This article was originally published by Stockhead
Guy on Rocks’ is a Stockhead series looking at the significant happenings of the resources market each week. Former geologist and experienced stockbroker Guy Le Page, director and responsible executive at Perth-based financial services provider RM Corporate Finance, shares his high conviction views on the market and his “hot stocks to watch”.
To be good at forecasting precious and base metal prices, you need to have one eye on the global economy and one on supply/demand metrics.
As we move into unprecedented levels of debt (figure 1) in the US (126% of GDP or $229,000 per taxpayer) which compares to a projected 45% in Australia by 30 June 2022, I thought it would be appropriate to seek out some doomesday preppers in the US such as Robert Kiyosaki (author of “Rich Dad, Poor Dad”) whose YouTube interview entitled “The biggest crash in world history” claims that there is no correlation between the US economy and the actions of Powell and Yellen.
Kiyosaki is 74, looks 42, is good friends with Donald Trump and identifies himself as a capitalist rather than a Republican or Democrat. Kiyosaki’s upcoming book, “The Capitalist Manifesto,” due out later this year, claims that the US government is exercising more totalitarian control measures on the populace.
Time to issue this man with Western Australian citizenship.
Where it has all gone wrong, according to Kiyosaki, is that M2 (or money supply) has increased without a corresponding increase in spending. What does all that mean? A pumped-up stock market and real estate sector.
He likens the establishment of the central bank as “90% of communising a nation”. As Vladimir Illyich Lenin pointed out, the best way to destroy a capitalist system is to debauch the currency, so it appears that the Fed is well on the way to achieving this.
So, the biggest “crash of all time”, aside from leading to massive and geopolitical social unrest, may present a good opportunity to buy gold (for saving), silver (for spending) and bullets (for protection), according to Kiyosaki.
A number of economic luminaries have suggested that the Fed Reserve create a one trillion-dollar platinum coin and borrow against it. The US Treasury could mint a $1 trillion platinum coin under commemorative clauses and deposit it at the Federal Reserve, giving the US an extra $1 trillion in funds to cover existing debts and pay bills without raising or suspending the debt ceiling. This would be a “fascist” move according to Kiyosaki.
Clearly the markets didn’t think this was going to happen, with platinum closing around US$971/ounce last week (figure 2).
For those learned southern-Africans among the Stockhead faithful, I thought I would show you a copy of the one hundred trillion-dollar Zimbabwe banknote I purchase in Cape Town back in 2012 for around US$20 (lead image, above).
The devaluation of the currency, among other things, ultimately led to the collapse of the economy. I’m not sure if my North American readers would appreciate a comparison with an African economy, however it did happen in Germany back in the 1930s.
The real question is, could this happen in the US? Looking at the clowns running the Fed at the moment, anything is possible.
In other news gold took a hit mid-week based on comments of Powell, closing at US$1,760/oz up $13 for the week with silver closing at US$22.48/ounce up 15 cents, palladium dipped into the low US$1,700s/oz before closing at US$1,846/ounce down 2.5% for the week and US$500/oz over the last month.
Copper was off 2.5% closing at $4.13/lb (Chinese imports were down 4.5% MoM and 12.4% YoY in September) with Chinese continuing reserve sales of all base metal stocks amid serious domestic economic concerns (e.g., Evergrande), energy supply problems and skyrocketing prices.
While there are some near term economic headwinds for base metals (or hurricane winds if you take the view of Kiyosaki) the strong projected rise in EV sales (figure 4) is bullish longer term for battery metals.
Figure 4 suggests there has been a sharp rise in the share of the high nickel chemistry battery NCM 811 (nickel, cobalt, manganese in ratio of 8:1:1) battery, (7.9% in Jan-May 2020 to 12.3% in Jan-July 2021).
Another trend is the strong rise in the cheaper LFP batteries (lithium iron phosphate – containing no nickel or cobalt) (figure 5) increasing from 20.9% to 24.7% over Jan-July 2020 and 2021 respectively. This is mostly driven by China, and I question the stability of these batteries. Despite this, the Tesla Model 3, BYD Han and SAIC GM Wuling are all using LFP. Buyer beware!
Many commentators are calling for a near term softening of battery metals due to the rising cost pressures as set out in figure 6.
