ANNOUNCEMENT: The paid newsletter now has both yearly and monthly subscription option at $1500/year and $150/month. If you've profited from my analysis, I encourage you to sign up and support my work so I can keep this going. The Members Area contains write ups on 11 new stocks, a futures portfolio, as well as my thoughts on crypto. Further updates on open trades will be reserved exclusively for paid subscribers.
Stocks Mentioned: Swiss Franc (CHF), Hudbay Minerals (HBM), Corn (ZC_F), Victoria Gold (VGCX.TO), Golar LNG Limited (GLNG), Cheniere Energy Inc (LNG), Nextdecade Corp (NEXT), Barrick Gold (GOLD), B2Gold (BTG), Danaos Corp (DAC), General Mills (GIS), Talos Energy (TALO), regional bank ETF (KRE), Okeanis Eco Tankers (OET.OL ECO), 2Y Treasury Note (ZT_F), 10Y Treasury Note (ZN_F), Utilities (XLU), Dolphin Drilling (DDRIL.OL), Ordinal (ORDI), Pyth Network (PYTH), Kaspa (KAS), Champion Iron (CIA.TO CIA.AX CIAFF), Apple (AAPL), Carvana (CVNA), Micron Tech (MU), wheat (ZW_F), Stacks (STX), Arbitrum (ARB), Interactive Brokers (IBKR), (iShares Russell 2000 ETF) IWM, Woodside (WDS), Tellurian (TELL), NextDecade (NEXT), Sempra (SRE), New Fortress Energy (NFE), Cheniere Energy (LNG), Clearwater Paper (CLW), Gladstone Land (LAND), Endeavour Mining (EDV.TO, EDV.L), BlackRock (BLK), Consol Energy (CEIX), Glencore (GLEN.L), Lundin Mining (LUN.TO LUNMF), Filo Mining (FIL.TO FLMMF), SSR Mining (SSRM)
Highlights
July 02, 2024
Closed the remaining half of my Hudbay Minerals (HBM) short position for a gain of 11%. That leaves one final short position on a copper miner, a premium pick which I wrote about for paid subscribers. Again, I highly recommend taking advantage of the current pricing of $1500/yr. If you have questions about the paid newsletter, contact me.
July 03, 2024
I closed the Nasdaq short position at 20,246 for breakeven. I shorted it right at the top, and the trade worked immediately. Then it came back all the way to my entry. I talk about this in last month's rollup. See the section On breakout trading.
A trade idea highlighting a junior gold stock has just been published in the Members' Area for paid subscribers. This stock is my no.2 position behind Consol Energy. I see potential for this stock to 4x in 3 years. This is a company that I've watched grow over the last 6 years and is one of my past multi-baggers. Send an email to hello@kashyapsriram.com to gain access.
July 04, 2024
Long Swiss Franc (CHF)
Took a starter position in CHFUSD. I haven't put on a currency trade since I went long the Japanese Yen. But that's a nice double bottom and the primary trend is up, so I'm in the trade. The why part is unclear as of now. Maybe the dollar is going to roll over.
Corn
When I closed the corn (ZC_F) trade, people asked: How much lower can it go?
A month later, we have the answer to that question. A lot lower, with no signs of a bottom.
However, that's not the important part. It's the subtext in that question: How much lower can it go... I'll just add more here and wait it out.
Except, you only make money when the price goes up. No one gives you an award for HODLing through a drawdown (except maybe a psychological award bitcoin maxis give themselves for riding multiple 80% drawdowns).
It doesn't matter that fundamentals are bullish, farmers are holding back crop rather than sell low, Russia is doing this, the weather is doing that, etc.
You only get paid when the price goes up.
I don't hold or add to losers hoping for a bounce to break even. I hold (and pyramid) winners, compounding gains.
Winners press winners, losers average losers.
Gold
Gold is unusually strong this summer. Traders tried to take it down on seemingly bearish news about Chinese/ PBoC gold buying, but the correction didn't last.
