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Michael Ballanger’s Top Mining Picks for 2022

Source: Michael Ballanger   01/12/2022

Michael Ballanger’s Quick Take for 2022

Northisle Copper & Gold Inc. moves into second place in…

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This article was originally published by The Gold Report

Source: Michael Ballanger   01/12/2022

Michael Ballanger’s Quick Take for 2022

  • Northisle Copper & Gold Inc. moves into second place in the rankings in portfolio behind Getchell.
  • The junior developer/explorers are being reduced in size to make room for the UVXY hedge, but it does not mean I am any less bullish. Those with excess cash need not sell anything but simply add the hedge to the portfolio.
  • Vendetta Mining Corp. (VTT:TSXV; VDTAF:US) is hereby deleted from the portfolio. There are simply too many shares outstanding for any traction to be gained and Pegmont is largely a lead deposit with zinc/silver credits. SELL.
  • Full Metal Minerals Inc. (FMM:TSXV; FLMTF:US) is ahead over 100% from the CAD $.08 private placement price. I am giving it until mid-January to secure a project of merit, after which I will reassess. Without the project, FMM is a shell worth perhaps CA$.05 a share despite having Aftermath’s Michael Williams at the helm.

As part of his annual forecast, sector expert Michael Ballanger is giving his top picks for 2022. 

In another piece, Ballanger says at the start of the year he finds himself at an investing crossroads where the four roads are defined as cash to the south, gold to the north, growth stocks to the east and fixed income to the west. Standing in the middle of the intersection and pondering one’s choices creates an epic quandary, he says.

“Constructing a portfolio in today’s ‘managed’ economy (through ‘managed’ markets) has been a challenge,” he wrote. “The forces of a Fed-induced deflation, brought on by tapering first and tightening second, discourages stocks and gold while favoring cash and fixed income. The emergence of high inflation and shocks to the supply chain (in the event of policy failure) discourages cash and fixed income while favoring stocks and gold. Since the Fed has clearly signaled inflation as the new enemy (as opposed to maximum full employment and stocks), my inclination is to opt for capital preservation over capital appreciation. The problem remains, however, and with inflation running ‘hot,’ capital preserved gets eaten alive by currency debasement, leaving the cautious investor penalized for that very caution.”

Michael Ballanger on His GGMA 2022 Model Portfolio

 

The major change to the model portfolio is reducing the size of all positions to create a 15% allocation to the Pro Shares Ultra VIX S/T Futures ETF. This will largely insulate the GGMA 2022 Portfolio from experiencing the type of drawdown which occurred in March 2020. If one assumes that a similar event occurs again in March 2022 and the gold miners and the UVXY perform in the same manner, one could theoretically experience an 87% drawdown in the junior miners while at the same time seeing a 1,240% advance in the “vol” trade. The portfolio would see $85,000 in junior miners shrink to $11,050 while the $15,000 hedge (UVXY) grows to $185,800. Now, these might be exaggerated numbers but you all get the drift.

I tried to put on the UVXY back in September and was stopped out at a 15% loss but market conditions are now as precarious as I have ever seen (and I went through the October 1987 crash, the 2001 tech wreck, and the 2008 subprime meltdown). Not once during those corrections did the Fed ever go “hostile;” in fact, they were standing there with liquidity safety nets every time the market let out a peep.

GGMA 2022 Trading Account

 

No immediate changes are pending. However, I will be adding UVXY to the trading account from the current $83,341 credit balance by mid-January. I will also be adding to Northisle Copper & Gold Inc. from cash as I see tremendous upside from the CA$0.42 level in 2022. Finally, I need to establish exposure to uranium in the trading account so Western Uranium & Vanadium Corp. is being acquired by way of the recent unit offering at CA$1.60 per unit (that includes the full three-year warrant at $2.50).

The GDXJ May $43 calls are currently underwater, but I am expecting to see a seasonal rally in the juniors right into May with the caveat being that I must keep an eye on the Fed and the U.S. dollar in case the tapering/tightening starts a mass migration to the greenback. No matter what the gurus tell you, a strong dollar is not good for precious metals.