During the third quarter 2021, the average Chinese price of nickel sulphate increased 48% from Q1 2020, with cobalt sulphate prices up 67%, lithium carbonate prices rising 143% and lithium hydroxide prices up 128%.
Importantly, using a higher grade 1g/t Au cut-off, the JORC Resource comes in at 2.82Mt @ 2.82 g/t gold.
Metallurgical testwork as part of the Scoping Study returned 94-98% recoveries with potential, according to PDI, to substantially increase JORC resources along the 35km long Bankan structure with multiple targets remaining untested (figure 9).
The Stockhead faithful will no doubt being doing handstands as this chestnut was rolled out here around 10-11 cents back in early July this year.
If you are inclined to send a bottle of champagne for this tip then I would find a Perrier Jouet or Crystal acceptable. You could also include a box of Plasencia Alma Fuerte cigars if you are feeling overly generous. Just make sure gifts are under the soft dollar limit of $300 so compliance don’t need to get involved…
As we approach Armageddon and are suitably loaded up with short positions on the market, gold equities and gold bullion, I thought it would be appropriate to start to look for value on the small end of the gold market.
Apart from sporting a year-round tan and being a very capable Masters’ swimmer, Klaus Eckhof has also had a cracking run with African mining companies including Moto Gold Mines Limited (21Moz gold) that was taken out by Randgold in 2009.
So far I haven’t lost money with him yet, so I am going to roll out his latest gig in the jungle being African gold explorer Amani Gold Ltd (ASX:ANL).
While the stock went for a big run on Friday after raising $7 million at $0.001 (together with one for one free attaching options exercisable at $0.0015 on or before 15/1/2024) and with an EV of around $73 million (not including unquoted securities, including 2 billion Performance Rights) I think there is more to come.
ANL is also starting life with combined Inferred and Indicated JORC Resources at its Giro Gold Project (figure 11) of 132Mt @ 1.04g/t Au (table 2).
Giro covers 497km² of the highly prospective Kilo-Moto Belt in the DRC which also incorporates Randgold’s 17 million-ounce Kibali group of deposits situated within 35km of Giro. The Kibali Gold Project is currently producing in excess of 600,000oz gold per annum.
The tenement has seen both alluvial and primary mining by artisanal miners.
The recently completed placement will fund an infill diamond drill program at Kebigada to further define the Central Kebigada Ore Body.
Drilling will also target the Eastern Kebigada Ore Body which has seen limited drilling despite previous RC holes returning impressive results including GRRC204 with 89m @ 1.58g/t Au from 8m downhole.
The company is also looking to accelerate development/commercialisation options for the project including a desktop study in relation to the Kebigada Deposit as well as a consideration of potential business development and corporate opportunities. I think this stock would fit well in any doomsday prepper’s portfolio…
At RM Corporate Finance, Guy Le Page is involved in a range of corporate initiatives from mergers and acquisitions, initial public offerings to valuations, consulting, and corporate advisory roles.
He was head of research at Morgan Stockbroking Limited (Perth) prior to joining Tolhurst Noall as a Corporate Advisor in July 1998. Prior to entering the stockbroking industry, he spent 10 years as an exploration and mining geologist in Australia, Canada, and the United States. The views, information, or opinions expressed in the interview in this article are solely those of the interviewee and do not represent the views of Stockhead.
Stockhead has not provided, endorsed, or otherwise assumed responsibility for any financial product advice contained in this article.
Each day, we analyze emotions and sentiments from different sources and crunch them into one simple number: The Fear & Greed Index for Bitcoin and other large cryptocurrencies.
This post by Lorimer Wilson, Managing Editor of munKNEE.com is an edited ([ ]) and abridged (…) version of an article by Alternative.me for the sake of clarity and length to ensure a fast and easy read.
<img src=”https://alternative.me/crypto/fear-and-greed-index.png” alt=”Latest Crypto Fear & Greed Index” />
Why Measure Fear and Greed?
The crypto market behaviour is very emotional. People tend to get greedy when the market is rising which results in FOMO (Fear Of Missing Out). Also, people often sell their coins in irrational reaction of seeing red numbers. With our Fear and Greed Index, we try to save you from your own emotional overreactions. There are two simple assumptions:
Extreme fear can be a sign that investors are too worried. That could be a buying opportunity.
