A Weekly Recap of All Things Resources to Friday, September 29th
‘That’s a Wrap’
By Rod Blake
As the brokers, investors, portfolio managers and traders reviewed the markets last weekend, it we clear that the magnificent seven, artificial intelligence (IA) led market rally that began last October was correcting and the weight of that correction was reverberating throughout the markets.
The way I see it – Every now and then something new comes along and captures the market’s attention and then bullish investors pile on and drive this sector higher and higher because, as we brokers used to say – “No one knows what it’s not worth.” That is – the new sector is given an extremely high valuation because it has not been through the test of time of both good or bad markets, competition, supply & demand and government regulations, etc. to know what its true value is. The companies of this new sector may be given a share price to earnings (PE) ratio of 80 when the longer term norm could be closer to 15. I last experienced this type of market in about 2014 when Canada first legalized marijuana. Here again – a number of companies rushed into the space and investors drove their stock prices higher and higher on sky high projections of how huge and profitable the cannabis space would be. The rush lasted for about a year and then reality started to set in as the rules, regulations, and expense of the cannabis business set in. Today of course, cannabis stocks trade with no premium at all to the rest of the market and some trade at large discounts. So, while new markets can be exciting – history shows that they don’t usually last very long and for investment purposes – it is better to be early in and early out rather than late in and late out.
During the week – the TSX Composite, the Dow Industrials, the S&P 500 and NASDAQ all fell to respective new 3-month lows of 19,436, 33,508, 4,274 and 13,064.
Meanwhile – the CBOE Volatility (fear) Index ‘VIX’ rose to a new 4-month high of 18.94.
Uranium continued its multi-week advance as the price of U3O8 rose to a new 12-year high of US$70.00 a pound.
All of which helped the share price of Cameco Corporation ‘CCO-T’ & ‘CCJ-N’ reach a 16-year closing high of $55.84. While Fission Uranium Corp. ‘FCU-T’ closed at a 7-month high of $0.93, Denison Mines Corp. ‘DML-T’ & ‘DNN-N’ reached a 22-month closing high of $2.35, NexGen Energy Ltd. ‘NXE-T&N’ closed at a new all-time high of $8.56 and Energy Fuels Inc. ‘EFR-T’ & ‘UUUU-N’ rose to new 17-month closing high of $11.82.
Sweden’s Northvolt AB announced the company will build a new $7-billion electric vehicle (EV) battery plant at a site 30-km east on Montréal, PQ.
This as lithium fell to a new 5-month low of US$22,821 a tonne.
Peyto Exploration & Development Corp. ‘PEY-T’ stock rose by $1.04 or 8.28% to $13.60 after the Calgary, AB petroleum company received $201-million from a previously announced equity financing.
Oil Sands producer Cenovus Energy Inc. ‘CVE-T&N’ saw its closing share rise to a new 10-month high of $28.46.
This as crude oil rose to a new 13-month closing high of US$93.77 a barrel.
The Canada Energy Regulator (CER) averted a possible 9-month delay of the critical Trans Mountain Pipeline Expansion by approving the company’s application to divert 1.3 km of the pipeline route around some bad ground near Jacko Lake (Pίpsell), south of Kamloops, BC
The closely followed Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs fell by 7-rigs over the past week to 623, down by 142 from this time last year. Up north – the number of Canadian active rigs rose by 1-rig to 191, down by 22 from a year ago.
Bonterra Resources Inc. ‘BTR-V’ shares’ rose by $0.02 or 11.11% to $0.20 after the Val-d’Or. PQ based company announced a $30-million over 3-years joint venture agreement with Osisko Mining Inc. ‘OSK-T’ to advance Bonterra’s various gold projects throughout Quebec.
This as gold bullion finally gave in to an ever-rising American dollar and fell to a new 6-month low of US$1,848 a troy ounce.
While copper fell to a new 4-month low of US$3.61 a pound.
As the U.S dollar Index ‘DXY’ marched up to a new 10-month high of 106.71.
All of which helped to pull the TSX Venture down to a new 3-year low of 550.
Uranium and natural gas were the resources with the most notable gains going into the weekend while once again lithium, along with gold and silver were the laggards.
For the Week – the DJI lost 1.34% to 33,508 and the S&P 500 dropped 0.74% to 4,288 while the NASDAQ rose by 0.05% to 13,219. In Canada – the TSX lost 1.21% to 19,541 and the TSX Venture fell 1.93% to 559. The CBOE Volatility Index or VIX rose by 1.86% to 17.52.
With currencies – the Canadian dollar lost 0.70% to US$0.7365 and the U.S. dollar ‘DXY’ gained 0.55% to 106.18.
With commodities – gold bullion lost 4.00% to US$1,848, as silver fell by 6.37% to US$22.15, while copper gained 1.63% to US$3.73, and lithium fell 6.70% to US$22,828. Crude oil gained 0.41% to US$90.74 as natural gas improved by 10.57% to US$2.93, and uranium rose by 6.87% to US$70.00. With soft commodities – lumber gained 3.93% to US$502. Overall – the CRB Commodities Index was down by 0.31% at 321.
And finally – It seems that where one lives in Canada may have some influence on one’s perception of ‘Doing the right thing’. A recent BestCasinoSites.net survey found that 55% of people living in Surrey, BC would keep $1,000 if they happened to find it on the street, while 70% of those in Laval, PQ, Burlington, ON and Windsor, ON said they would turn the money over to authorities.