What happened to the most talked about commodities in August?
We are knee deep in a metals super cycle, the experts say. That means there are far more winners than losers.
Dominant this month was lithium, which continues to go gangbusters:
Lithium carbonate up 131% in 2021
— Simon Moores (@sdmoores) September 1, 2021
As did lithium equities, with a remarkable 22 of the top 50 stocks enjoying exposure to the battery metal.
Premium Low Vol CFR China – a benchmark for Chinese coking coal imports — hit an all-time high of $US410/t. That’s a 248% increase over the past year. Thermal coal prices are doing even better.
Iron ore was one of the month’s only losers. After a tremendous run into the high $US220/t’s, the benchmark price fell to earth with a thud, and now trades sub $US150/t.
What were the top 50 resources winners for July searching for?
Here are the top 50 ASX resources stocks for the month of August>>>
Scroll or swipe to reveal table. Click headings to sort. Best viewed on a laptop
|CODE||COMPANY||1MONTH RETURN %||SHARE PRICE||MARKET CAP||LOOKING FOR|
|KNI||Kuniko||1260||2.72||$ 144,000,000.00||Copper, Nickel, Cobalt|
|RHI||Red Hill Iron||268||4.05||$ 239,312,814.51||Iron Ore|
|CHR||Charger Metals||174||0.63||$ 17,120,000.54||Lithium, Nickel, Copper, PGE|
|PAM||Pan Asia Metals||136||0.33||$ 8,048,796.60||Lithium, Tungsten|
|ORM||Orion Metals||100||0.034||$ 18,533,313.06||Shell Company|
|GLA||Gladiator Resources||93||0.029||$ 11,941,962.41||Gold, Uranium|
|SYA||Sayona Mining||83||0.15||$ 978,106,466.40||Gold, Lithium|
|BCB||Bowen Coking Coal||81||0.15||$ 163,644,294.87||Coal|
|AOA||Ausmon Resorces||75||0.007||$ 4,974,615.40||Copper, Cobalt, Lead, Zinc|
|EQR||Eq Resources||65||0.051||$ 66,981,086.18||Tungsten|
|NXM||Nexus Minerals||63||0.145||$ 36,622,750.65||Gold, Copper|
|CNJ||Conico||58||0.09||$ 88,887,602.98||Nickel, Copper, Gold|
|JRL||Jindalee Resources||55||3.8||$ 199,196,793.18||Lithium|
|HWK||Hawkstone Mng||54||0.043||$ 70,366,704.98||Gold, Lithium|
|FYI||FYI Resources||54||0.86||$ 299,424,126.54||HPA|
|MRZ||Mont Royal Resources||50||0.33||$ 12,499,315.95||Gold, Silver, Copper, Nickel|
|BMM||Balkan Mining and Minerals||50||0.63||$ 20,800,000.00||Lithium|
|ADV||Ardiden||50||0.012||$ 27,941,604.81||Gold, Lithium|
|EUR||European Lithium||47||0.087||$ 86,829,255.13||Lithium|
|AGY||Argosy Minerals||46||0.175||$ 200,043,472.64||Lithium|
|AAJ||Aruma Resources||45||0.08||$ 7,629,186.74||Gold, Lithium|
|VUL||Vulcan Energy||45||14.25||$ 1,495,881,255.00||Lithium|
|FFX||Firefinch||45||0.58||$ 493,020,625.86||Gold, Lithium|
|AZS||Azure Minerals||44||0.36||$ 112,871,038.17||Nickel, Copper|
|VML||Vital Metals||39||0.068||$ 287,418,332.80||Rare Earths|
|ARV||Artemis Resources||38||0.08||$ 97,889,816.78||Gold, Nickel, Copper, Cobalt, PGE|
|TIG||Tigers Realm Coal||38||0.011||$ 156,800,428.42||Coal|
|AR3||Australian Rare Earths||37||1.05||$ 48,589,909.80||Rare Earths|