When Investors are getting too greedy, that means the market is due for a correction.
Therefore, we analyze the current sentiment of the Bitcoin market and crunch the numbers into a simple meter from 0 to 100. Zero means “Extreme Fear”, while 100 means “Extreme Greed”. See below for further information on our data sources.
We are gathering data from the five following sources. Each data point is valued the same as the day before in order to visualize a meaningful progress in sentiment change of the crypto market…
1. Volatility (25 %)
We’re measuring the current volatility and max. drawdowns of bitcoin and compare it with the corresponding average values of the last 30 days and 90 days. We argue that an unusual rise in volatility is a sign of a fearful market.
2. Market Momentum/Volume (25%)
Also, we’re measuring the current volume and market momentum (again in comparison with the last 30/90 day average values) and put those two values together. Generally, when we see high buying volumes in a positive market on a daily basis, we conclude that the market acts overly greedy / too bullish.
3. Social Media (15%)
While our reddit sentiment analysis is still not in the live index (we’re still experimenting some market-related key words in the text processing algorithm), our twitter analysis is running. There, we gather and count posts on various hashtags for each coin (publicly, we show only those for Bitcoin) and check how fast and how many interactions they receive in certain time frames). A unusual high interaction rate results in a grown public interest in the coin and in our eyes, corresponds to a greedy market behaviour.
4. Dominance (10%)
The dominance of a coin resembles the market cap share of the whole crypto market. Especially for Bitcoin, we think that a rise in Bitcoin dominance is caused by a fear of (and thus a reduction of) too speculative alt-coin investments, since Bitcoin is becoming more and more the safe haven of crypto. On the other side, when Bitcoin dominance shrinks, people are getting more greedy by investing in more risky alt-coins, dreaming of their chance in the next big bull run. By analyzing the dominance for a coin other than Bitcoin, you could argue the other way round, since more interest in an alt-coin may conclude a bullish/greedy behaviour for that specific coin.
5. Trends (10%)
We pull Google Trends data for various Bitcoin related search queries and crunch those numbers, especially the change of search volumes as well as recommended other currently popular searches. For example, if you check Google Trends for “Bitcoin”, you can’t get much information from the search volume. Currently, you can see that there is a +1,550% rise of the query “bitcoin price manipulation“ in the box of related search queries (as of 05/29/2018). This is clearly a sign of fear in the market, and we use that for our index.
Surveys (15%) currently paused
Together with strawpoll.com (disclaimer: we own this site, too), quite a large public polling platform, we’re conducting weekly crypto polls and ask people how they see the market. Usually, we’re seeing 2,000 – 3,000 votes on each poll, so we do get a picture of the sentiment of a group of crypto investors. We don’t give those results too much attention, but it was quite useful in the beginning of our studies. You can see some recent results here.
Editor’s Note: The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.
A futures-based exchange-traded funds based on Bitcoin called the ProShares Bitcoin Strategy ETF (BITO) started yesterday and I believe it will be a major factor in making the process to invest in Bitcoins considerably easier, safer, and more convenient. Here are 5 reasons why:
While our year-end price target for Bitcoin is $100,000, we believe that Bitcoin prices will soar much, much higher in the long run – like 5X higher. That’s right, we think Bitcoin is going to $500,000 and the rationale is simple.
Trading in bitcoin has become a very profitable way to generate income, and whether you’re just starting out, or have been at it for a while, there are some tips that can enhance your bitcoin trading strategy.
While there are risks, cryptocurrencies can reap huge rewards for those who make the right investment decisions. In this blog post, we discuss how to invest in cryptocurrency and what you need to know if you want to get involved!
Gold and Crypto are both expected to embark on their next bull run and, a disadvantage to owning one asset is often an advantage of owning the other. Therefore, we believe both deserve a place in your portfolio for at least insurance purposes.
It would be wise for bitcoin traders to use any kind of hedge that they can find and over the past few months, one such hedge has been, ironically, gold.
A Few Last Words:
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Pegasus Resources Inc. (TSXV:PEGA) continues to make its presence in the prolific Athabasca Basin uranium camp with the recently announced acquisition of three uranium properties at the northwest edge of the Basin. The 54,026 hectare properties comprising 13 mineral claims contain a cumulative total of 535,718 lbs of uranium, and significantly, includes a historic resource estimate of 202,200 tons at 0.119% U308 at an average width of 4.8 metres.
