Nick Hodge – Using The Volatility In Commodities To Compound Gains In Resource Stocks
Nick Hodge, Co-Owner of Digest Publishing and editor of Foundational Profits and Hodge Family Office, joins us to review macro investing themes in general US equities and in the commodities resources stock in gold, copper, oil, uranium, and lithium.
We kick things off with the continued break higher in gold and gold equities over the last month, on the back of the banking crisis and expectations around the Fed tightening cycle coming to a pause. This is a wide-ranging discussion that gets into the continued yield curve inversions, if we are still heading towards a “double-whammy” recession, and how that could affect the demand for various commodities.
One of the topics reviewed is that while a longer-term fundamental thesis can be bullish, for something like Dr Copper, it still could show weakness in the medium-term with a contracting economy on the horizon. Investors can take advantage of longer-term macro trends by purchasing into weak corrective periods. We also discussed the recent OPEC+ cuts in oil production, and what that means for the energy space, the precious metals space, and the outlook they see for a slowdown in global growth and demand.
Nick makes the point that investors should use the volatility (both to the upside and downside) for compounding gains when positioning in or trimming out of resource sectors. We touch upon the continued volatility and poor sentiment in the uranium sector, despite a compelling macro fundamental backdrop, and he mentioned having done well getting positioned 2 months back in the more advanced companies that are dual-listed on the big boards like Energy Fuels (UUUU) (EFR), and enCore Energy (EU), while keeping a tight stop in place.
We also revisited the lithium sector, the recent pullback in Li prices due to China reopening, Liontown Resources (LTR.AX) turning down a major takeover offer, and some of the frothiness coming out of the lithium stocks over the last 2 months. While he had lightened up on some positions in the past 2 months, Nick noted that there have been companies like Patriot Battery Metals (PMET) and Critical Elements Lithium (CRE), that have pulled back to levels where he’s been a recent buyer once again.
I had posted this on yesterday’s blog under the Dave Erfle interview, but since Nick Hodge and I had discussed the hilarious swipe at Gold calling it “Boomer Rocks” in the discussion up above, then it seemed worthwhile to repost it again here for quick reference and a quick laugh. 🙂
“Gold Nears All-time Highs As Investors Pile Into Boomer Rocks”
I agree with Nick Hodge’s point about using volatility in both directions in commodity resource stocks to lighten up on rips and add more on dips, and his comments that with things getting a bit stretching in the PM stocks, that now may be a good time to lighten up on big winners.
Yesterday, I pulled some profits on Coeur, Guanajuato, and Calibre, (while maintaining core positions of 75%-85% in all 3 stocks) which have all ripped nicely higher for some time. I added a little bit (10% roughly) to UEC and Uranium Royalty Corp. which have pulled back quite a bit to more attractive levels.
Stocks Slide as Recession Fears Buoy Haven Assets: Markets Wrap
Richard Henderson – Yahoo Finance – Wed, April 5, 2023
“Asian stocks fell with US equity futures and government bonds rallied against the backdrop of weaker-than-expected economic data that supported forecasts for recession.”
“It’s going to be a rocky few quarters for global equities,” John Vail, chief global strategist for Nikko Asset Management, said in an interview with Bloomberg Television. “We don’t see a recession in the States this year and that will surprise some investors on the positive side.”
“Haven assets retained their strength, with two-year and 10-year Treasuries little changed and yields near their lows for the year. Government bonds rose in Australia and New Zealand, with moves downward in yields of around seven basis points for Australia’s 10-year maturity.”
“An index of the dollar and the yen extended advances from Wednesday. Gold was down slightly but remained near a 13-month high reached in the prior session.”
CNNC announces largest ever annual investment plan on nuclear power, new energy
By Global Times – Mar 12, 2023
“China National Nuclear Power Co (CNNC) recently unveiled its 2023 investment blueprint, worth of 80.02 billion yuan ($11.58 billion), which is a near 60 percent of year-on-year increase, also marking the highest annual investment since it was listed on the stock market.”
“According to the announcement, the annual investment plan was devised based on the company’s development and operational projects, which will cover various sectors of nuclear power, multipurpose nuclear energy, new energy and other investments in fixed assets and program acquisition.”
“As of the end of 2022, CNNC had 25 nuclear power generators in operation with capacity of 23.75 million kilowatts and eight nuclear power generators under construction with a forecast capacity of 8.88 million kilowatts, according to a company announcement.”
KHNP and Doosan Enerbility sign a $2.3 billion supply deal
“Korea Hydro & Nuclear Power (KHNP) and Doosan Enerbility signed a 2.9 trillion won ($2.3 billion) component supply agreement for the 10-year construction of Shin-Hanul 3 and 4, the Ministry of Trade, Industry and Energy said Wednesday.”
“The Shin-Hanul 3 and 4 are two additional nuclear power plants to be built at the Shin-Hanul complex in Uljin, North Gyeongsang. Doosan Enerbility will manufacture and supply key components for the nuclear plants such as reactors, steam generators and turbine generators for the next 10 years to KHNP.”
Sunak To Focus On Carbon Capture And Mini-Nuclear Reactors In Energy Policy
Aubrey Allegretti in San Diego – The Guardian – Mon 13 Mar 2023
“PM says energy security strategy will launch shortly after plans reworked to meet net zero commitments.”
“An energy security strategy will be launched “shortly”, Rishi Sunak has promised, with a focus on ramping up carbon capture and small modular reactors to develop homegrown energy and meet net zero commitments.”
“The technology is sparking a renaissance for nuclear energy, with a range of next-generation small modular reactors being developed in the US.”
Govt approves installation of 10 nuclear reactors
Web India 123 – April 5, 2023
“The central government has given bulk approval for the installation of 10 nuclear reactors, informed the Department of Atomic Energy on Wednesday. In a statement in Lok Sabha, Union Minister of State for Atomic Energy and Space Jitendra Singh said the government has roped in Public Sector Undertakings (PSUs) for the installation of the nuclear reactors or the exercise would be done exclusively by the specialised government agencies.”
“The government has accorded administrative approval and financial sanction for 10 indigenous Pressurized Heavy Water Reactors of 700 MW each in fleet mode. The reactors will be installed in Kaiga in Karnataka, Chutka in Madhya Pradesh, Mahi Banswara in Rajasthan and Gorakhpur in Haryana. The government has amended the Atomic Energy Act in 2015 to enable the Joint Ventures of NPCIL with Public Sector Enterprises to set up nuclear power projects.”
Are you noticing the global trend here with embracing nuclear power, and building more plants?
This is happening regardless of whether the US has a recession, and puts very different global supply/demand dynamics on the Uranium sector, regardless of may happen with other commodities.
Giant Chile Mines Are Struggling Just as World Needs More Copper
James Attwood – Financial Post – Mar 31, 2023
FDIC Retains BlackRock Unit For Signature Bank, SVB Securities Portfolio Sale
Wed, April 5, 2023
“The Federal Deposit Insurance Corporation (FDIC) has retained BlackRock Inc unit Financial Market Advisory to sell the securities portfolios it kept in receivership after the collapse of Signature Bank and Silicon Valley Bank.”
“The face values of the two portfolios are about $27 billion and $87 billion, the regulator said in a statement on Wednesday.”