|KTA||Krakatoa Resources||37||0.071||$ 20,040,274.36||Gold, Copper, Rare Earths|
|GTE||Great Western Exp.||36||0.225||$ 29,963,585.74||Gold, Copper, Molybdenum, Potash|
|CAD||Caeneus Minerals||36||0.015||$ 64,299,076.11||Gold, Lithium|
|ASM||Australian Strategic Materials||35||11.68||$ 1,534,566,066.00||Rare Earths, Zirconium, Niobium, Hafnium|
|BRB||Breaker Resources||34||0.215||$ 65,168,185.80||Gold, Lithium|
|MLS||Metals Australia||33||0.002||$ 8,454,376.09||Graphite, Lithium, Nickel, Gold, Copper|
|HAW||Hawthorn Resources||33||0.06||$ 16,675,780.65||Gold|
|HYM||Hyperion Metals||33||1.425||$ 154,365,902.90||Titanium, Rare Earths|
|AVZ||AVZ Minerals||32||0.245||$ 707,997,989.60||Lithium, Tin|
|ASN||Anson Resources||32||0.094||$ 86,271,133.63||Lithium, Nickel, Copper, PGE|
|ESS||Essential Metals||32||0.185||$ 42,771,595.32||Lithium, Nickel, Gold|
|GL1||Global Lithium||32||0.37||$ 33,810,840.48||Lithium, Gold|
|AWV||Anova Metals||32||0.025||$ 35,827,355.00||Gold|
|LKE||Lake Resources||31||0.61||$ 685,340,907.50||Lithium|
|MNB||Minbos Resources||31||0.11||$ 53,363,783.16||Phosphate, Green Hydrogen|
|OKJ||Oakajee Corp||30||0.065||$ 5,761,099.89||Nickel, Copper, Gold|
|ANX||Anax Metals||30||0.1||$ 35,018,389.00||Copper, Zinc, Lead, Gold, PGE|
|BEM||Blackearth Minerals||29||0.135||$ 27,174,408.38||Graphite|
LITHIUM GETS LOOSE
22 stocks in our top 50 had lithium exposure, up from 9 in July.
What happened last month to kick investor FOMO up a gear?
Miner Pilbara Minerals’ (ASX:PLS) first auction of spodumene — a lithium precursor — went off at an amazing $US1,250t. That’s well above prevailing market price, and streets ahead of the ~$US380/t spod producers were accepting last year.
There was a rush to the doors for lithium stock exposure.
Leading the pack was newly listed lithium and base metals play Charger Metals (ASX:CHR) (+174%), which is currently mapping and sampling at its ‘Bynoe’ project in the Northern Territory.
Pan Asia Metals (ASX:PAM) announced the acquisition of a geothermal lithium project — sending the share price into the stratosphere.
It wasn’t just lithium-focused stocks that benefitted — punters also uncovered a bunch of explorers hiding exposure in the recesses of their respective portfolios – like gold-focussed Aruma Resources (ASX:AAJ), Caeneus Minerals (ASX:CAD) and Breaker Resources (ASX:BRB).
MEMESTONKS GET PUMPED?
In late August, Scandinavian base metals explorer Kuniko (ASX:KNI) stormed onto the ASX boards with a 325% first day gain.
The ‘zero carbon’ Vulcan Energy (ASX:VUL) spin-off then went on to notch up a remarkable 1,260% gain to month’s end.
The stock subsequently addressed its use of a paid investor relations services provider and knowledge of various “meme stock promoters” in response to an ASX query, but punters are still waiting on the ‘dump’ part on this possible pump and dump.
Is it fair value? Probably not. Is it fun to watch? Yes … yes it is.
