Good afternoon
some anecdotal evidence, that there is still upside: I listended to three fundmanagers in a webinar yesterday - all multi-asset managers - and asked the question, why they would not hold any resources stocks, given their generally positive outlook. The answer was initially silence, and then some bullshitting on oil stocks. I also read a T.Rowe Price strategy document today - no mention of commodities, gold or resources stocks...This let me believe, that there might be a long way for these generalists ahead to reweight some of their exposure from FANG´s etc ( which are at risk from the regulator around the world ) and other darlings to our unloved sector. As I said yesterday - performance sucks, and these guys will come...
Jeffrey Gundlach, the famous bond manager, today said in his outlook for 2018, that they expect commodities as late-cycle movers to have a very strong performance - stronger than last year.
Finally: Bond yields have now seriously started their upward trajectory - and rising yields have been the best performance driver for resources in the past - definitely in the early stages of the move.
So as I said - 2018 will be our year!! increasing prices for commodities, accompanied by continued upward revisions of earnings, and money-inflow!! And all this ahead of the suckers-rally, which might still be to come in 2019!
No mention anywhere of gold - are the young blokes all buying Bitcoins instead???? I guess so - but is something like this adding stability to your portfolio??? I rather punt on lithium and nickel, than this virtual stuff!!
Metals are trading stronger today, helped by weaker US$ , probably based on some more hawkish comments by Europen central bankers ( I think these guys are VERY right ) and rising bond yields in Germany. Gold in particular is back up through 1320 US$oz , and now making new, recent highs at 1324 US$ ( I fear now down to 1320 again...)and nickel/copper are looking good!
Evolution - they have significantly underperformed since the beginning of last year - probably due to the relatively conservative way my gold-darling is being managed. The stock is just on the cheapish side in absolute terms, and much cheaper in relative terms, when I compare them to the other,midsized Australian producers. The stock is yielding 3% at current levels - fantastic for a gold miner - and has at least 10% upside in relative terms, and about the same in absolute terms vs the current gold price. I have been a little ( too ) cautious on the gold price lately - but I think on valuation grounds, EVN are getting cheap again. Good, core exposure to gold, and at a nice yield!
There has been some renewed talk on increased gold mining royalties in Western Australia - EVN would not be affected by this at all.
Strike Energy - the chairman is buing 1 mill shares at 7ct in the market. This is not a lot of money for him, but he is not the type of guy to waste any money voluntarely! Drilling of Jaws is getting closer - by the end of the month, we might see some punters comning into the stock.
Breaker - had been put in doubt late last year by some informal comments from the market, that their resource " would not hang together", and the extension of time wanted / needed to put a meaningful resource togther. Drilling results announced today - some with very high grades, and many with still good grades, but long intersections - should go some way to alleviated these concerns. The company continues to increase the resource footprint, as well as deepen- and confirming it. But the litmuas test will be the first resource estime, out later this Quarter. I am still a happy holder,awaiting some confirmation from the first resource estimate. Anything below 1 mill oz would be quite a disppointment for me - the potential upside is much larger.
Kingsgate - had their EGM yesterday, and the current board just managed to hang in there...54 to 56% is a very slim vote, though, and normally, would have the Chairman step down. But knowing Ross Smyth- Kirk, who has never sold a share , he will continue to fight like an english boxer to stay as their Chairman! I am very reluctant to punt on a court decision here, or an out-of-court settlement with the insurance, as well as with the Thai government. There are better opportunities around.
Syrah - got hit a little bit today by the decision of the local Parish Council, to not allow the proposed baterry graphite production plant at the planned site in Louisana, USA. The parish people do not want any more maufacturing in their area. SYR do not expect any delays for the production, though, as there are alternative proposals for a site in Louisana. Nevrtheless - a slight negative, as obviously, this site had been chosen for reasons and has been the companies preferred location for the plant. Even though the company does not expectso, I would not be surprised about a small time delay in constructing at an appropraite location.
Have a nice evening
WS
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