A “Pause That Refreshes” for Most Metals
Gold and silver prices dipped last week in the face of encouraging U.S. economic data and a rally in the U.S. dollar index. The dips in both metals found support at nearby moving averages, however, to keep the main uptrends intact.
Indeed, most major precious and base metals have experienced some degree of weakness or consolidation in recent days. For the most part, the pullbacks were needed to refresh the market and flush out the weak hands and other latecomers who belatedly jumped into the market after the strong rallies in April and May.
I’ll make the case here that while some additional near-term weakness is possible, the fundamentals underlying the broad-based metals bull market remain intact.
We’ll also look at a top rare earths miner which is undergoing a turnaround and could be a top performer this year based on rising demand for a little-known mineral which is critical to the red-hot electric vehicle market.
Feature Story: Metals Benefit from the “Everything Shortage”
Last week’s issue of Barron’s featured a story about the so-called “Everything Shortage”, an allusion to the worldwide shortage of essential goods across many different industries. If you know anything about inflation, you know that it has been classically defined as “too much money chasing too few goods.” With that in mind, the Everything Shortage is worth discussing since it will almost certainly have a big impact on precious and base metals prices in the coming months.
Blame it on the lingering impacts of last year’s Covid-related shutdowns, or blame it on a series of unfortunate weather-related setbacks (like Hurricane Laura and the polar vortex), but whatever the reasons, supply chains domestically and globally are in disarray. Because of the near-constant supply chain disruptions that have occurred since last year, supplies of many key commodities and consumer goods are harder to get in a timely fashion.
Nationwide transportation problems seem to be the major problem surrounding the shortage of goods. As the Barron’s article pointed out, “Shipping containers that carry most of the world’s goods are suddenly difficult to secure, but at the same time, Daniel Miranda, president of the Longshore and Warehouse Local 94 union that works two massive California ports, sees too many of them. ‘Your goods are on the dock, but who’s going to pick them up?’ he says. ‘If you don’t believe me, I’ll take you to L.A., Long Beach, and you can see them stacked eight high.’”
Last month’s temporary Colonial Pipeline shutdown (cyber-attack related) is another case in point. While gasoline supplies remained plentiful in the southeastern part of the U.S. served by Colonial, finding trucks to distribute it to fuel stations was a problem due to transportation bottlenecks and trucker shortages. Consequently, gas prices briefly spiked well over $3/gallon in some areas of the country.
As I alluded to above, the problem of inflation can be boiled down to a case of excess money supply chasing a diminished availability of goods—emphasis on availability. For it doesn’t matter that the actual supply of certain commodities is plentiful; what does matter is how easily that supply can reach its designated market channels. Transport problems represent a limitation of the supply of goods reaching the market, which can exacerbate inflationary conditions even in the midst of a plenitude of products.
“But,” observes economist Scott Grannis in a recent blog, “it’s important to remember that supply bottlenecks and temporary labor shortages are not what create inflation: only Fed mistakes do.” And the chief problem as he sees it? “Massive government spending and an overly-accommodative Fed have introduced profound risks to the economy and to financial markets.”
Grannis further noted that the central bank isn’t reversing its quantitative easing (QE) policy in response to recent inflation signals, which means “unwanted money” is increasing. This of course can be seen in the weak U.S. dollar and rising commodity prices, not to mention accelerating house and stock price values and rising inflation expectations.
Adding pressure to the money supply aspect of the growing inflation problem, the White House envisions spending some $6 trillion in the coming year, “with trillion-dollar deficits as far as the eye can see,” as financial pundit Randall Forsyth recently observed. Economists and investors alike fear that inflation could accelerate in the coming months as a result of unrestrained fiscal spending and money supply increases, the extent of which is visible in the graph showing the runaway federal spending trend.
The explosive increase in federal expenditures shown above, coupled with shrinking tax receipts, is a recipe for future inflation. Not surprisingly, the market is already discounting the negative impacts to the economy via the inflation-index Treasury securities (TIPS) market. Based on current TIPS yields, the inflation rate is anticipated to average around 3% per year for the coming five years.