Still several pockets of value in the mining sector, especially the stocks that aren't affected by GDX and GDXJ liquidity flows, and the stocks that suffered collateral damage from the Victoria Gold (VGCX.TO VITFF) heap leach pad failure.
July 05, 2024
A moment of silence for all the Baby Boomers who thought putting their retirement money into a bitcoin ETF was wiser than just holding T-bills and collecting 5% risk-free.
The 2024 class of crypto bagholders forgot the lessons of 2021. Bitcoin went from $64k in April to $69k by November 2021... but only after a brutal crash all the way to $28k.
New Fortress Energy
Revisiting my call on New Fortress Energy (NFE) 11 months later, looks like I was right to drop coverage. That said, if the stock bounces here I'll give it a re-look.
Investors are in love with Golar LNG Limited (GLNG), Cheniere Energy Inc (LNG) and Nextdecade Corp (NEXT). Maybe they're willing to give NFE another chance.
My no.2 stock position, which I featured in the paid newsletter, has gained 53% in the past seven trading days. Did I know it would do that? No. But I do a lot of research and spend hours every week looking at charts. To quote Seneca, "Luck is what happens when preparation meets opportunity." I got lucky with the ETHE trade, I got lucky on this trade, I'll get lucky on many more trades to come. I'm currently focused on writing up everything I own in my stock portfolio for paid subscribers. That's a lot of reports since I own 53 stocks. Once that's done, I'll be talking more about my process and sharing how I trade. The paid newsletter is going to be way, way better than the trading service I've run for these last 3+ years. To sign up, email me at hello@kashyapsriram.com. |
July 06, 2024
Average daily volumes of futures and options traded on the London Metal Exchange posted a 10-year high of 730,385 lots per day in Q2 2024, soaring 27% year-over-year, with nickel leading the way and copper coming in second place.
July 08, 2024
Gold is within kissing distance of $2400/oz and nobody cares.
Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria. - John Templeton
July 09, 2024
Gold ETFs have seen two straight months of inflows. No doubt the PBoC has been buying even though it claims it hasn't. India just added a ton. This is shaping up to be a very different summer for gold.
Political risk alert: Mali
Barrick Gold (GOLD) felt compelled to comment on Mali today after the country passed the Implementation Decree ushering in a new era of expropriation, aka the 2023 mining code which asks companies to cede 35% equity interest to the government and locals.
B2Gold (BTG) has a lot more to lose but appears to be sticking to radio silence. I reduced my BTG position slightly. Why hold at all? Because if the Mali situation blows over, this is the best growth story in the gold space. If Mali does a Niger, they're sunk. But it looks like they will just get expropriated a bit more for the Anaconda license and that's it.
Mali has officially signed the implementation decree for the 2023 mining code. So far, the only gold miner which has put out a press release on this is an ASX junior.
The decree grandfathers in licenses signed under previous mining codes, removing uncertainty regarding Barrick's (GOLD) Loulo-Gounkoto and B2Gold's (BTG) current operations at Fekola. However, B2Gold's Fekola and Anaconda expansion could see it lose 35% to the Malian govt and locals as opposed to the current 20%. Even high margin mines can't withstand that level of mooching, hence the company's acquisition of Sabina and move into safer jurisdictions.
Barrick should be fine, but owning B2Gold is like playing hot potato. I'm waiting for press releases from other mining companies, following which paid subscribers will get an update with my take on owning these stocks.
Danaos Corp
Danaos Corp (DAC, MCap: $1.7 bn) blows half a billion dollars on more containerships.
"The five newbuilding orders with an aggregate contract price of $509 million comprise of one additional 8,258 container vessel to be built at Yangzijiang shipyard in China expected to be delivered in 2027 and four 9,200 TEU container vessels to be built at Dalian shipyard in China, three of which have expected deliveries in 2027 and one vessel in 2028".
As if the current glut in the sector isn't enough, DAC decides to compound the problem. This kind of thing tends to happen when a company has too much cash and management doesn't engage in share buybacks.
Financial engineering is dangerous. Value traps are equally dangerous. I'm glad I gave a Sell recommendation last month.