These new properties add to the previously announced Pine Channel uranium property which consists of six mineral claims covering 6,028 hectares and is located at the northern edge of the Athabasca basin, roughly 40 km west of the town of Stony Rapids. The Athabasca Basin in Northern Saskatchewan is host to several of the world’s largest and highest-grade uranium mines, including Cameco’s (TSX: CCO) McArthur River Mine and Cigar Lake Mine.
The Wollaston Northeast property is located in the 20A zone within the prolific Wollaston Domain, 45 kilometres northeast of the Eagle Point Uranium Mine. The property has at least eight known base metals showings and five previously documented uranium occurrences, and is considered highly prospective for basement hosted uranium mineralization.
Much of the recent renewed interest in uranium in the region is due to recent discoveries within the Wollaston Domain where the Eagle Point deposits are hosted within its basement rocks. In addition to the Eagle Point Mine, the area also hosts the historic Rabbit Lake Mine and Cameco/Orano Key Lake Mine, the world’s largest high-grade uranium mine.
The 12,397 hectare Bentley Lake Uranium Property consisting of three mineral claims, and is located 35 kilometres northeast of the edge of the Athabasca Basin, within a transition zone between the Wollaston and Mudjatic Domains. This trend is host to several major uranium deposits, including Cigar Lake, Roughrider, McArthur River and Midwest. It is located at the transition zone between the Wollaston and Mudjatik geological domains.
The third property is located approximately 40 kilometres northeast of the edge of the Athabasca Basin and within the Charlebois-Higginson Lake Uranium District. The 6,908 hectare Mozzie Lake Uranium Property consists of three mineral claims and has a historical resource estimate of 204,200 tons at 0.119% U308, with an average width of 4.8 metres, and containing 535,718 lbs of uranium. What makes the Mozzie Lake Property particularly compelling, aside from the historical resource estimate that Pegasus’s exploration efforts may be able to increase significantly, are the pegmatite deposits of the Charlebois-Higginson Lake Uranium District.
Since being initially explored from the 1940’s through to the 1960’s, there has been virtually no exploration on the property. Previous work in the region, as well as on the Pinkham Lake property at Mozzie Lake, indicated that the pegmatite deposits may also host mineralization which contains rare-earth-element bearing minerals. Rare earth minerals are in high demand today due to the needs of the various technology, consumer electronics, and electric vehicle manufacturing industries. PEGA plans to examine the property’s rare earth potential as part of its uranium exploration program at Mozzie Lake.
Pegasus will next review the historical data on the properties to determine an exploration strategy and work programs, and will provide shareholders with updates in the near future. The company’s recent announcements of the uranium assets have certainly rekindled interest in PEGA shares, and its market capitalization has increased by almost 50% to $7.98 million in recent weeks, signifying that investors are enthused about the direction management has taken.
PEGA last traded at $0.095 on the TSX Venture exchange.
FULL DISCLOSURE: Pegasus Resources is a client of Canacom Group, the parent company of The Deep Dive. The author has been compensated to cover Pegasus Resources on The Deep Dive, with The Deep Dive having full editorial control. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security.
The Ethical Investor is Stockhead’s weekly look at ESG moves on the ASX. This week’s special guest is JP Equity Partners’ director and partner, Nic Brownbill.
The world is in the grip of an ongoing global power crisis that has seen energy prices soaring by thousands of percentage points.
From China to Europe and now India, the cost of energy is surging drastically. The price of natural gas has even quadrupled in some parts of the world.
But economists are now warning this might be just the first of many power crunches the world will see as we transition into the new economy.
According to a research paper by CommBank’s analyst Vivek Dhar, there are two main root causes that led to the crisis — a strong demand recovery from the pandemic, and an acute shortage of two key power-producing fuels – natural gas and thermal coal.
As economies reopen, there is a sudden pent up demand from consumers which meant that factories were forced to switch on their production capacity at short notice. This was exacerbated by a colder than usual European autumn, as the continent potentially faces a more-freezing-than-usual winter season.
