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‘That’s a Wrap’

By Rod Blake

When the brokers, investors, portfolio managers and traders powered down their terminals last Friday they couldn’t help but notice that one market stood out more than the rest – and that market was gold and silver. Gold bullion caught many players by surprise as the yellow metal surging up over $60 in just one day last Friday to US$1,933, for a weekly gain of $101 or 5.51%. Similarly, silver jumped up by $0.86 or almost 4% on Friday to end the week up 5.14% to US$22.70. What makes this even more intriguing is that how many players probably have little or no exposure to these markets, or they could even be short (sold positions they didn’t own in the hope of buying them back at a lower price at a later date).

The way I see it – When large commodity markets such as gold or silver jump up by some 4% in one day, one should take notice. These markets trade in large positions all over the world, and to make a move of that magnitude indicates an overload of buyers or a lack of sellers. I’m leaning to a lack of sellers as both gold and silver have been trending down for the last five months as sellers have outweighed buyers as they relentlessly pushed these markets lower since May. The last exhaustion selling seemed to happen during the previous week when gold fell to $1,832 and silver fell to US$21.00. If the sellers are all out or better yet short – this sudden reversal to the upside may gain some significant traction.

During the week Gold bullion rose to a new 21/2-month closing high of US$1,981 a troy ounce.

All of which helped B2Gold Corporation ‘BTO-T’ & ‘BTG-N.A’ shares’ to rise to a new 2-month closing high of $4.65, while the closing price of Kinross Gold Corp. ‘K-T’ & ‘KGC-N’ reached a new 5-month high of $7.36.

Teck Resources Ltd. ‘TECK.B-T’ & ‘TECK-N’ shares’ rose by $1.47 or 2.77% to close at $54.62 after the giant Vancouver, BC miner with the company’s 3rd-quarter steelmaking coal sales and pricing guidance.

The closing share price of Kodiak Copper Corp. ‘KDK-V’ rose by $0.09 or 16.98% to $0.62 after the Vancouver, BC based mineral explorer reported diamond drill hole AXE-23-011 from the West Zone of the company’s MOD copper-gold porphyry project in southern BC ran 0.27% copper equivalent (CuEq) over 941 metres starting at surface bedrock.

Unfortunately, overall – investors weren’t in a speculative mood as they pushed the junior TSX Venture Exchange down to a new 31/2-year closing low of 521.

Tourmaline Oil Corp. ‘TOU-T’ stock price rose by $2.20 or 3.17% to a new 10-month closing high of $71.66 after the Calgary, AB petroleum company strengthened its ‘Deep Basin’ land position by purchasing Bonavista Energy Corp. for a cash & stock consideration of some $1.45-billion.

Cenovus Energy Inc. ‘CVE-T & N’ shares’ rose to a new 11/3-year high closing price of $29.05 while Canadian Natural Resources Ltd. ‘CNQ-T & N’ stock closed at a new record high of $91.51.

This as the influential Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs rose by 2-rigs over the past week to 624, down by 147 from this time last year. Across the line – the number of Canadian active rigs increased by 5-rigs to 198, down by 12 from a year ago.

Umicore Rechargeable Battery Materials Inc. with assistance from the federal government ($551.3-million) and the Ontario Government ($424.6-million) has committed to building a $2.76-billion battery plant in Loyalist Township, Ontario.

Similarly – Honda Motor Co. Ltd. ‘HMC-N’ announced the Japanese automaker would begin producing its Civic Hybrid next year in Alliston, Ontario which will supplement the company’s already Alliston produced CR-V Hybrid.

The recent multi-month low in the price of lithium (US$22,740-a-tonne) was bound to affect the price of lithium equities and as such, the share price of American lithium giant Albemarle Corporation ‘ALB-N’ fell to a new 23/4-year closing low of US$138.68.

Copper – another so called ‘electric’ mineral fell to a new 5-month low of US$3.53 a pound.

Investor enthusiasm for solar stocks also seemed the be waning as the price of SolarEdge Technologies Inc. ‘SEDG-N’ plunged by $31.08 or 27.27% to a new 4-year low of US$82.90 when the smart energy disappointed with preliminary 3rd-quarter financials and less than expected European sales guidance.

Silver and lithium were the resources showing the greatest gains at the end of the week, while natural gas and lumber were down the most.

The S&P 500 Index and NASDAQ Exchange both fell to respective new 3-month lows of 4,224 and 12,984.

The CBOE Volatility Index or VIX rose to a new 61/2-month high of 21.71.

All five of the North American markets were negative going into the weekend as investors sold positions ahead of an Israel/Hamas fueled uncertain two days.

For the Week – the DJI lost 1.61% to 33,127 while the S&P 500 lost 2.40% to 4,224 and the NASDAQ fell by 3.16% to 12,984. In Canadathe TSX lost 1.78% to 19,116 and the TSX Venture fell 1.51% to 521. The CBOE Volatility Index or VIX gained 12.37% to 21.71.

With currencies – the Canadian dollar fell by 0.41% to US$0.7291 and the U.S. dollar ‘DXY’ lost 0.48% to 106.15. 

With commodities – gold bullion gained 2.48% to US$1,981, and silver rose 2.95% to US$23.37, as copper lost 1.40% to US$3.53, while lithium gained 2.79% to US$23,410. Crude oil gained 0.74% to US$88.53 while natural gas lost 9.03% to US$2.92, and uranium was unchanged at US$69.00. With soft commodities – lumber dropped by 2.37% to US$493. Overall – the CRB Commodities Index gained 0.62% at 323.

One Last Thought – Time along with technology relentlessly marches on. As such, the Canadian Broadcasting Corporation or CBC has cancelled the iconic beeping National Research Council’s (NRC) 1:00 p.m. Eastern Time zone signal that has linked Canada from coast to coast to coast every day since 1939. The signal had become redundant as most Canadians now rely on the GPS signal in their smart phones to keep an accurate track of time.

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