The post Who Made the Gains? Here are August’s top small cap miners and explorers appeared first on Stockhead.asx gold lithium cobalt rare earths nickel copper zinc iron tungsten molybdenum titanium hafnium niobium
Your cash will lose at least 5% of its purchasing power in the next year
Earlier this week, Fed Chair Jerome Powell announced that the real yield on dollar cash and cash equivalents is likely to be -5% or less over the next…
Earlier this week, Fed Chair Jerome Powell announced that the real yield on dollar cash and cash equivalents is likely to be -5% or less over the next 12 months. Yes, your cash balances will lose at least 5% of their purchasing power over the next year, and that's virtually guaranteed. So what are you—and others—going to do about it?
Assumptions: This forecast of mine optimistically assumes that 1) the first Fed rate hike of 25 bps comes, as the market now expects, about a year from now, and 2) the rate of inflation slows over the next 12 months to 5% from its year-to-date rate of 5.9%. Personally, I think inflation next year likely will be higher, if only because of the delayed effect of soaring home prices on Owner's Equivalent Rent (about one-third of the CPI), the recent end of the eviction moratorium on rents, and the continued, unprecedented expansion of the M2 money supply.
I'm a supply-sider, and that means I believe in the power of incentives. Tax something less and you will get more of it. Tax something more and you will get less of it. Erode the value of the dollar at a 5% annual rate and people will almost certainly want to hold fewer dollars than they do today.
I'm also a monetarist, and that means I believe that if the supply of dollars (e.g., M2) increases by more than the demand for dollars, higher inflation will be the result. We've already seen this play out over the past year: the M2 money supply has grown by more than 25% (by far an all-time record) and inflation has accelerated from less than 2% to 6-8%. Massive fiscal deficits have played an important role in this, but so has an accommodative Fed. Between the Fed and the banking system, 3 to 4 trillion dollars of extra cash were created over the past 18 months. At first that was necessary to supply the huge demand for cash the followed in the wake of the Covid shutdowns. But now that things are returning to normal, people don't need or want that much cash. Yet the Fed continues to expand its balance sheet, and they won't finish "tapering" their purchases of notes and bonds until the middle of next year. That means that there will be trillions of dollars of cash sitting in retail bank accounts (checking, demand deposits and savings accounts) that people will be trying to unload.
If we're lucky, the inept and feckless Biden administration will be unable to pass its $1.5 trillion infrastructure and $3.5 trillion reconciliation bills in the next several weeks. This will lessen the pressure on the Fed to remain accommodative, but it's not clear at all whether it will encourage the Fed to reverse course before we have a huge inflation problem on our hands. Non-supply-siders (like Powell) view an additional $5 trillion of deficit-financed spending as an unalloyed stimulus for the economy. Supply-siders view it as a virtually guaranteed way to increase government control over the economy and thereby destroy growth incentives and productivity.
Amidst all this potential gloom, there are some very encouraging signs, believe it or not. Chief among them: household net worth has soared to a new high in nominal, real, and per capita terms. Also, believe it or not, the soaring federal debt has not outpaced the rise in the wealth of the private sector. See the following charts for more details:
Commodities and Cryptos: Oil’s path higher, Gold turns positive, China’s Bitcoin blow
Oil Crude prices continue to climb higher as both short-term supply and demand fundamentals suggest the oil market will remain tight throughout the winter. …
Crude prices continue to climb higher as both short-term supply and demand fundamentals suggest the oil market will remain tight throughout the winter. The crude demand outlook is turning very upbeat as some scientist’s models predict a steady decline in COVID cases through March. Holiday bookings will continue to pick up, supporting jet fuel demand and a trucking demand crisis will likely mean diesel demand will remain very strong.
A cherry on top for the bullish outlook is that low natural gas inventories and a cold winter for the northern hemisphere could mean added demand for crude as an alternative energy source. Today’s rally in crude prices is impressive as it has been a steady climb higher this week, alongside a strengthening dollar that normally dampens appeal for commodities. Oil prices have one direction to go for the remainder of the year and that is higher.