The List

 

Getchell Gold Corp. (GTCH:CSE; GGLDF:OTCQB); (CAD $.58 / USD $.4673): Having owned this deal since May of 2017, it has been a long journey filled with more than a few bumps in the road (including fouled-up listing procedures in early 2019, drill bit disappointment at Hot Springs Peaks, and more recently delays due to COVID, local staffing issues, and now a hacked assay lab) but what keeps this name at the front of the pack is the superb job being carried out by geologist/President Mike Sieb and Vice President of Exploration Scott Frostad in the interpretation and exploration of the rapidly-advancing Fondaway Canyon project in Nevada.

I am issuing a follow-up Special Situations report later this month after I get a look at the results from drill hole FCG2021-11, which should be spectacular but which have been delayed by a “hacked” assay lab. I fully expect that all of the results from holes 11 to 17 will be good holes but it is not the assay results that are the issue here. Valuation (or undervaluation) is a BIG issue, and it must change.

If I use the fully-diluted capital of the company at $110 million, the market capitalization is $51.4 million and when I divide that number by 1,069,000 ounces which represents the pre-2017 “historic” resource (before Getchell even drilled a single hole), it puts a value-per-ounce of $48 on the entire company based solely on Fondaway.

If this were the 1990s, analysts covering the junior miners would take one glance at that value-per-ounce number and be pounding the table because of the history of mergers in Nevada and the value-per-ounce commanded by the seller. Low-grade, open-pit (Carlin-type) resources usually go out at around $100 per ounce while high-grade get closer to $200 per ounce. Fondaway Canyon’s Central Zone is higher grade than most Nevada gold resources. In fact, the head grade mined by Barrick Gold in Nevada averages .87 g/t which is a fraction of the grade being found in not only the known portions of the deposit but also in two new high-grade zones that are NOT included in the “historic” resource number.

Click to enlarge.

Thus far, the market refuses to believe that there is a much larger and potentially impactive story developing despite Sieb and Frostad’s brilliant interpretation and that is no fault of theirs but it is not simply to be sloughed off as being due to the “crappy junior mining market.” As an analyst and former corporate finance player, I refuse to accept this deeply discounted valuation for the asset and have warned management that they need to engage an independent engineering firm to upgrade the existing resource which entails the inclusion of 2017 drilling done by the former owner (Canarc Resources) and all of the Getchell drilling in 2020 and 2021 to date.

The old paradigm of the 1990s where analysts and investors did not require “spoon- feeding” has been replaced by one in which all one needs is a “story” and “an uptrend” in order to constitute “due diligence.” For Getchell shareholders, that is not an acceptable excuse for such dramatic underperformance relative to others whose results do not hold a candle to Getchell’s but whose share price has left it in the proverbial dust. That the stock closed at a year-to-date + 70.59% ROI versus negative numbers for the sector is a feather in their hat but in terms of being rewarded for such outstanding drill results, it is woefully inadequate.

Having gotten that off my chest, GTCH remains my largest holding and I will add on weakness.

BUY – Target: $5.00 in 2022

(Warning: I had a $5.00 target for 2021 as well.)

Northisle Copper and Gold Inc. (NCX:TSX; NTCPF:OTCPK); (CA$0.42/$.3361): Initially recommended in May 2021 at CA$0.25 ($0.1975), this name falls beautifully into the perfect storm of electrification and inflation protection. The North Island Project has scale and grade and proximity to infrastructure seldom present in the current environment for junior developers.

I like every aspect of this company: solid management with capital markets expertise and relationships, a strong technical team experienced in mine building and operations, a great jurisdiction (B.C.), and most importantly, the presence and involvement of strategic investor Michael Gentile, whose track record and market savvy are enviable.

Click to enlarge.

In a world moving rapidly and forcefully toward total electrification, access to turnkey copper projects is a rarity these days and while I covered that in the earlier part of this issue, the main driver behind Northisle is management, where there exists substantial capital markets experience as CEO/Pres. Sam Lee brings knowledge from a 20-year career with CIBC World Markets to the table. Adding to the capital markets horsepower is strategic investor Michael Gentile whose fund recently threw down CA$1.9 million by way of a unit offering and whose interview and podcast sent the share price scurrying from the tax-loss doldrums sub-CA$.20 level to a 52-week and multi-year high of CA$.47. I picked this off last March in the CA$.25 range, but until a few weeks ago, had been less than thrilled with its performance. That the Gentile association triggered an avalanche of buy-side volume is not a surprise. A similar deal, Arizona Metals Corp. (AMC:TSX.V; AZMCF:OTCQX) received the Gentile blessing on Dec. 2, 2020, with the stock at CA$.70. Thirteen months later, it trades at CA$6.15 for a gain of 778%.