Sold General Mills (GIS)
I featured a value stock I really like in the latest report to paid subscribers. Between that and other value stocks I currently own and am adding to, GIS just doesn't make the cut. Value investing requires patience; I prefer being patient on other stocks over GIS. As with fertilizers, I'm finally giving up on consumer staples.
July 10, 2024
Talos Energy
Carlos Slim is spending $1.2 bn on a GoM nat gas project. Slim likes Talos Energy (TALO) (MCap: $2.1B) enough to take a 20% stake.
Is that a V-bottom on the Talos daily chart?
July 11, 2024
Regional Banks
The regional bank ETF (KRE) is a good case study on why TA is an art and not a science.
The price action looks like a sideways consolidation. The Commodity Channel Index (think of it as an unbounded RSI) is flashing overbought (i.e. buy). The Relative Strength vs. the Nasdaq (RS (QQQ) on the chart) indicates avoid.
Some traders will look at the RS and say this will mean revert, i.e. KRE higher Qs lower. Some will look at the rising CCI and go short for a mean reversion trade. Long-term strategies would consider the $45.6 level a triple bottom and get long.
Every opinion is right. It is all in the trading style. As for me, I prefer 2Y treasuries to banks but I like both here.
Okeanis Eco Tankers
If you buy breakouts in uptrends, corrections in uptrends, new highs in uptrends, you end up in a lot of uptrends.
If you average down during downtrends, you just end up losing more money.
I've been long Okeanis Eco Tankers (OET.OL ECO) since last December and welcome the opportunity to add more during this correction in an uptrend.
Interest Rates
The 2Y bottomed on April 30. I called for rate cuts, but it did not matter that the Fed didn't cut. All that mattered was positioning. It pays to be contrarian at extremes, and April COT showed an extreme.
Today's price action shows investors are getting long duration again. I'm still not keen on risking money in the 30Y, but maybe the 10Y is now a buy.
Unlike stocks, interest rates trend. Once the Fed starts cutting, they keep cutting.
From around 2014-19, investors bought bonds for capital appreciation (it was the glorious era of negative rates) and stocks for yield.
Do we go back to that era? No way to tell.
But funnily enough, bonds and utilities are both working, just as they were back then. 2Y Treasury Note (ZT_F), 10Y Treasury Note (ZN_F), Utilities (XLU)
Japanese Yen
1971: “The dollar is our currency, but it’s your problem." - US Treasury Secretary James Connally
The BoJ has hitherto taken a leaf out of Typhoon Connally's playbook and allowed the carry traders to gorge themselves on cheap yen. Until they drew a line in the sand at 160 and said no more.
This is the second targeted intervention by the BoJ, a big warning sign that the carry trade needs to be reined in.
I'm playing the unwind with a long CHF position.
Two new reports were posted for subscribers yesterday. One report is an update on the Panama situation and how that's bullish for one of my holdings. The other is a new stock pick, one which I haven't talked about before, on a growth-at-a-reasonable-price (GARP) stock that caters to the US oil & gas sector. |
July 12, 2024
B2Gold on Mali Risk
B2Gold (BTG) on the 2023 Mali mining code:
"We're concerned about the 2023 code, I guess, in terms of future production for Mali. Mali has been -- despite some of the issues and rumors and stuff that we see out there, Mali has been a very good country to invest in gold mining when you look at Randgold and Barrick and ourselves and others.
So the issue there is that the government wants to take too big a piece of the pie in 2023. The big question is who's going to go explore for the next Fekola in Mali, if the economic terms are much less attractive than they have been. Just a reminder, we built Fekola mine for over US$500 million, 100% of our risk.
To date, the government of Mali has realized a little over 50% of the economic benefit of the Fekola mine, with no risk. I think that's a deal anybody would take all day, every day. If someone wants to spend all the risk capital, we get 50% plus of the upside. So I'm worried that the new code is going to change those economics. So it doesn't speak to what we're doing, but it speaks to -- because of our very robust economics and the trucking opportunity -- but it does speak to the future of gold mining in Mali".