Before the New York open, WTI crude softened after Iranian Foreign Minister Hossein Amirabdollahian said Iran nuclear deal talks will resume soon. Expectations for sanction relief for Iran have diminished since Iran’s inauguration day. Negotiations will be a long drawn-out process that will likely require compliance before the US gives any sanction relief. Extra Iranian barrels of crude seem unlikely to be a 2021 story.
Gold prices turned positive after Evergrande’s woes extended beyond China. US Evergrande investors reportedly have not yet received interest payments and the China Evergrande New Energy Vehicle Group Ltd has a serious shortage of funds. It looks like China won’t save Evergrande but will try to contain any systemic risks, which should lead to some safe-haven flows for bullion.
Gold has been battling against a stronger dollar that stemmed from surging Treasury yields post-Fed. Gold is in a very tough spot and volatility will remain elevated with the risks remaining to the downside. The US growth story will continue to improve if COVID modelers are right about a steady decline in COVID cases through March. If Evergrande’s fallout is contained over the weekend, gold could be vulnerable for a test of the $1700 level.
Bitcoin was dealt a major blow after China’s central bank said all cryptocurrency transactions are illegal and must be banned. Bitcoin initially fell over 5% and the other top coins dropped around 10%. Overseas exchanges that offer Chinese residents services are illegal, also taking aim at Chinese nationals who work at those exchanges are at risk of an investigation. Bitcoin, Ethereum, and Tether were specifically named as cryptos that can’t circulate in China.
Beijing withheld banning possession of cryptocurrencies, which would have dealt a massive blow to the entire crypto space. A banning of possession of cryptos probably would have sent everything crypto 20% lower. If you are a Chinese crypto holder, you might be deciding now is the time to cash out. Three years ago, crypto was heavily centralized in China, with over two-thirds of the mining happening there. If Chinese crypto holders fear a ‘possession ban’ is looming, a tremendous amount of selling from old wallets may occur.
Bitcoin remains extremely vulnerable on the break of the $38,000 level, which could trigger momentum selling to the $35,000 level.aim gold
7 Materials Stocks to Buy as Investors Look Forward to 2022
While materials stocks occupy the undesirable quality of competing for the title of most boring investment category, Wall Street might very well apply…
While materials stocks occupy the undesirable quality of competing for the title of most boring investment category, Wall Street might very well apply a premium for dull holdings. For instance, while the S&P 500 index has been a solid performer — up 18% on a year-to-date (YTD) basis — over the trailing month, it’s down just under 1%.
Concerns about domestic economic stability, along with rumblings overseas has investors spooked. Not surprisingly, many folks are deciding enough is enough, taking their money out of risky ventures. While the U.S. market isn’t exactly a sterling opportunity, the reality is that over the long term — as legendary investor Warren Buffett implied — America represents a solid place to grow your wealth. And that sets up an intriguing scenario for materials stocks.
As you know, one of the reasons for President Joe Biden’s election victory last year was his promise to “build back better.” What that slogan translated to was a multi-trillion-dollar infrastructure bill, an initiative that if passed would augur well for materials stocks. Of course, fiscally conservative Republicans and moderate Democrats aren’t exactly thrilled at the scope of the proposal. Per the Washington Post, Biden is attempting to broker a truce within his own party ranks.
Given the acrimony — and sometimes sheer chaos — of the Washington machinery, it’s not entirely clear what will come of the infrastructure bill. But in terms of the viability of materials stocks, prospective investors might not need to worry so much about domestic politics. As it turns out, the situation in China — particularly the liquidity crisis of major property developer China Evergrande (OTCMKTS:EGRNF) — is much worse.
Therefore, a combination of faith in the American political process and cynicism that not many stable opportunities exist abroad casts a favorable light on boring but reliable companies dedicated to rebuilding from the novel coronavirus disaster.
