Weekly Portfolio Review, November 26 2023
The calm before the storm
Last week was basically a holiday-shortened version of the previous one. The broad equity indexes rose a bit on hopes for an end to Fed tightening. Oil fell slightly on signs of slowing economic growth. Gold knocked on the $2000/oz door yet again. And uranium just kept rising as nuclear becomes the energy sector’s Next Big Thing. Think of last week as the calm before the storm.
Sector news
Uranium prices top $80 for the first time in 15 years as demand for nuclear power surges
(Yahoo) - A nuclear power renaissance is fueling investor interest in uranium, helping to drive the price of the key energy commodity to a 15-year high.
Uranium futures tracking a form of uranium called "yellowcake" hit $80.25 a pound on Monday, Bloomberg reported.
Prices have been on the rise this year after a decade of trading sideways, due to growing demand for nuclear power. The heightened demand arrives as extreme weather events have created a more unstable electricity market, and intensifying commitments towards the clean energy transition have spurred the search for alternative energy sources.
The prospect of a growing nuclear power industry has sent investors back into mining shares and uranium derivatives, and they're a lot more interested in futures prices than the spot price, according to research cited by Bloomberg.
Uranium sector ‘scrambling’ to fill supply gap
(Canadian Mining) - The price of uranium will hit triple-digits for the first time since 2007 as nations weaning off oil and seeking energy security deplete nuclear fuel supplies, the world’s largest investment fund in the physical metal says.
The spot price for uranium should rise from US$79 per lb. this week to US$100 or more per lb. within a year to 18 months, John Ciampaglia, CEO of of Sprott Asset Management, which runs the Sprott Physical Uranium Trust (TSX:U.U for US$; U.UN for C$), said by phone on Monday. The trust holds 62 million lb. of yellowcake uranium valued at US$4.9 billion.
Global yellowcake supply might reach 145 million lb. this year or next, Ciampaglia said, citing the World Nuclear Association. But annual demand is already at 180 million lb. and the industry group expects it to nearly double to 300 million lb. by 2040. Some 60 nuclear plants are under construction globally and more are planned. Countries like Germany and Japan that considered phasing them out are reversing course.
“You've got an industry that's scrambling to meet the supply requirement that's forming and the market today is already out of balance,” Ciampaglia said in Toronto where he’s based. “Around 2030, there's a very large supply deficit that could play out and that's why the price of uranium is obviously starting to move.”
Chile copper deal implies tighter year-ahead market
(Yahoo) - Next year was supposed to be a year of raw material surplus, with smelters enjoying TC/RCs equal to or better than this year's benchmark of $88 per metric ton and 8.8 cents per pound.
Those negotiated by Antofagasta and Jinchuan came in at $80 and 8.0 cents, suggesting both miner and smelter agree the concentrates market will be tighter than expected.
Gold prices gain as U.S. dollar loses strength on Fed pause bets
(CNBC) - Gold prices rose on Friday, on track for their second consecutive weekly gain, with a boost from a drop in the U.S. dollar and bets the U.S. Federal Reserve might soon end its interest rate-hiking cycle.
Spot gold was up 0.4% at $1,999.88 per ounce, and has risen about 1% so far this week. U.S. gold futures gained 0.4% to $2,001.20.
The dollar index has been deteriorating due to the weaker data coming out this week which should shift the Fed to a more dovish pivot and then that could be a tailwind for gold in 2024, said Phillip Streible, chief market strategist at Blue Line Futures, in Chicago.
Chinese jewelry sales boost gold consumption with 12.2% increase through Q3
(Kitco) - Chinese jewelry companies reported a 12.2 percent year-on-year increase in retail sales of gold, silver, and other jewelry, reaching 247.2 billion yuan ($34.4 billion) between January and September, according to a report from China Daily.
The rate of growth nearly doubled China’s overall retail growth rate. “The growth rate…is far higher than the average growth of total retail sales — at 6.8 percent — across China,” said Ye Zhibin, president of the Gems & Jewelry Trade Association of China.
Home sales fell to a 13-year low in October as prices rose
(CNBC) - Sales of previously owned homes were 4.1% lower in October compared with September, running at a seasonally adjusted annualized rate of 3.79 million units, according to the National Association of Realtors.
It was the slowest sales pace since August 2010. Analysts were expecting a smaller drop, to 3.9 million units. Sales were down 14.6% year over year.