From The Maven Letter: 10 January 2024
Yesterday we finally saw uranium stocks lift, after dragging along sideways for weeks even as uranium marched steadily higher.
The first chart below is of URNM, the Sprott ETF of uranium miners; the chart below that is the spot price of uranium. The comparison shows how uranium stocks responded nicely to the rising spot price in September and October but then stalled out, trading sideways for the last two months while uranium moved from $74 per lb. to $92 per lb.
The URNM chart also shows how uranium stocks did seem to move distinctly higher yesterday, snapping back to mirror the spot price (which jumped $1.25 per lb. on the day! And another $1.13 today! Neither of those gains are shown on the chart). It all happened because of this:
The US Department of Energy (DOE) asked uranium enrichment companies to pitch it with proposals to produce High Assay Low Enriched Uranium (HALEU). A less-structured request for HALEU production proposals late last year didn’t garner a lot of response so it seems the DOE stepped up its game here, promising up to $500 million in HALEU contracts and asking for minimum 10-year
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From The Silver Stock Investor | Mid-month Update December 2023
Investors are starting to wake up and recognize the exceedingly bullish setup in the silver market.
Let’s look at what was expected for 2023, how it’s turning out, and what we can look forward to in 2024.
Although overall total demand is expected to ease by about 10% to 1.14 billion ounces for 2023, that’s still the second highest level on record. After a record deficit of 253 million ounces in 2022, the silver market is facing a 140 million ounce shortfall for 2023. I think we’ll see 2024 end with another sizeable shortage of about 150 million ounces. The Silver Institute expects significant deficits will persist for years. In fact, the cumulative total deficits of 2021, 2022 and 2023 are approximately 474Moz, which is nearly 50% of 2023’s total supply.
Industrial demand reaches a new record high of 632Moz silver in 2023, driven in large part by the green transition technologies of solar panels, upgrading power grids and 5G telecom, as well as EVs and their chargers.
Reviewing the Silver Institute’s World Silver Survey 2023 from April, a few key points stand out. The big news relates to demand
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From Evergreen Investing: December 2023
We started Evergreen Investing for one clear reason: climate change is one of the most disruptive economic forces of our lifetimes, a statement underpinned by the fact that 70% of countries representing almost 83% of global emissions and 80% of global population have committed to net zero by 2050.
Dramatic changes in how things are made, moved, and used around the world will generate standout investment opportunities. Paradigm shifts always do (as we discussed in the October issue).
But the green paradigm shift is currently stalled. High interest rates have suffocated capital-intensive green initiatives. Political backlash keeps impeding green directives in many places. And green investment hype five years ago pushed many green stocks sky high; they have since fallen a long way and it takes time for investors to re-engage when a sector sells off significantly.
The selloff probably isn’t done. In a recent MLIV Pulse survey, Bloomberg asked investors whether they thought green stocks would fall further.
What I want to discuss today is why we are so confident the green shift is paused, not stopped.
It comes down to two things: political commitments and social shifts.
Political Commitments
A strong majority of the world’s countries are on the net
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From The Maven Letter: 13 December 2023
I’ve talked a lot about rates in the last while. I had to because they were THE reason gold moved decisively up through $2000 per oz. and rate expectations are THE factor that will determine where gold goes from here.
Today was a big rate in the world of rates: a Fed rate decision (unchanged at 5.25 to 5.5% – no surprise there) and a dot plot updating where policy makers see rates going. The FOMC only updates its dot plot every other meeting, so we only get this look at official rate expectations four times a year. Here it is.
I used Yahoo’s version of the dot plot rather than the official one from the Fed because this one compares policy makers’ rate outlooks from September and today. The difference is not dramatic but it’s important.
Look at 2024. The blue dots show that, in September, Fed officials expected to make 1, or maybe 2, rate cuts next year. Today they expect to cut 3, perhaps 4, times in 2024.
Three cuts to get to a Federal funds rate of 4.5-4.75% is a different
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From The Maven Letter: 8 December 2023
Gold has certainly made some attention-grabbing moves in the last two weeks!
Most attention-grabbing were its drive up through $2000 per oz. two weeks ago and then its spike to a new all-time high of $2140, after which it immediately dropped $100. As all the coverage suggests these two weeks have been frenetic…though really the yellow metal has been laying the groundwork for those moves for some time.
After bottoming at $1820 in early October the yellow metal marched higher, touching $2000 by the end of the month. After relinquishing some of those gains to hit $1938 on November 10th, gold ground its way higher for two weeks to close at $1994 on November 23.
That 6-week setup meant that when it moved above $2000 per oz. and broke that round-number resistance, it had a free path higher: by November 28 it was at $2044. It traded at that level for a few days…and then came the intensity of December 3rd and 4th when gold spiked from $2070 as high as $2138 before heading quickly back down to $2020.