Volatility-weary investors may want to consider these materials stocks:
- International Paper (NYSE:IP)
- Celanese (NYSE:CE)
- LyondellBasell (NYSE:LYB)
- DuPont (NYSE:DD)
- Nucor (NYSE:NUE)
- Southern Copper (NYSE:SCCO)
- Olin Corporation (NYSE:OLN)
Just to be clear, boring investments don’t necessarily equate to insulation from red ink. As U.S. Treasury Secretary Janet Yellen reminded us in an op-ed for the Wall Street Journal, we’re not exactly out of the woods either — far from it. Thus, it’s best to approach these materials stocks with the same due diligence as you would any other business sector.
Materials Stocks to Buy: International Paper (IP)Source: Mark ONCE / Shutterstock.com
At first, you might be forgiven for rolling your eyes at International Paper. While materials stocks never registered highly on the excitement scale, International Paper also appears to be irrelevant. With so much emphasis placed on going green — and therefore digital — there doesn’t seem to be much room for IP to grow. The Covid-19 crisis has also placed importance on contactless transactions.
Nevertheless, growing is exactly what it’s doing right now. Certainly, 2020 was a rough year for International Paper, with its revenue down 8% from 2019’s tally. However, in the trailing-12-month period, the company is on course to generate $21.3 billion, up nearly 4% from 2020’s result. That’s not bad for a seemingly anachronistic investment.
In reality, materials stocks form the physical backbone of our economy, and International Paper is no different. True, we may be attempting to reduce our dependency on paper, but thanks to the mercurial rise of e-commerce during the lockdowns, packaging demands have accelerated. Additionally, IP is directly linked to seemingly mundane but vital goods like baby diapers and personal hygiene products.
Celanese (CE)Source: sfam_photo / Shutterstock.com
One of the peculiar dynamics of materials stocks is that while the segment as an investing opportunity doesn’t always bring the pizzazz, the underlying products and services are vital to everyday living. Take Celanese as an example. A global chemical and specialty materials firm, it’s not exactly a household name. However, it’s no hyperbole to suggest that Celanese represents the difference between life and death for its innovations’ ultimate end-users.
Among the many solutions the materials company provides, it has a robust healthcare and life sciences business. From drug delivery methods and devices to surgical and medical consumable solutions (i.e., tubing, respiratory equipment, dental products), it’s very likely that we’ve all come in contact with the Celanese brand.
If that wasn’t enough to pique your interest, the company also represents a vital cog in the 5G rollout — that’s right, it’s not just telecom shares that you should consider but also materials stocks! In this case, Celanese lends its hand through expertise in liquid crystal polymer solutions and other high-performance thermoplastics.
Materials Stocks to Buy: LyondellBasell (LYB)Source: Flagmania / Shutterstock.com
For those who are looking for value in their materials stocks, you might want to check out LyondellBasell. Based in the Netherlands, LyondellBasell is one of the world’s largest plastics, chemicals and refining companies. From high-level industrial applications to the most mundane activities, LYB features “background” relevance across the board.
For instance, a major component of LyondellBasell’s everyday solutions is in food packaging. According to Grand View Research, the global ready-made meals market reached a valuation of $159.15 billion in 2019, with experts predicting that it will expand at a compound annual growth rate of 5.5% from 2020 to 2027. That translates to global revenue of $244.3 billion by the end of the forecasted period.
Why is this important for LYB stock? The underlying company recognizes that consumers are looking for “the quick and easy solution” in their packaged food products, an attribute that LyondellBasell specializes in.
Best of all, LyondellBasell is the world’s largest licensor of polyolefin technologies, which have myriad applications in industries ranging from medical, filtration and transportation sectors, among others. Should the U.S. and other nations spark a build out, LYB could benefit handsomely.
DuPont (DD)Source: ricochet64 / Shutterstock.com
One of the world’s premiere materials stocks, DuPont is synonymous with everyday products and innovations that we take for granted. From home goods to military applications, if you want maximum coverage in this sector with one name, DD stock would be it.
