0.36% to US$558. Overall – the CRB Commodities Index rose 2.40% to 342.