The tape action in NCX and the historic performance of AMC underscores the nascent advantage enjoyed by those juniors that have the endorsement of a powerful “influencer” so given my bullish assessment for the copper space, Northisle has all cylinders firing hard as we move into the New Year.

BUY aggressively using a CA$.50 / USD $0.42 limit price – target $1.15 (subject to revision)

Western Uranium & Vanadium Corp. (WUC:CSE; WSTRF:OTCQX); (CA$1.87 / $1.47): As discussed earlier, uranium is truly the most asymmetrical trade in the universe as we head into 2022, and if there is one thing that stands out for Western U & V, it is the 55-million-pound uranium resource on their balance sheet. Favorable jurisdiction and access to infrastructure, zero CAPEX requirements and a tight share structure allows shareholders to have a 100% correlation to uranium pricing.

Click to enlarge.

By comparison, Energy Fuels carries slightly under a 50-million-pound resource and trades at a $1.187 billion market cap versus Western’s $57 million. Surely, the ownership of a permitted mill (Pinion Ridge) should not make EF more valuable to the tune of a billion dollars.

Buy – Target price: New highs above CA$4.18/$3.28 by Q3/22. No stop.

Allied Copper Corp. (CPR:TSX; CPRRF:OTCQB); (CA$.22/$.1689): When I introduced the March financing to all subscribers, it was on the basis of the caliber of management with specific reference to Chairman Warner Uhl, a former Fluor Corp. engineering wizard with all of the necessary attributed as a mine builder. As the deal unfolded, he was awaiting the completion of the May subscription receipt funding in order to begin the process of sourcing out advanced exploration or pre-production assets. Unfortunately, this process was derailed in May as IIROC determined that the transaction that accompanied the funding was to be treated as an “RTO” (reverse takeover) resulting in a painful six-month trading halt. When it opened for trading in November, memories of the CAD $.68 all-time high for the year were soon forgotten and uncertainty prevailed, never a positive for any listed company.

Click to enlarge.

Now, Uhl is still chairman and the new president/CEO, Richard Tremblay, during a number of conversations in late 2021, demonstrates a high degree of capital markets understanding and appreciation. While the trading halt hurt the near-term performance, it has not altered my bullish stance on CPR. The retrenchment in copper and the junior copper deals in the second half of last year has actually increased the availability of projects at lower prices so the six-month delay has actually benefitted them due to the excellent working capital position (CA$5.9 million).

I am taking the view that electrification will bring investors to junior copper developers and that Mr. Uhl’s considerable contacts in the global copper space will result in multiple high-quality projects crossing his desk and ultimately driving valuation. With only 38 million shares issued and a CA$8.37 million market cap, there is a great deal of room for appreciation.

BUY – Target Price: CA$1.25 in 2022.

Norseman Silver Ltd. (NOC:TSX.V); (CA$0.29/$.221): Despite having a difficult 2021 after a barnburner start, Norseman is my top junior explorer. The Taquentren Project (nicknamed “Son of Navidad”) in Patagonia, Argentina was assembled by Daniel Bussandre, the prospector/geologist that put together the Navidad discovery acquired by Pan American Silver in 2009 for CA$630 million. Early reports have revealed a great many similarities between the two projects but were it not for the presence of Bussandre, I would not be as optimistic.

The company needs to focus on marketing the Taquentren Project because this is the kind of junior mining market that will only reward major discoveries (but not always, i.e., Getchell’s Fondaway Project). The Gastre Fault region of Patagonia is an under-explored geological province due to what has been a harsh regulatory environment for junior explorers but despite that, it is highly prospective from a geological perspective. Also adding to my bullish view was the recent ruling out of Chubut Province that would allow open-pit mining in certain zones of the Gastre Fault region which will allow investment capital to flow more freely into projects located in Patagonia and Argentina as a whole. Chairman Campbell Smyth has been a colleague/friend of mine for over a decade and knows the mining business as well as anyone I have encountered in my 45-year investment career.

