A Weekly Recap of All Things Resources to Friday, October 4th

‘That’s a Wrap’

By Rod Blake

As the brokers, investors, traders and portfolio managers prepared for the new week there was a silent relief that the North American equity markets came through September relatively unscathed, and for the most part in the black, on one of the usually more turbulent months of the year. Now, the markets are about to enter the historically buoyant 4^th-quarter that unfortunately begins with an even more uncertain month of October.

Even the resource sector had a good September with most metals up on the month.

The way I see it – We’ve been hearing a lot of media lately about gold making new all-time highs, and to a lesser extent, silver making multi-year highs. As brokers, we often maintained that the media usually got wind of a story at the top or the bottom of a market. This makes me wonder if perhaps the precious metals are ripe for an overdue correction before entering their usually bullish 1^st-quarter of the upcoming New Year.

Going unnoticed of late is the price of lithium, that – after bottoming in mid September at a 3^1/2-year low of US$10,021 a tonne (t), on all of the media’s recent negative electric vehicle (EV) related headlines – has now climbed some $500 or 5^% to the US$10,500 a tonne (t) level. Now, while it’s too soon to say if a 2-week or 5^% climb is the start of a new bull market, it might be time to start investigating some oversold lithium equities. If my above premise on the media holds true, then we may have seen the bottom of an excruciating 2-year downturn in lithium. Rest assured, if this is the start of a new lithium bull market – the media will tell you all about it sometime next year.

Then, as if on cue – lithium rose to close at a new 1^1/2-month high of US$10,775 a tonne.

And, another energy related commodity – Uranium closed at a new 1^1/2-month high of US$82.20 a pound (lb).

This as uranium stocks got another boost of interest after Alphabet Inc. ‘GOOG-N’ CEO Sundar Pichai announced his company would consider following Amazon and Microsoft’s lead and consider sourcing electricity directly from small modular nuclear plants.

While on a related note – after 142-years as a stalwart symbol of industrialization – Britain finally closed down its last coal-fired power plant located in Radcliffe-on-Soar, Nottinghamshire.

Lithium Royalty Corp. ‘LIRC-T’ shares’ fell to a new all-time closing low of $5.52.

MEG Energy Corp. ‘MEG-T’ stock rose by $0.96 or 3.78^% to $26.37 after the company announced that after achieving its US$600-million debt target, the Calgary, AB based petroleum company would now return 100^% of the company’s free cash flow to shareholders by way of share buybacks and dividends.

Natural gas rose to close at a new 4-month high of US$2.97 per million British thermal units (mmBtu).

The key Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs fell by 2-rigs in the past week to 585, down by 34-rigs from this time last year. Across the line – the number of Canadian active rigs rose by 5-rigs to 223, up by 43-rigs from one year ago.  

Base metals caught a bid as copper rose to a new 2^1/2-month closing high of US$4.61 a pound (lb), while nickel closed at a new 4-month high of US$8.28 a pound (lb), and zinc reached a new 4^1/2-month closing high of US$1.45 a pound (lb).

Lumber stocks also caught a bid with Canfor Corporation ‘CFP-T’ and American forest giant Weyerhaeuser Company ‘WY-N’ closed at respective new 6-month highs of $17.34 and US$33.84, while Canadian forest giant West Fraser Timber Co. Ltd. ‘WFG-T & N’ reached a new all-time closing high of $133.25.

Doman Building Materials Group Ltd. ‘DBM-T’ shares’ surged up by $0.88 or 11.22^% to $8.72 after the Vancouver, BC based company acquired South Carolina based CM Tucker Lumber in an all-cash transaction of some US$255-million.

In our quest to report exceptional exploration results we give you – Clean Air Metals Inc. ‘AIR-V-‘ stock rose by $0.005 or 7.14^% to close at $0.075 after the Thunder Bay based explorer reported diamond drill Hole CL24-010 returned 50.7 metres (m) grading 13.74 grams per tonne (g/t) of platinum equivalent (Pt.eq).

SilverCrest Metals Inc. ‘SIL-N’ & ‘SILV-N.A’ stock rose by $1.22 or 9.69^% to close at $13.81 on word the Vancouver, BC based silver miner had agreed to a US$1.7-billion all-stock takeover offer from American silver miner Coeur Mining, Inc. ‘CDE-N’.

As a broker I often said “Somebody knows something” when a stock moved on increased volume with no news showing. Such as Minera Alamos Inc. ‘MAI-V’ surging up $0.05 or 15.38^% on a volume of 6.39-million shares traded to close at a new 4-month high of $0.375 with now news posted as of Friday afternoon.

The CRB Commodities Index ‘CRB’ rose to a new 3^1/2-month closing high of 346.

The US Dollar Index or ‘DXY’ rose to a new 2-month closing high of 102.78.

The S&P 500, Dow 30 and TSX Composite indexes closed at respective new all-time highs of 5,762, 42,353 and 24,163.

Crude oil and silver were commodities with the greatest gains on the week, while natural gas and lumber were the biggest drags.

All five of the North American equity markets I follow were positive going into the weekend.

For the Week – the DJI gained 0.09^% to 42,353, with the S&P 500 up 0.23^% to 5,751, and the NASDAQ rose 0.10^% to 18,138. Up north – the TSX rose 0.86^% to 24,163 and the TSX Venture gained 2.06^% to 595. The CBOE Volatility Index or VIX rose 13.27^% to 19.21.

With currencies – the Canadian dollar fell 0.46^% to US$0.7365, while the U.S. dollar ‘DXY’ rose 2.09^% to 102.49. 

With commodities – gold bullion gained 0.04^% to US$2,653, with silver ahead 1.71^% to US$32.18, while copper fell 0.02^% to US$4.52, and lithium rose 1.06^% to US$10,641. Crude oil gained 8.52^% to US$74.45, while natural gas dropped 2.41^% to US$2.83, and uranium rose 1.23^% to US$82.20. With soft commodities – lumber lost 1.32^% to US$524. Overall – the CRB Commodities Index gained 2.37^% to 346.