Shown here is a useful graph comparing the inverted 5-year TIPS yield with the gold price. Both tend to be positively correlated to each other since both gold and TIPS have long been used as safe havens whenever investors are worried about future economic prospects. As you can see, both the gold price and the TIPS inverted yield are near record highs, which underscores the extent to which gold’s “fear factor” is driving up the metal’s price.
As we head further into 2021, I expect to see more evidence that inflation expectations are increasing as supply-chain disruptions continue in parts of the world where Covid lockdowns continue. Importantly from an investment standpoint, the metals in general (and gold specifically) should benefit from this rising fear of inflation, much as they have for the better part of the last year.
In the short-term, however, a shake-out (or “pause that refreshes”) is probably needed to cool off some of the excess heat generated by recent rallies in the key industrial and precious metals. We’ll discuss this in greater depth elsewhere in this issue. But the overall intermediate-term (6-9 month) trend for the overall metals sector remains bullish.
What To Do Now
We recently purchased a conservative position in the iShares Gold Trust (IAU), my preferred gold-tracking vehicle of choice (and the most actively traded of the U.S. exchange-listed gold ETFs). IAU has rallied persistently in recent weeks as fears over inflation widened. There have also lately been substantial inflows into IAU ($291 million week over week, to be exact) as investors—retail and institutional alike—have increased their appetite for gold in the wake of economic and geopolitical concerns. While higher inflows in IAU can sometimes serve as a contrarian signal (thus hinting that a trend reversal is imminent), higher inflows can also be interpreted as a bullish development in the early stages of a turnaround. All told, I’m still expecting a fairly vibrant gold market this summer. I suggest raising the stop-loss on this position to slightly under the 35.30 level on a closing basis (where the 25-day line’s presence is currently felt). HOLD
Turning our attention to the leading blue-chip gold miners, Barrick Gold (GOLD), the world’s second-largest gold producer, is poised to benefit from the gold turnaround currently underway. Moreover, its copper exposure is also a long-term positive (along with declining per-unit copper mining costs). The million-ounce gold producer forecasts all-in sustaining costs for gold (a key metric) of around $929 per ounce as of last year’s fourth quarter—well below current prices of around $1,911 per ounce—and giving the firm plenty of room to take on additional projects. Also encouraging for Barrick is a balance sheet featuring zero net debt, $500 million in cash and a $3 billion undrawn credit facility. What’s more, the company trades at a reasonable price/earnings ratio of 17, which makes the stock attractively valued compared to many of its peers. After shares rallied 8% from our initial recommendation, I previously suggested taking partial profits (based on the rules of our technical trading discipline). For now, I also suggest maintaining the previously-recommended protective stop-loss on the remainder of the trading position at slightly under the 23 level. HOLD
An excellent balance sheet and solid production outlook combine to make Newmont Mining (NEM) one of my top picks among blue-chip senior gold mining companies. From a relative strength perspective, moreover, Newmont has been a leader in the present gold mining stock rally, having been the first of the senior miners to achieve new highs for the year in April. In a recent conference call, Newmont’s CEO stated, “During the first quarter, our world class portfolio produced 1.5 million ounces of gold and 317,000 gold equivalent ounces from copper, silver, lead and zinc. In line with our full-year outlook and positioning Newmont to deliver a stronger performance as expected in the second half of the year.” Analysts concur and expect Newmont’s top line to increase 37% from a year ago in the second quarter of 2021, while the bottom line is expected to increase 145%. Newmont’s all-in sustaining costs, meanwhile, are currently $1,039 per gold ounce, which is under current bullion prices by around 85%. It’s a solid mining story and I believe Newmont stock should be a part of every long-term precious metals portfolio. After the 10% rally from our initial recommendation, I previously suggested traders take partial profits and raise the stop on the remainder of the trading position. The suggested stop-loss for the remainder of our position is slightly under the 67.50 level (our original entry point). HOLD
New Recommendations/ Updates
A Needed Silver Price Pause
After a solid rally into May, the front-month silver futures price has stabilized after stopping short at the $29 per ounce level a few weeks ago. The pause has proven to be both needed and refreshing and a lateral trading range pattern has since developed, with silver going more or less sideways as the market consolidates its gains from the last two months.