The permitting process is ongoing and I am optimistic that a drill program will be announced this year but surface work including geochemical and geophysical surveys should continue to draw parallels between Navidad and Taquentren and it is the marketing of these very important similarities identified by the man who discovered that 800-million-ounce silver deposit in the adjacent province that will drive the share price.

BUY – Target Price CA$0.75 in 2022 (subject to revision).

Goldcliff Resource Corp. (GCN:TSX.V; GCFFF:OTCBB); (CA$.09/USD $.075): Goldcliff has made an early-stage gold discovery by way of sampling and trenching on the Kettle Valley project located in southern British Columbia. The company announced that they have pinpointed drill targets that will be prioritized once the weather clears but everything being executed by Goldcliff is systematic and cost effective. CEO and major shareholder George Sanders was a founding director of Silvercrest Metals, so given that George owns over 35% of the issued capital, he is not going to spend money unless he sees potential for an exit, which will not happen unless he comes up with something major.

Click to enlarge.

At a CA$5 million market cap, there is significant leverage here and while junior explorers are a tough sell right now, I like the risk-reward ratio.

Full Metal Minerals Corp. (FMM:TSX.V); (CA$.165/$.158): I bought the $0.08 secondary offering in mid-2020 and then watched the stock trade up to CAD $0.65 last May while waiting for the private placement to receive regulatory approvals which arrived in late April with the shares free to trade in very late August. Due to delays in landing the project, which we originally thought was “in the bag,” investors have decided to dump their cheap stock followed by December tax-loss selling resulting in a profitable trade but a disappointment, nonetheless.

I am giving Full Metal until mid-month and if no project is forthcoming, I will take profits above CA$.15 and move on.

Hold. No target.

This completes the initial assessment of the 2022 list of portfolio components. Good luck in 2022.

Follow Michael Ballanger on Twitter @MiningJunkie. He is the Editor and Publisher of The GGM Advisory Service and can be contacted at [email protected] for subscription information.

Originally trained during the inflationary 1970s, Michael Ballanger is a graduate of Saint Louis University where he earned a Bachelor of Science in finance and a Bachelor of Art in marketing before completing post-graduate work at the Wharton School of Finance. With more than 30 years of experience as a junior mining and exploration specialist, as well as a solid background in corporate finance, Ballanger’s adherence to the concept of “Hard Assets” allows him to focus the practice on selecting opportunities in the global resource sector with emphasis on the precious metals exploration and development sector. Ballanger takes great pleasure in visiting mineral properties around the globe in the never-ending hunt for early-stage opportunities.

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Disclosure:

1) Michael J. Ballanger: I, or members of my immediate household or family, own securities of the following companies mentioned in this article: Getchell Gold Corp., Northisle Copper and Gold Inc., Arizona Metals Corp., Western Uranium & Vanadium Corp., Allied Copper Corp., Norseman Silver Ltd., Goldcliff Resource Corp., and Full Metal Minerals Corp. My company has a financial relationship with the following companies referred to in this article: Getchell Gold Corp., Northisle Copper and Gold Inc., Arizona Metals Corp., Western Uranium & Vanadium Corp., Allied Copper Corp., Norseman Silver Ltd., Goldcliff Resource Corp., and Full Metal Minerals Corp. I determined which companies would be included in this article based on my research and understanding of the sector. Additional disclosures are below.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Allied Copper Corp. and Goldcliff Resource Corp. Click here for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with Allied Copper Corp. and Norseman Silver Ltd. Please click here for more information. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy. 
4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports. 
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Getchell Gold Corp., Western Uranium & Vanadium Corp., Allied Copper Corp., Norseman Silver Ltd., Goldcliff Resource Corp., and Full Metal Minerals Corp., companies mentioned in this article. 

Michael Ballanger Disclaimer:
This letter makes no guarantee or warranty on the accuracy or completeness of the data provided. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This letter represents my views and replicates trades that I am making but nothing more than that. Always consult your registered advisor to assist you with your investments. I accept no liability for any loss arising from the use of the data contained on this letter. Options and junior mining stocks contain a high level of risk that may result in the loss of part or all invested capital and therefore are suitable for experienced and professional investors and traders only. One should be familiar with the risks involved in junior mining and options trading and we recommend consulting a financial adviser if you feel you do not understand the risks involved.

All charts and graphics are provided by the author.