Inflation
Egg prices are up 85% since the Fed began its $3 trillion money printing campaign to fight an invisible enemy, but hey look - egg prices were up 230% earlier so we're actually experiencing gaslighting. Whoops, I meant to say deflation.
The spike in the second half of 2022 was related to a specific incident. If the bird flu nonsense picks up, this chart is going to go parabolic.
Dolphin Drilling
Troubled small-cap offshore driller Dolphin Drilling (DDRIL.OL) managed to peek above the 50 DMA before resuming its long march towards zero. The company recently issued 72 million shares at NOK 6 and there is a ton of selling pressure on any rally. Lots of trapped capital waiting to get out, with no trading volume (<100k shares) to speak of.
Offshore oil services stocks have created a lot of shareholder wealth in the last 1.5 years. But only for the stock pickers who knew what they were doing. Buying "value" based on the balance sheet or replacement cost doesn't work in this space.
Crypto portfolio update
I have completely exited Ordinal (ORDI) and Pyth Network (PYTH) and plowed the proceeds into acquiring more Kaspa (KAS). Kaspa is rapidly moving up the market cap ranking and currently stands at 20. And it still doesn't have a proper listing on Binance, Coinbase, Kraken, etc. This is organic growth with very little hype until the Marathon Digital (MARA) news.
Winners press winners, losers average losers.
In crypto, winners tend to run far harder than is the case with stocks. I caught Pyth and Kaspa before they had a proper exchange listing. The former worked out okay, but my re-entry was wrong. The same could happen with Kaspa. This market can humble you in a matter of days if you get cocky or think you're smart. I've seen it happen over and over again. I know guys who mined a coin, promoted it when it traded at 7 cents on $3000 of daily volume, rode it all the way up to $16 (yes, $16!) on multi-million dollar volume - AND ENDED UP LOSING MONEY ON IT. How is that even possible? Because they believed their own bullshit and bought on the way up, held on the way down, and got zeroed out.
Crypto is a space where you can really find yourself as a trader since mistakes stare at you everyday. And every day is a fresh start and an opportunity to undo previous mistakes.
I've got several DMs from my Telegram group on Kaspa, on whether it could be the next Solana. Maybe. But keep expectations in check and let the upside surprise you. That's how I have survived for so long.
"I have met old traders. I have met bold traders. I have never met an old, bold trader." - Anon
I'm 35 years old and I can attest to that. I'd never take the same risks as I took in my 20s or even early 30s.
July 13, 2024
Short Setup in Micron Technology
Micron (MU) has lost relative strength vs the Nasdaq, the CCI indicates weakness, the rejection candle at the all-time high signals a blow-off top, but the stock is still hugging the 50 DMA (red line) which has acted as support throughout this uptrend. A break below that and this finally becomes shortable.
The chart says wait, my instinct screams front run the signal. It's a good thing the market is closed. Also why I love looking at charts on Saturdays.
Active investing makes a comeback
Every week I glance at the performance of the sectors I track. Momentum and tech are lagging, rate-sensitive sectors are leading. This is a stock pickers' market.
The money is still on the long side, but the indices will offer nil (or negative) returns while value and quality stocks with high D/E ratios outperform.
The past two years have been terrible for active investors. Every fund letter is a sob story as to why they underperformed the benchmark. That's about to change.
Champion Iron
Champion Iron (CIA.TO CIA.AX CIAFF) is temporarily shutting down operational activities at its Bloom Lake iron ore mine in Quebec in response to forest fires.
CIA produces high-grade iron ore and was a big winner for me in the past. Iron ore prices are likely to head lower due to a supply glut from the Simandou mine in Africa, but glut or not this stock is worth watching.
Will the rally in homebuilders mark the top?
Wouldn't it be cool if history repeats? Not that I think it will. Like generals fighting the last war, investors always focus on prior crises. Behavioral economists call it recency bias.
July 15, 2024
Bitcoin
Bitcoin is flat for the month, reversing its downtrend only due to its association with Donald Trump.
Gold is up 3.8% even though the PBoC said it made no official gold purchases for the second straight month.
Trump says he'll back the US dollar with bitcoin and yet, the price barely blipped. If he said the same about gold, gold would have a God candle to $3000/oz and just keep going.
