‘That’s a Wrap’
By Rod Blake
As I reviewed the previous week’s market stats – three things seemed to stand out. The first was that the U.S. markets were mixed as they tried to hold onto their spectacular year to date artificial intelligence (IA) induced gains. The second was that the two Canadian Indexes, if only for one week, greatly outperformed their American counterparts (TSX Composite +2.72% and TSX Venture +1.72%). The third and perhaps most significant was that the price of gold bullion was up $4 to US$1,923 while the U.S. dollar ‘DXY’ reached a new 6-month high of 105.40.
The way I see it – There is usually only one reason why the TSX-C outperforms the mighty American markets – and that is rising resources. This time the outperformance is due to energy in the form of uranium and crude oil. The Venture Exchange also needs rising resources to outperform, but its focus is usually on one important mineral – gold. More junior gold companies trade on the Venture than any other exchange. And, while I’m not a true gold bug per say, I do come from a family that helped to develop two British Columbia gold mines, (Erickson and Carolin), so gold and the performance of gold, has always been of great interest. Most every analyst will tell you that gold always moves counter trend to the U.S. dollar. That is – gold moves lower as the U.S. dollar moves higher. That’s why last week’s move up in gold, especially when the U.S dollar was hitting new highs, really got my attention. With apologies to Buffalo Springfield – “There’s something happening here. But what it is ain’t exactly clear”. A market (gold) that goes up when it should be going down is significant. Whether this is a one-week countertrend bounce or the start of a more sustained uptrend remains to be seen. But, gold bug or not – one might be prudent in elevating one’s attention to the gold market at this time.
Uranium stocks continued their outperformance early in the week with Denison Mines Corp. ‘DML-T’ & DNN-NA- closing a new 5-month high of $2.24, while NexGen Energy Ltd. ‘NXE-T&N’ closed at a record high of $8.49, and uranium kingpin Cameco Corp. ‘CCO-T’ & ‘CCJ-N’ closed a new 16-year high of $54.54.
This as the price of uranium rose to a new 12-year high of US$65.50 a pound.
Canada entered into a $3-billion supply and service financing deal with Romania that will see two more Candu nuclear reactors built in that Eastern European country. The reactors are expected to be online by 2032.
Meanwhile, the price of crude oil reached a new closing high of US$92.23 a barrel.
The key Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs fell by 11-rigs over the past week to 630, down by 134 from this time last year. Across the line – the number of Canadian active rigs was unchanged at 190, down by 25 from a year ago.
Hecla Mining Co. ‘HL-N’ announced the curtailment of production for the rest of 2023 from the company’s Lucky Friday Silver Mine in northern Idaho in order to rebuild fire damaged infrastructure.
The price of Calibre Mining Corp. ‘CXB-T’ stock rose by $0.04 or 2.70% to $1.52 after the Vancouver, BC based junior miner released an initial open pit Mineral Resource Estimate for the company’s Cerro Volcan Gold Deposit in Nicaragua.
Equinox Gold Corp. ‘EQX-T&N.A’ shares’ plunged lower by $1.42 or 19.97% to $5.69 after the Vancouver, BC based miner disappointed investors by announcing a US$150-million convertible debenture financing intended to reduce debt and for general corporate purposes.
The old drillers helper in me likes to report exceptional drill hole assays. These two come from Snowline Gold Corp. ‘SGD-V’ that recently reported several good diamond drill hole intercepts from the Valley Zone of the company’s Rogue Project in eastern Yukon. To highlight – Drill hole V-23-045 delivered 517.9 metres grading 1.14 grams per tonne gold (g/t Au) and drill hole V-23-048 returned 256.2 metres of 2.20 g/t Au. What also caught my eye was that these drill holes hit gold values very close to surface.
Canfor Corporation ‘CFP-T’ announced the Vancouver, BC based forest company would invest approximately $200-million to build a new state-of-the-art – 300-million board feet of lumber per annum – manufacturing facility in Houston, BC.
This as the price of lumber fell to a new 3-month low of US$478 per 1,000 board feet.
Meanwhile – West Fraser Timber ‘WFG-T&N’ announced the giant Vancouver, BC forest company has an agreement to sell two pulp mills (Quesnel River & Slave Lake) to Greenwich, Connecticut’s Atlas Holdings for an all-cash price of some US$120-million.
American Battery Technology Co. ‘ABAT-Q’ shares’ rose by $0.26 or 2.39% to US$11.25 after the Reno, NV based lithium developer and critical battery materials company’s stock listing was moved up from the OTCQX board to the higher profile Nasdaq Capital Market (NASDAQ) Exchange.
This as the price of Lithium fell to a new 4-month low of US$24,407 a tonne.
Uranium was the resource with the most notable gain going into the weekend while once again lithium was the laggard. Gold and silver were also notable as these two quasi currencies again rose against a rising US dollar.
This as the U.S dollar Index ‘DXY’ rose to a new 6-month high of 105.60.
The TSX Venture Exchange fell to a new 8-month low of 568.
For the Week – the DJI lost 1.89% to 33,964 as the S&P 500 dropped 2.92% to 4,320 and the NASDAQ fell by 3.62% to 13,212. In Canada – the TSX lost 4.08% to 19,780 and the TSX Venture fell 3.55% to 570. The CBOE Volatility Index or VIX rose by 23.74% to 17.20.
With currencies – the Canadian dollar rose 0.34% to US$0.7417 and the U.S. dollar ‘DXY’ gained 0.25% to 105.60.
With commodities – gold bullion gained 0.10% to US$1,925, and silver rose 2.35% to US$23.55, while copper lost 2.39% to US$3.67, and lithium fell 4.49% to US$24,466. Crude oil lost 0.73% to US$90.37 while natural gas was unchanged at US$2.65, and uranium gained 5.65% to US$65.50. With soft commodities – lumber lost 3.40% to US$483. Overall – the CRB Commodities Index was down by 1.23% at 322.
And finally – While the ever increasing acceptance of electric vehicles (EVs) may be good for air quality, especially in large cities, their acceptance may not be that good for autoworkers. According to the Financial Post – EVs use 30% less domestic labour in the United States, and Germany has warned that the European country may lose about one-half of its 800,000 auto jobs by 2030 due to EVs.