Good afternoon
interesting situation: Bnd yields in the US are slowly rising, as the US$ is falling. Whether Pelosi or Trump - both are jockeying fr the electorate. We are talking a 2 trill$ spending package here - will bond buyers be able to finance this? Or could we see a confidence crisis developing here? Are the US still the undisputed leader of the Western World?? In any case - gold is stronger today, and there remain many reasons to own it!!
European equity markets are falling victim too seemlingly exponentially rising corona numbers. They are also rising very strongly in the States - but the market there is concentrating on the potential spending program!
Base metals are stronger - helped by the US$, but especially by a very bullish research piece from Goldmans. They see base metals very strong, especially copper and aluminium, driven by lacklustre production on the supply side, but even more so, by very strong demand next year from China, a Western World recoevring strongly, and not lastly, by higher demand for use in green technology. As I said yesterday - these thing are trading at very sexy levels for nearly all producers, but nobody is really talking about it.
How can we proit, if Goldmans are right ( and there discussion sounds plausible to me! )?
Well - certainly by buying the blue chips. But their performance might be limited, as they are all depending on bulk commodities ( and especially iron ore ) which might not be so sexy next year.
So what´s next? Certainly quality producers loke Oz Minerals. After that, there is nothing but a big gap in terms of size. IGO I do not really like, and their dependence on base metals is also limited. But I think Western Areas could be one, for nickel exposure. The stock has done next to nothing so far, but has been a reliable nickel producer for many years. WSA has been overrated for a long time, never really producing as much cash as investors were hoping fr - depsite seemingly low operating costs. They have been punished for that with a constant derating by the market. But the advent of nickel as battery metal might well put an end to this, and their new underground mine ( which was a bit of a bet n the nickel price ) looks like it might be coming into prduction jast as more nickel is needed. I think they are worth a hard look with nickel at 10,30 A$/lb!
Certainly my old and beaten-up favourite, Panoramic, if - as expected - the mine will restart operations in 6 month time. The biggest risk to this is probably a shortage of labor - otherwise, I cannot see too much in the way for PAN to really print money at current nickel prices!
Gascoyne - relisted today. Following a 1:20 consolidation, they closed effectively only just above the recent rights issue at 2,5ct/share. That´s very disappointing - I guess the stock had not been listed for a long while, and some inevstors might have just gone for significant tax losses. The Quarterly incl costs etc is still to come and I will wait for detailed comments until then. I believe, though, that Gascoyne are very cheap for a 80.000oz producer in Australia, and I also believe, that the rights issue was priced to make some money for long suffering shareholders. But unfoortunately, I need some more inf for more detail!
Have a nice evening
WS