I want to buy the real thing that's making new highs even though nobody cares. Not the digital wannabe that's heavily marketed by BlackRock and still can't catch a bid.
Bitcoin (again)
"It is a big deal for a big company to change auditors, change law firms, or for IT departments to move away from using IBM. There is a lot of continuity to it." - Warren Buffet in November 2011 when he announced his IBM position
By then, savvy tech investors were investing in the SMAC (social, mobility, analytics, cloud) stack. Buffet was late to the party. He bought IBM because "Nobody got fired for buying IBM". He didn't understand the landscape, but wanted to dip a toe in the water. IBM was his learning experience, Apple (AAPL) was the payoff.
Larry Fink and the Bitcoin ETF pumpers are providing geriatric boomers with a false sense of comfort and getting them to buy the IBM of crypto. These people have no clue about all the innovation in the crypto space, and are simply marketing the coin they are most familiar with.
This is the social media equivalent of opening a MySpace account in the Facebook era. Except, it is disingenuous and they are playing with people's life savings.
The ETF is not the problem. Mis-selling it to retirees who can't afford to gamble is.
Next thing you know, Carvana (CVNA) will be marketed as a blue chip stock.
"Look, it is up so much! Must be a great company that's about to change the world."
July 16, 2024
Micron Tech (MU) finally broke below the 50 DMA. CCI went negative. OBV is neutral. I'm short. Investors are going to learn semis are a cyclical sector, more cyclical than software and communications.
July 17, 2024
I used to play WWE SmackDown 5 on a PS2 as a kid. I loved Royal Rumbles because I could just fight with no consequences. The trick was to pick a strong character close to the end and avoid getting into a fight when the last 3 are in the ring. Fighting the weakened winner is key to being Last Man Standing.
Watching the currency speculators and the Bank of Japan duke it out reminds me of WWE. The real winner in this bout isn't the dollar or the yen, but the Swiss Franc. The franc is above the fray and benefits from inflows while the rest of them duke it out.
Agri commodities
Corn (ZC_F) might have finally, finally bottomed from seller exhaustion. This is the value zone where long-term investors will start buying. I'm sitting it out. Besides, I prefer bottom fishing wheat (ZW_F) over corn here.
Wheat prices are now back to pre-pandemic levels. Like the Fed's $3 trillion in money printing didn't matter. Like the Ukraine-Russia war (both major wheat exporters) hasn't been going on for well over 2 years. Wheat is so stupidly cheap, one has to wonder who is shorting it here.
Crypto Update
Stacks (STX) bounced right off support, indicating a move higher. Note that this is a 3-day chart. I use longer periods to eliminate chop.
Contrast this with the chart of Arbitrum (ARB). Similar bounce, but that's a major downtrend. There's going to be immense selling pressure on the way up, which makes it likely ARB will be a laggard in the next cycle.
I exited Arbitrum on this bounce and will be deploying the proceeds into Stacks once momentum cools off a bit.
July 18, 2024
From Interactive Brokers (IBKR) Q2 earnings call:
"Our customer contract volumes in options rose 35% over the prior-year quarter, well above industry growth, and reached a new record high for IBKR. Futures contract volumes rose by 10%, reflecting our second highest volume ever; and stock share volumes rose by 26%, as they did across the industry.
Stock share volume generally increased in tandem with clients gravitating to larger, higher quality names, with relatively lower trading in pink sheet and other very low-priced stocks, in our largest markets".
The numbers reveal investors' contempt for small caps and proclivity towards gambling on options. Everyone says "oh, this is just short covering on (iShares Russell 2000 ETF) IWM " - maybe so.
Or maybe it starts as short covering, followed by stock pickers making a comeback while the index huggers on leverage get destroyed.
Platinum
Platinum is choppy, but the low is likely in. This is not a trade that will work immediately, but can add quite nicely to the P&L over a long holding period.
July 21, 2024
An update on Ethereum has been published in the Members Area for paid subscribers. With the ethereum ETF launch coming up this week, if you are invested in ETH, you'll want to read this.