( Companies Mentioned: CPR:TSX; CPRRF:OTCQB, AMC:TSX.V; AZMCF:OTCQX, FMM:TSX.V, GTCH:CSE; GGLDF:OTCQB, GCN:TSX.V; GCFFF:OTCBB, NOC:TSX.V, NCX:TSX; NTCPF:OTCPK, WUC:CSE; WSTRF:OTCQX, )

tsx tsxv cse otcqb otcqx ax gold silver vanadium uranium copper zinc tsxv-amc arizona-metals-corp arizona metals corp tsxv-ncx northisle-copper-and-gold-inc northisle copper and gold inc tsxv-vtt vendetta-mining-corp vendetta mining corp cse-gtch getchell-gold-corp getchell gold corp cse-wuc western-uranium-vanadium-corp western uranium vanadium corp

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Articles

Drilling proves Strickland’s theory about Dusk til Dawn gold mineralisation

Special Report: The balance of results from drilling at Dusk til Dawn have all but confirmed Strickland’s reinterpretation of how … Read More
The post…

The balance of results from drilling at Dusk til Dawn have all but confirmed Strickland’s reinterpretation of how mineralisation at the prospect really looks like.

Results such as 10m grading 3.1 grams per tonne (g/t) gold from 314m and 11m at 2g/t gold from 249m including 5m at 3.2g/t gold have extended gold mineralisation further down dip.

Previous results from the same drill program had yielded hits such as 33m at 3.6g/t gold from 61m and 24m at 1.6g/t gold from 196m including 12m at 2.5g/t gold.

More importantly, all holes have intersected the modelled alteration zone where Strickland Metals (ASX:STK) had predicted, a strong indicator that its understanding of Dusk til Dawn mineralisation is down pat.

It also means that further discoveries in the surrounding terrain are very likely given the proven effectiveness of the company’s current set of geophysical and geochemical techniques used at the prospect.

This means that there is significant potential for the discovery to scale-up given that there are up to 20 lookalike targets in two corridors within roughly 10km strike of Dusk til Dawn.

“The drilling has confirmed the company’s reinterpretation of the mineralisation at the prospect, with all holes intersecting the targeted zones where predicted. Remodelling of the mineralisation is underway, with an updated Mineral Resource expected in early February 2022,” chief executive officer Andrew Bray said.

“Most excitingly, our growing understanding of the mineralisation in this area opens up a tremendous opportunity to intersect repeats of this style of mineralisation.”

He added that six of the lookalike targets were drilled prior to the reverse circulation program concluding in December 2021, with all holes intersecting the targeted alteration zones.

However, the ongoing laboratory delays mean that results from these initial holes are not due until the middle of February 2022.

Dusk til Dawn cross section. Pic: Supplied

And now for the next act

Work is now underway to remodel the existing resource of 108,900oz of contained gold.

Strickland believes that correctly orientating the mineralised plunge will potentially lead to a material increase in both grade and tonnage.

This remodelling should also demonstrate the excellent potential to build a substantial mineralised inventory in the immediate surrounding region should the nearby ‘look-a-like’ targets also be mineralised.

The updated resource estimate is expected to be announced early in February 2022.

 


 

 

This article was developed in collaboration with Strickland Metals, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

The post Drilling proves Strickland’s theory about Dusk til Dawn gold mineralisation appeared first on Stockhead.


Author: Special Report

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Economics

What the Experts See Coming in 2022

We have analyzed 300+ articles, whitepapers, podcasts and interviews to create a big picture look at what experts predict could unfold in 2022.
The post…

We have analyzed 300+ articles, whitepapers, podcasts and interviews to create a big picture look at what experts predict could unfold in 2022.
Experts are merely guessing at what will happen over the coming year so why should we pay any attention to predictions at all? Well, for one, these guesses are backed by expertise and experience, so the accompanying analysis is informative. Perhaps more importantly though, influential people and companies are in a position to shape the future with their predictions. In some cases, sentiment and actions can turn a prediction into a self-fulfilling prophecy.