The Sunday spike was short covering. This happens with regularity in markets
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From The Silver Stock Investor | Mid-month Update November 2023
Silver is volatile, there’s no denying it. But that’s also part of its appeal.
I’ve seen it time and time again. Silver will go through an extended period of sideways price action, then explode higher or sell off hard before recuperating, then go back to trading in a limited range.
Knowing that silver acts this way is key to taking advantage of its behaviour. As investors it helps us to remain patient, build a position gradually, take profits after a runup, or cut our losses early when a correction starts.
I’m going to examine how silver has behaved in previous bull markets to help you better prepare for what may lie ahead. I’ve presented this analysis in one of my very first issues of Silver Stock Investor. But given the long period we’ve endured with silver in a range between roughly $20 and $28, I thought it worth reviewing.
Consider that between 2002 and 2006, silver dropped 10% or more 4 separate times.
Then, between 2006 and 2011, short but sometimes deep corrections came, with silver dropping 13% or more three times.
From The Maven Letter: 30 November 2023
Gold broke up through $2000 per oz. decisively on Friday and has stayed aloft since. It’s only been a few days but sticking above $2000 for a week – and not just lingering just above but running as high as $2044.45 and then sticking above $2035 – is markedly different from the last few times gold bested this round-number resistance.
The clear reason is rates. The market is convinced hikes are over, a stance that various Federal Reserve officials have reinforced in the last while, and that conviction has bond yields falling. The most important factor for the gold price is real rates – gold rises when they fall – and real rates are now clearly falling.
It’s a classic investment move – buy gold when a rate hike cycle ends – and it seems investors are heeding that classic pattern. And they are also buying gold miners in the classic way: the GDX fund of major gold miners is up 6.8% over the week, providing almost 3x leverage to gold’s 2.4% gain.
It feels different this time. I want to credit my superb intuition for that…but it probably feels different because this time gold is not fighting
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From Evergreen Investing: October 2023
New ways of thinking catapulted fertilizer use in the mid-20th century, triggering the first Green Revolution. It’s credited with alleviating world hunger and saving countless lives.
That was a true paradigm shift.
In the February issue, I made the case that feeding 8 billion people today would lead to great opportunities. This month I circle back to this arena and show how striving to reach that goal sustainably will favour particular agrifood subsectors.
But first, I’ll detail this sector’s progress over millennia so you can better understand how and at what pace we arrived where we are today, and why the future is so bullish.
Let’s start with a look at this chart of fertilizer consumption.
How did the planet go from relatively limited to explosive use? This true paradigm shift, like those Gwen fleshed out last month, embodied new ways of thinking and doing that became widely adopted and created tremendous wealth for those involved.
Before we look at where this paradigm shift is heading next, let’s look back at how agriculture evolved.
According to a team led by archaeobotanist (a new term for me) Amy Bogaard from the University of Oxford, the use of manure as fertilizer dates back 8,000
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From The Maven Letter: 16 November 2023
A few good data points sent markets higher this week. Key among those good data points were weak inflation numbers, showing CPI and all its permutation extended steady declines in October. That seems to have cemented the idea that rates have topped, which sent yields down so markedly that it seemed the bond rout of the last year might have ended.
At least, it seemed that way for a day.
I start with this because man oh man it remains strange out there. Stocks ripping higher while growth slows; bond yields rising while inflation falls; seven stocks responsible for pulling entire stock market higher.
In today’s comment, I want to highlight some of the strangeness. I’ll do it point form, rather than my usual extended blather.
- Searching documents filings going back to 1995, it appears mentions of a ‘soft landing’ have spiked twice before…and both times were followed by a recession. It’s a reminder that recessions usually come on gradually, disguised as soft landings until they really hit. Also, if you define soft landing as a period when rates rise but economic growth doesn’t contract for even one quarter, it has happened
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From The Maven Letter: 26 October 2023
I quickly wanted to highlight the latest numbers from the World Gold Council on central bank gold purchases. The below is from the Financial Times.
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Putting it in chart form…
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And remember that 2023 isn’t over yet – this year’s bar only shows Q1-Q3. It certainly looks like central banks are on pace to buy as much gold as last year’s record level, if not more.
There have been lots of reports over the last few months about significant retail gold buying in China as well. It makes sense: a weak renminbi, a lacklustre domestic stock market, and a troubled real estate sector have pushed Chinese to buy as a store of wealth.
Rising desire to buy gold is keeping the price near $2000 per oz. It isn’t helping gold equities – central banks don’t buy gold stocks! – but if the pressure continues, at some point the price will reach a point where investors can’t but move into gold stocks.