I have introduced a new pricing tier of US$150/month, making the subscription more accessible. This article should be well worth the $150.
July 22, 2024
LNG Developer Tellurian
Aussie company Woodside (WDS) is acquiring US LNG developer Tellurian (TELL) for $1/share all cash.
Late last year, shares of NextDecade (NEXT) took off, followed by Golar LNG (GLNG) in March, Sempra (SRE) in April, Cheniere Energy (LNG) in June, and New Fortress Energy (NFE) last week. Now comes an M&A on a project everyone had given up on.
Tellurian (TELL) was founded by Charif Souki and was his second LNG bet after Cheniere. His story is captured in Gregory Zuckerman's The Frackers: The Outrageous Inside Story of the New Billionaire Wildcatters (2013).
Following the publication of the book, Souki was fired from Cheniere by billionaire corporate raider Carl Icahn in 2016, at which point he co-founded Tellurian.
Ironically, Souki was fired from Tellurian in 2023 for spending the company money on fancy vacations while the company teetered towards bankruptcy. Tellurian traded as high as $21.74 in 2017. The only investors who have made money on this stock are those who bought the covid bottom at 67 cents and held on - or those who bought into Tellurian after seeing every other name LNG related take off.
Timing the market is more important than time in market. The market falls in and out of love with sectors, themes, countries, entire asset classes.
In my newsletter, I cover a broad range of securities so I can always find a bull market somewhere.
Ethereum Trade Update
The much awaited Ethereum ETF is set to begin trading on Tuesday.
Is this a "sell the news" event?
Or the beginning of a rally in this overlooked crypto asset (which, incidentally, has outperformed bitcoin since its public launch at 31 cents)?
I go into my trading plan for the launch in my article for paid subscribers. Treat yourself to a mix of TA, on-chain fundamentals, macro outlook and scenario analysis, at an introductory price of US$150/month.
Clearwater Paper
Clearwater Paper (CLW) is selling its tissue business at 6 times EBITDA to a private Italian company. While big institutions buy the iShares Russell 2000 ETF (IWM) 'cos small caps are now hot, I actively look for undervalued stocks in sectors that have been left for dead.
Sell Gladstone Land (LAND)
Gladstone Land is the only open trade I've recommended in this group that I don't personally own. TA-wise the stock has bottomed, based and bounced higher, indicating more upside ahead. But since I don't own it, I'm closing this trade. I have agriculture positions in the futures portfolio but no exposure in the stock portfolio.
July 24, 2024
Sell Endeavour Mining (EDV.TO, EDV.L)
Endeavour is still a top 5 position for me but I have started trimming it down. I recommended buying the stock during a time of crisis and expected some form of M&A to materialize. We're up about 24% since original entry - more, if you added and trimmed as suggested.
Between building the website, marketing, consulting work, my own trading and writing for premium subscribers, I don't have much time to devote to ongoing trade updates for free subscribers. I'm in no hurry to exit Endeavour and may not even completely exit, instead trimming to a lower allocation.
I'm closing the trade here and dropping coverage. Paid subscribers will continue to receive updates on all open trades.
July 26, 2024
BlackRock
Has Larry Fink been marketing BlackRock (BLK) while pretending to market his precious bitcoin ETF? It is not a coincidence that BLK shares took off just as someone planted the fake ETF approval news on CoinTelegraph.
While there is no way to know how much marketing $$$ was spent in hyping up iShares Bitcoin Trust (IBIT), it is clear that the intended beneficiary was Blackrock itself.
On a completely unrelated topic, here's a helpful section from the SEC talking about affinity fraud:
"Affinity fraud refers to investment scams that prey upon members of identifiable groups, such as religious or ethnic communities, the elderly, or professional groups. The fraudsters who promote affinity scams frequently are - or pretend to be - members of the group. They often enlist respected community or religious leaders from within the group to spread the word about the scheme by convincing those people that a fraudulent investment is legitimate and worthwhile. Many times, those leaders become unwitting victims of the fraudster's ruse.