Based on the hundreds of predictions we analyzed, the general mood can be described as cautiously optimistic:

  • the global economy will likely keep growing, but not at the rate it did in 2021,
  • monetary policy will begin to tighten over the next 12 months,
  • an era of lower equity returns and increased volatility will continue as many of the issues that plagued 2021 have carried over into 2022,
  • technological disruptions will continues to reshape industries,
  • climate change and cybersecurity issues will continue to be top of mind,
  • geopolitical tensions will heat up as well, now that countries have acclimated to the immediate challenges posed by the pandemic,
  • China will have a rocky start to 2022 with pessimism around China’s zero-COVID strategy, uncertainty around power shortages, a potential housing crisis, and regulatory crackdowns, and if the country is still on uncertain footing when the Chinese Communist Party’s 20th National Party Congress meets later in the year, , it could create a tense political atmosphere in Beijing,
  • the labor shortages that emerged during the pandemic will remain in place in 2022 and beyond, companies that don’t offer flexibility will face a disadvantage in attracting talent and individuals will look to the internet and social media for careers beyond simply working for a company,
  • we’ll be hearing a lot more about NFTs and Web3 with the prospects of the burgeoning “Creator Economy” – a catch-all term describing the new technological ecosystem and growing infrastructure – allowing individual content creators to monetize and flourish,
  • the ability to purchase products straight from influencers is becoming more common on major social platforms, and ecommerce companies are creating more products to support influencers in their marketing endeavors
  • experts expect higher-than-normal inflation levels to continue see it leveling off (relative to 2021) as supply chain disruptions work themselves out,
  • regulatory actions will force automakers to consider the future of their fossil-fuel models as EV sales set new records and the electrification of fleets will gather momentum,
  • industrial and battery metals like lithium and cobalt will continue to surge into 2022.

Editor’s Note: If you found the above version of the original article by Nick Routley of visualcapitalist.com informative and a fast and easy read, please DONATE something towards the costs involved in providing it. I find it demeaning to ask for money but it is either that or converting munKNEE.com into a fee-based subscription service which I don’t want to do. Any amount would be appreciated. It all adds up in the end. Thank you.
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Author: Lorimer Wilson

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Precious Metals

Foreign Holdings Of US Treasuries Hit A Record High In November

Foreign Holdings Of US Treasuries Hit A Record High In November

After October’s ugliness, and before the carnage began in December, November…

Foreign Holdings Of US Treasuries Hit A Record High In November

After October’s ugliness, and before the carnage began in December, November saw US Treasury yields oscillate with the last week seeing rates plunge on Omicron anxiety.

So, the big question is – did global central banks continue to dump bonds into this late-rally or did they flip-flop back to buyers of the world’s most liquid reserve asset?

The answer is – they were back to big buyers…

Today’s (latest) TIC data (for November) shows that foreign holdings of US government debt rose to a new record $7.75 trillion.

  • Foreign purchases of corporate stock +$7.2BN, biggest monthly increase since August, and follows sales of $11BN in Sept and $21.8BN in Oct

  • Foreign Purchases of corporate bonds +9.8BN, 4th month of purchases in a row

  • Foreign purchases of agencies $19.6BN, 56th consecutive month of foreign purchases of Agencies

Official buying of Long-Term Treasuries rose by $66.3BN in Nov, biggest increase since March 2021 when bonds got crushed on the Japanese pension selling

November saw the biggest private-buying of USTs ever

China added to its Treasury holdings for the 3rd straight month in November (+15.4bn to $1.08 trillion)…

But Japan remains the biggest holder of USTs and added for the second straight month in November (+$20.2bn to $1.3 trillion)…

Cayman Islands – often a proxy for hedge funds – saw net selling of $4.4bn USTs to $265.8b. That is the first monthly net-selling since Jan 2021…

Notably, foreigners haven’t sold any US agencies since March 20117, and if exclude that month, it has been non stop buying since April 2014…

On a 6-month-rolling-basis, enthusiasm for US stocks is fading…

Overall, while private TIC flows surged, official flows saw capital exit in November…

Finally, we note that the trend towards gold reserves (and away from USTs) continues (according to IMF and Fed Custody data)…

Net gold buying by central banks globally reached 393 tons at the end of Q3 (latest data from WGC). Central banks have already bought more gold this year than they did in the entirety of 2020 (255 tons) with one quarter left to go. The World Gold Council says net gold purchases are “poised to reach a significant total in 2021.”

Tyler Durden
Tue, 01/18/2022 – 16:17

Author: Tyler Durden

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