Good afternoon
equity markets are slightly weaker,again, on corona-fears - despite two vaccines looking like they can do the job! But the EU as well as the US are really struggling to bring their stimulus programs through the various institutions. I am loosing all the little respect I have had for Hungary and Poland…for the Republicans, I´ve lost it anyway! But there is still massive, underlying support for equities - especially from the US!
US labor market numbers are disappointing! And I have just been shopping in the centre of Munich - unless everybody is buying online, retail numbers for Germany will also look bad! But existing home sales are booming in the States
Tesla, Albemarle and Uber are joining up to call for 100% of EV sales by 2030….Germany is extending subsidies for EV´s until 2025 and starts spending program for loading stations…German EV sales last month 3x higher than pcp…Lithium will go for a run, once stocks have been used up. Stocks like Pilbara have been moving strongly with heavy turnover - BUY Liontown, with the only, really large resource not comitted as yet, having superior grades to many others, and in the right country!On top of that, also some exploration potential from their Julimar-look-alike , owned by :
Chalice - reported some more very exciting drilling results yesterday. I ahve no idea, how large this thing could be - but the potantial is certainly there for a world class orebody. The only negative, in my opinion: There is defintely work left to do on metallurgy…and also: I am usually buying this kind of stock to double- or tripple my money - this might be hard in Chalice, given the 1.1 bill A$ market cap.
Base metals are only very slightly down…as Goldman´s is calling for the beginning of a structural bull market in commodities!! For once, I would love them to be right! These EV-news are really good in the moment, and the sector seems to develope some nice momentum. This certainly helps also copper and nickel! And as I am slowly leaving the office, base metals are starting to turn green again!
some stocks are behaving , as if Goldman´s could be right:
Foran Mining - are on fire, thanks to the new and highly regarded MD! At the closing price of 45ct, they are capped at 63 mill - the NPV is probably around 350 mill Can$…hence, nobody really wants to sell. Very small turnover despite strong bidding - the stock si very tightly held, and most holders have been there for a long time. This thing had a good run - but hardly anyone in North America has heard about the stock, and shareholders obviously know about the potential of the stock. There are not all that many copper/zinc stories around, which have been so extensively prepared to do the final step to be brought into production! Foran have been in a deep winter-sleep for a long time - finally, the stock is awakening and we have seen in some crazy moves like Piedmont´s, what happens, when the North Americans start chasing a stock! FOm are a long way away form valuations like that one!
Iron ore is also making new highs, despite all the negative comments from analysts! China is buying anything they can get their hand on - and the Australian cyclone-season will be starting in a few weeks time. That´s probably the reason, why nobody is worried about stocks in China slowly rising! This is a seasonal increase of stocks, not a structural one! And prices for steel rebar and otehr types of steel are also constantly going higher, indicating good demand! Stocks like BHP/RIO are not expensive, and Fortescue are very cheap, if iron ore stays above 100 ( from 126 US$/t today! ) for the enxt 12 month! If iron ore prices can be sustained at 120 US$, they could well be trading on a 15% dividend yield, and only slightly above 3x EV/EBITDA! Having been substantially leveraged for most of it´s history, the company is in net-cash for the first time, despite deveoling two new mines currently - one of which will go into production next month or so.
Gold ETf´s saw the third day in a row yesterday with more than 300.000oz outflow. Somehow, I finf it strange to own gold just because of Covid - but it seems to be the case, that quite a few investors have done so. The yellow metal does not feel any good in the short term - might have to go down, before it goes up again!
Have a nice evening
WS
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