These scams exploit the trust and friendship that exist in groups of people who have something in common. Because of the tight-knit structure of many groups, it can be difficult for regulators or law enforcement officials to detect an affinity scam. Victims often fail to notify authorities or pursue their legal remedies and instead try to work things out within the group. This is particularly true where the fraudsters have used respected community or religious leaders to convince others to join the investment".
July 28, 2024
THIS RARE INDICATOR HAS FLASHED A WARNING FOR THE FOURTH TIME IN 100 YEARS
I hate such marketing. An indicator that provided a signal 3 times in 100 years is unreliable, un-actionable, and just plain worthless. Sure, it is rare. So is finding someone eating waffles with mustard. But at best, such indicators are a curiosity.
Let's say I take 100 trades a year. I'd want an indicator to be responsible for at least 5 of those, and contribute to 5 others. That's the only way to know whether the indicator provides reliable trading signals.
The rare indicator sellers use a post hoc ergo propter hoc logic - if your back itches and your next trade turns out to be a winner, it happened because you scratched your back.
The richer the peddler of such ideas, the more gullible the audience. After all, if the indicator seller is on a yacht sipping champagne with bikini clad girls, he must know all there is to know about trading.
At Kashyap Sriram Research, you will find no such BS. Just the plain reality of trading for a living, which is as exciting as watching a banyan tree grow.
Click here to subscribe to my premium newsletter.
On Russian Stocks
Never be contrarian for the sake of being contrarian. Well over 2 years now since Western investors had to write down the value of their Russian holdings to zero. If they had just studied history, they would have avoided this obvious landmine.
July 29, 2024
July 30, 2024
My Take on the Filo Mining Acquisition
In 2011, Barrick Gold (GOLD) paid a monster C$7.3 billion - in cash - to acquire Equinox Minerals. That deal, along with the IPO of Glencore (GLEN.L), marked the top of the commodity bull market.
Looking at $BHP and Lundin Mining (LUN.TO LUNMF) bid C$4.1 billion for Filo Mining (FIL.TO FLMMF) - a 32% premium - gives me the same eerie feeling.
These mega acquisitions rarely work to the buyer's advantage. Newmont (NEM) is still reeling from its ill-advised acquisition of Goldcorp. Kinross has a permanent black eye due to its misadventure with FDN. SSR Mining (SSRM) gambled away the family silver when it acquired Alacer Gold.
BHP is big enough to shrug off any losses from the Filo deal, but Lundin Mining isn't. For all the hype around Vicuna, investors seem to have a short memory of how bad things can get in Argentina and Chile, viz. Barrick's Pascua-Lama.
"Those who cannot remember the past are condemned to repeat it." - George Santayana
Uranium Bear Market
Why is the uranium market in the dumps? (URNM URNJ)
"UxC published its annual review of global uranium production for CY2023. Worldwide uranium output rose by 14 million lb for the year, recording a total of 143 million lb compared to 129 million lb for CY2022.
Contributing to the uplift included the ramp-up of Cigar Lake and McArthur River in Canada, incremental increases at both the Rossing and Husab mines in Namibia, as well as higher recovery from Navoiyuran's ISR mines in Uzbekistan.
Kazakhstan remained the world's largest uranium-producing country with an aggregate output of 54.9 million lb U3O8 (39% of global production), followed by Canada, which contributed a total of 28.6 million lb (20% of global output).
Namibian production rose by 24%, recording an aggregate output of 18.2 million lb U3O8, with CGN's Husab mine producing 11.7 million lb, an increase of 34% over 2022 output.
UxC forecasts CY2024 global uranium production will fall in the range of 153-158 million lb U3O8 based on further increases at Cigar Lake and McArthur River, as well as the restarts at Langer Heinrich (Namibia) and Honeymoon (South Australia)"
According to UxC, the uranium supply continues to rise year after year. According to Twitter bulls, the uranium market is seeing record deficits due to a shortage of sulphuric acid in Kazakhstan.
Being entirely news driven, with no real fundamentals, uranium is a great sector for technical traders. Right now, the money is on the short side.
Good Trading!
Kashyap