In China, the crisis mainly stemmed from an undersupply in local production of coals, according to Dhar, adding that coal supply has been hampered in China because of the government’s own environmental protection regulations.
So what can we learn from all this?
Dhar reckons that we are transitioning into the new economy too fast, too soon.
“What the recent energy crisis has shown is that the energy transition needs to be planned carefully,” Dhar wrote.
“This will mean significant investment in renewable generation, batteries, electricity grids and hydrogen.”
But he thinks the roll-out of a decarbonised grid and role of gas need to be clearly defined too.
“Under-investing in gas infrastructure relative to its role in coming years will only serve to make Europe’s energy market more vulnerable to prolonged gas shortages, and increase dependence on Russia.”
Like Europe, China’s decarbonisation ambition will need to be planned as well, Dhar said.
“If coal mines and coal power plants are closed before a renewable replacement is in place, power shortages in China could be an ongoing concern.”
What’s happening in Australia
Australians have chosen climate change as the top ESG priority, according to the latest survey conducted by global ESG consultant, SEC Newgate.
And more than half of the 1,000 Aussies surveyed said they were happy with the direction the government is taking on the environment.
These results should provide food for thought for PM Scott Morrison, who’s currently caught in a political wrangle with the Nationals in setting our 2050 climate goals.
The PM has told Liberal colleagues that he wants to bring a binding 2050 net zero commitment to the COP26 Summit in Glasgow next month, without having to upgrade Australia’s 2030 commitments.
Nationals Leader and also Deputy PM, Barnaby Joyce, said however that he was willing to back the 2050 targets only if funding for regional producers and farmers were made as part of the deal.
Special guest JP Equities’ Nic Brownbill shares his views and ESG stocks
Nic Brownbill, a partner at JP Equity, told Stockhead that decarbonisation is a mega global investment opportunity, one that JP Equity wants to be all in on.
How big is the potential for ESG investing?
“We see the whole decarbonisation theme as the next mega global investment opportunity. An estimated $41 trillion is required to decarbonise the planet. It’s going to be a bigger opportunity than the crypto market, because unlike cryptos, the carbon market is going to be mandated by governments, major asset managers and pension funds.”
Which segment of the ESG market do you see outperforming?
“Some companies will fall short in trying to make their carbon targets, so the balance will need to be met with carbon credits. I think carbon emissions will eventually be metricated, and the carbon offset market is going to be a way for major companies to offset their emissions.”
Would that investment opportunity catch on in Australia?
“I believe the Australian market hasn’t really caught on to the opportunity of this yet. But I think something will really start to emerge from the COP26 conference in November, where you’ll see a sustained mega theme starting to unfold in this country.
“I think we will start to see a complete emergence of Australian companies in the carbon space over the next few months and beyond.”
What are the ASX stocks that JP Equity likes in the carbon credit space?
One ASX stock that we’ve been watching very closely is Fertoz (ASX:FTZ). They’re a leading North American fertiliser manufacturer that produces a unique low-emission rock phosphate product that increases crop yield by 15%.
“Importantly, it can generate significantly lower CO2 emissions in manufacturing compared with other commercial fertilisers.
“This presents a really significant opportunity because agriculture as a sector accounts for 24% of all human generated greenhouse emissions. Fertoz is one of the first movers in the carbon credit market, and since May this year has been issuing carbon offset credit certificates.
“It’s not a matter of if, but when disclosure of carbon emissions will become metricated. And as a result, Fertoz is getting some strong enquiries from other companies looking to offset their footprints by buying carbon credits.”
Any other ASX stocks you like in the ESG space?
“We’re also bullish on Mpower (ASX:MPR). The company is Australia’s leading specialist in renewable energy, battery storage and micro-grid business. It has a focus on five megawatt solar farms, and is in the process of creating an initial portfolio of 20 sites across Australia in the coming years.
“That gives them an aggregate capacity of around 100 megawatts, and an estimated value of more than $150 million. It’s now down to what the team can deliver in some of those projects to build up the portfolio.”
The company has appointed global consulting firm Deloitte to ensure a robust ESG program at its Maricunga project in Chile.
Deloitte has been tasked to imbed sustainable protocols in LPI’s lithium extraction operations, and to establish ambitious standards for LPI to become a carbon neutral producer, while keeping high standards on the social aspects.