Weekly Portfolio Update, December 24 2023
In a commodities bull market, good news actually helps mining stocks
Merry Christmas, everyone!
There’s suddenly a lot to be excited about for commodities investors. The Fed has pivoted, interest rates are falling, and the metals (gold and silver but also copper) are starting to follow uranium toward new highs. If this keeps up, expect our portfolio to generate some excitement in 2024.
Sector news
Here Come the New Listings of Existing Homes, Prices Drop Further, Demand Remains at Collapsed Levels
(Wolf Street) - The national median price of existing single-family houses, condos, and co-ops whose sales closed in November dropped to $387,600, down by 6.3% from the peak in June 2022, according to data from the National Association of Realtors (NAR) today.
Prices of new houses, sold by homebuilders, have already dropped 18% from the peak a year ago, as builders aggressively target the new reality with lower prices, smaller houses, “de-amenitizing” spec houses (cheaper appliances, countertops, etc.), and big mortgage-rate buydowns, thereby successfully competing with homeowners selling their existing homes (which we discussed here).
The New Listings are coming out of the woodwork.
New listings of existing homes normally drop after the spring selling season and plunge going into the holidays.
But in November, new listings fell by only 22,000 to a total of 316,900; while a year ago, they plunged by 65,280 over the same period. Between 2017 and 2022, they dropped on average by 56,000 over the same period, according to data from Realtor.com. They’d risen in August, when they normally drop. And in the other months of the second half, they barely dipped, when they normally drop sharply.
Copper Prices Waver as Global Supply Faces New Challenges
(Oil Price) - Panama's President ordered the shutdown of the Cobre Mine, impacting 1% of global copper supply and contributing to potential market shifts.
The fate of the Cobre Panama mine remains uncertain, with possibilities including permanent closure, nationalization, or renegotiation of contracts.
Environmental concerns and upcoming presidential elections in Panama add to the uncertainty, potentially impacting global copper prices and supply dynamics.
Still short of a breakout, current copper prices lifted off their October lows during November and have yet to see a major downside correction.
Uranium stocks rise after China bans export of rare-earth technology
Shares of uranium producers such as Energy Fuels (NYSE:UUUU), MP Materials (NYSE:MP) and EnCore Energy (NYSE:EU) jumped on Thursday after China banned the export of technology for extracting and separating rare-earth metals. The country cited national security concerns.
China's actions come as the United States and European countries seek to reduce their reliance on rare-earth elements from China, which makes up about 90% of global refined output. Rare earths consist of 17 metals used to make batteries, electric vehicles and wind turbines, among other products.
Uranium Spot Price Surpasses $90 to Reach Highest Level Since 2007
(PR Newswire) - TradeTech's uranium spot price has continued to break records in recent weeks and the indicator reached US$91.00 per pound U3O8 on December 22—its highest level in 16 years.
TradeTech's Weekly Uranium Spot Price Indicator has moved up 91 percent in the last year, increasing from $49.00 to $91.00 per pound U3O8, placing the indicator at a 16-year high. Growing global support for nuclear power and uranium supply concerns, due to the potential for legislation that would ban Russian uranium imports in the USA, have contributed to the price rise. The current price marks the first time that the uranium spot price has broken through the $90.00 price level since late 2007.
"Growth in global policy support and demand for nuclear power, combined with the desire by many to ensure independent, secure sources of nuclear fuel, is expected to exert continued upward pressure on nuclear fuel prices," said TradeTech President Treva Klingbiel.
U.S. States Make Bold Move to Reclassify Gold and Silver
(Oil Price) - Bills filed in the Oklahoma and Missouri legislatures for the 2024 legislative session would eliminate state capital gains taxes on the sale of gold and silver. The legislation would also take other steps to treat gold and silver as money instead of as commodities.
In Missouri, Rep Doug Richey filed HB1867 on Dec. 11. Rep. Bill Hardwick filed HB1955 on Dec. 15. The bills are companions to SB735 filed in the Senate by Sen. William Eigel earlier this month.
In Oklahoma, Sen. Shane Jett filed SB1507 and Sen. Nathan Dahm is running SB1508.
The enactment of any of these bills would eliminate state capital gains taxes on the sale and exchange of gold and silver bullion.
Both of these states are already among the 42 that do not levy sales taxes on gold and silver bullion.