A Weekly Recap of All Things Resources to Friday, September 6th

‘That’s a Wrap’

By Rod Blake

As the traders, investors, brokers and portfolio managers closed up shop last Friday, August 30^th ahead of the Labour Day long weekend, there was a general warm feeling that the markets were back on track, with the Major North American Indexes having ended the month at or near all-time highs. Even the Gold Bugs were smiling with thoughts of more all-time highs to come as their favourite investment tries to build support above US$2,500 a troy ounce (t oz).

The way I see it – With an extra day this weekend I had some time to study the gold bullion chart, and what I saw was quite enlightening. First, if my math is right – from a low of about US$2,025 at the end of last January, gold bullion has closed every month higher than the month before. That’s seven consecutive monthly gains to the US$2,503 close at the end of August, for a gain of some $478 or 23.60^% in just 7-months. Compare this to the 18.42^% year to date gain of the S&P 500, North America’s best performing index, or even the highflying artificial intelligence (IA) juiced NASDAQ’s 2024 gain of 18.00^%. Going further back – take away the one small decline in January and gold bullion is up for ten of the last 11-months going back to last October’s low of US$1,821 – a $682 or 37.45^% run. Is a correction due? You can count on it. We’re just entering gold’s second weak season of the year – October to December. Should something near US$2,500 hold to year-end then the first quarter of 2025 could see a lot more blue sky for gold and more smiles for the Gold Bugs.

The North American markets came out of the Labour Day long weekend on a recession induced a negative note, which also drove most commodity prices lower.

Crude oil fell to a new 2024 closing low of US$68.22 a barrel.

Which no doubt helped to drag the closing price of Africa Oil Corporation ‘AOI-T’ down to a new 2 ^1/2-year low of $1.86.

Vermillion Energy Inc. ‘VET-T & N’ dropped to a new 3-year closing low of $12.44.

This as the closely followed Baker Hughes Petroleum Rig Count reported the number of active American drilling rigs fell by 1-rig in the past week to 582, down by 50-rigs from this time last year. Across the line – the number of Canadian active rigs was unchanged 220, up by 38-rigs from one year ago.  

Uranium stocks also suffered with Cameco Corporation ‘CCO-T’ & ‘CCJ-N’ closing at a new 10-month low of $50.06, while Fission Uranium Corp. ‘FCU-T’ and Uranium Royalty Corp. ‘URC-T’ & ‘UROY-Q’ closed at respective new 1-year lows of $0.74 and $2.60, and Energy Fuels Inc. ‘EFR-T’ & ‘UUUU-N.A’ fell to a new 3-year closing low if $5.82.

Interest rate sensitive pipeline stocks rose once again with:

Enbridge Inc. ‘ENB-T & N’ rising to a new 1^1/2-year closing high of $54.79.

TC Energy Corp. ‘TRP-T & N’ closed at a new 2-year high of $63.34.

Pembina Pipeline Corp. ‘PPL-T & N’ closing at a new all-time high of $54.91.

The lithium sector took another setback when Volvo Cars announced the Swedish automaker was abandoning its ambition agenda of being fully all-electric by 2030 and would instead offer a mix of electric and hybrid vehicles for the foreseeable future.

This as as Ford Motor Company ‘F-N’ estimates the Detroit, MI based automaker lost US$44,000 on each electric vehicle (EV) sold in the 2^nd-quarter and expects to lose US$5-billion on them through the end of this year.

All of which helped to pull down the closing price of Patriot Battery Metals Inc. ‘PMET-T’ down to a new 2-year low of $3.36, and Lithium Royalty Crop. ‘LIRC-T’ to close at a new all-time low of $6.00.

Only one week after the Canadian government announced a 100^% tariff on imports of Chinese made electric vehicles and China conveniently announced an anti-dumping probe on Canadian canola imports.

Snowline Gold Corp. ‘SGD-V’ continued with its long string of outstanding diamond drill hole assays from the company’s Valley deposit in Yukon with hole V-24-077 returning 435.0 meters (m) of 1.61 grams of gold per tonne (g/t).

Gato Silver Inc. ‘GATO-T’ shares’ rose by $0.56 or 4.82^% to $12.18 after the Vancouver, BC based miner accepted a US$960-million all-stock takeover offer from fellow Vancouver based First Majestic Silver Corp. ‘AG-T & N’.

Pan American Silver Corp. ‘PAAS-T & N’ stock fell to a new 4-month closing low of $25.24 and Impact Silver Corp. ‘IPT-V’ closed at a new 6-month low of $0.19.

TransAlta Corporation ‘TA-T’ & ‘TAC-N’ rose to close at a new 1-year high of $12.11.

The price of lumber fell to a new 2-month closing low of US$489 per 1,000 board feet (mbf).

This as the price of Canfor Corporation ‘CFP-T’ stock fell to a new 2-month closing low of $14.01 after the Vancouver, BC based forestry giant announced the permanent closing of two lumber mills in northern British Columbia and a reduction of production at a number of the company’s American operations.

Natural gas and lithium topped the commodities market on the week, while crude oil and silver were the greatest drag.

All of the North American equity markets retreated going into the weekend as investors sensed that the outlook for the U.S economy was shifting from a soft landing to a full-blown recession.

For the Week – the DJI lost 2.93^% to 40,345, with the S&P 500 off 4.25^% to 5,408 and the NASDAQ down 5.78^% to 16,691. In Canada – the TSX lost 2.42^% to 22,781 and the TSX Venture fell 4.05^% to 545. The CBOE Volatility Index or VIX rose 49.27^% to 22.39.

With currencies – the Canadian dollar lost 0.57^% to US$0.7370, and the U.S. dollar ‘DXY’ fell 0.53^% to 101.19. 

With commodities – gold bullion lost 0.56^% to US$2,495, with silver down 6.41^% to US$27.91, and copper off 4.52^% to US$4.01, while lithium gained 0.59^% to US$10,572. Crude oil fell 8.83^% to US$68.22, while natural gas gained 7.01^% to US$2.29, and uranium rose 0.44^% to US$79.85. With soft commodities – lumber fell 0.81^% to US$489. Overall – the CRB Commodities Index fell 2.43^% to 321.