What’s particularly appealing about DuPont at this juncture is that it could be one of the most viable value plays among materials stocks. Similar to LYB and CE above, DuPont shares have printed some red ink recently. Over the trailing month, DD found itself staring at a 7% loss. And on a YTD basis, it’s down over 3%.
However, that could be due for a change because of our rapidly changing world. For instance, DuPont produces Nomex, a heat-and-flame resistant material that’s vital for protecting firefighters. As you know, climate change has contributed to record-breaking wildfires, which cynically drives demand for Nomex products.
As well, DuPont is famous for manufacturing Kevlar, which in addition to being vital for infrastructure is best known for undergirding military body armor. With our national security profile increasingly shaky, DD stock offers multi-tiered relevance.
Materials Stocks to Buy: Nucor (NUE)Source: Shutterstock
If you believe that President Biden can resolve conflicts brewing between high-profile Democrats and succeed in pushing through the infrastructure bill, Nucor will be one of the top materials stocks to consider. Billed as the “safest, highest quality, lowest cost, most productive and most profitable steel and steel products company in the world,” Nucor has a track record that few can assail.
At the same time, it’s appropriate to consider the risks, which are rather sizable. Obviously, if Washington acrimony succeeds in scuttling the infrastructure bill, NUE stock will look far less attractive than it does now. In addition, the underlying company is exposed to global growth dynamics; hence NUE’s sharp loss on Sept. 20 following China Evergrande’s default worries.
As a result of the nearer-term threats, NUE has been discounted sharply in recent days. Over the trailing month, it’s down 15%. However, if the government approves some level of infrastructure spending, NUE could benefit.
Also, Nucor provides steel solutions for the automotive industry, which has been a disaster due to the semiconductor supply crisis. Nevertheless, once that problem fades away, Nucor could swing higher on a demand ramp up.
Southern Copper (SCCO)Source: Coldmoon Photoproject/Shutterstock.com
Back in May of this year, some commodity analysts suggested that investors take a contrarian view on the copper mining space, arguing that it was undervalued compared to the target commodity. Further, they anticipated higher prices in the fourth quarter of 2021, suggesting that key copper fundamentals — including dollar weakness and a post-Covid-19 recovery trek — should bode well for the industrial metal.
Despite some key changes to the global economic forecast since then till now, many factors remain positive for copper. By logical deduction, Southern Copper could be one of the top materials stocks to buy once we work out of the present funk.
Moving forward, should the Biden administration succeed in its infrastructural buildout initiatives, Southern Copper stands poised to deliver big contrarian gains as the underlying commodity is critical to electric vehicle production. If the White House is serious about getting the U.S. economy to hit net-zero emissions by 2050, EVs will play a critical role.
Further, copper being a highly efficient conductor of electricity is also crucial for renewable energy systems. Thus, SCCO is one of the must-watch names among materials stocks.
Materials Stocks to Buy: Olin Corporation (OLN)Source: IgorGolovniov / Shutterstock.com
As one of the global leaders in chemical production — particularly chlor alkali products and epoxy — Olin Corporation enjoys relevant demand sources from myriad industries. As such, OLN will be among the materials stocks to gain an advantage from the infrastructure bill should it pass.
However, I can understand that some people might not be interested in buying shares that have anything to do with Biden’s policies. Following the Afghanistan debacle, the president doesn’t exactly have the confidence of the nation. But if you do happen to have hard feelings about the current administration, then OLN stock could be a cathartic wager.
In addition to chemical products, Olin owns the Winchester brand of ammunition. Due to the record-breaking surge in firearms sales, ammo prices have likewise shot through the roof due to dwindling supplies. Moreover, the ridiculous prices continue to be a challenge for the outdoorsman types.
Some reports indicate that the ammo shortage could last between 12 to 24 months. Moreover, threats of gun control policies could spike up demand for firearms and related products. Thus, the Biden administration is a perfect catalyst for OLN stock.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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