My expectation is for silver to exceed the early February peak (the current year-to-date high) of $30 this summer as a number of fundamental factors combine to boost the white metal’s appeal.
The first factor which supports a sanguine outlook for silver is the aforementioned inflation threat, or to be more specific, the fear of inflation. Haven demand for safety-conscious investors is increasing, and while silver isn’t as widely utilized as gold as a safe haven, its reputation as a monetary metal assures that demand for it will rise as long as inflation remains a threat.
Equally supportive for silver is its outsized role as an industrial metal. And while silver has lagged the price gains of other leading industrial metals so far this year, pent-up manufacturing and jewelry demand globally is expected to give the metal’s price a much-needed boost and lead to higher highs in the coming months.
What’s more, a growing number of industry experts believe silver could go as high as $50 if the White House’s renewable energy plan is realized. This would have the effect of increasing silver demand for use in electric vehicles (EVs), solar panels and other alt-energy applications in which the metal is widely utilized.
Additional anticipated uses for silver in the foreseeable future include the continued 5G wireless network rollout and the accelerating demand for bullion coins (for both speculative and long-term investment purposes).
Along those lines, CoinWeek recently drew attention to a silver shortage that is being experienced by the U.S. Mint. Specifically, the Mint is having difficulty procuring silver blanks from suppliers for making the 2021 Morgan Silver Dollar, Peace Dollar and other popular commemorative coin series. The Mint reports, “The demand for many of our bullion and numismatic products is at record heights and increasingly outpacing the supply of silver blanks available through our suppliers.”
In view of the supply shortage and other demand-related factors, a so-called “#SilverSqueezeMovement” is trending across Twitter and other social media platforms. Traders hope to capitalize on the supply disruptions to (presumably) push silver prices to the meteoric heights achieved by GameStop (GME) and other “meme stocks” in recent months.
Will the #SilverSqueezeMovement crowd ultimately prevail? While I can offer no specific insights into the success or failure of the attempt at creating a massive silver short squeeze, I can hazard a guess that we’ll see prices drift higher as we head further into summer based on the positive fundamental backdrop discussed here, including a five-year trend of decreasing supplies (see chart below, courtesy of United States Gold Bureau). In view of this, a bullish intermediate-term stance toward silver is still recommended.
What To Do Now
Aggressive investors purchased a position in the iShares Silver Trust (SLV) on May 11. This is my preferred silver-tracking vehicle of choice and is one of the most actively traded of the U.S.-listed silver ETFs. Aside from the obvious inflation factor, silver is benefiting from several major areas of industrial demand (which should increase as the global economic reopening continues apace). Furthermore, silver expert Frank Holmes of U.S. Global Investors recently observed that the metal should become a key beneficiary of several emerging industrial applications, including the global rollout of 5G technology, solar power generation (e.g. solar panels) and the electric vehicle and automotive sector. On a technical note, after hitting a yearly intraday high at 28 on February 1, leaving a rather prominent “air pocket” that I expect will be eventually filled (as is normal in such cases). For now, I’m maintaining my “hold” rating on SLV and suggest maintaining the stop-loss on our existing trading position at slightly under the 24.50 level on a closing basis (where the 50-day moving average comes into play). HOLD
Copper Market Correction Underway
It had to happen sooner or later, but after a blistering spring rally which captured widespread media attention, copper prices have pulled back lately as demand from top industrial consumer China has shown signs of fading.
Continuous contract copper futures rallied from $3.50 in early February to $4.75 by early May—a remarkable 36% gain in just three months. But in recent weeks, China’s appetite for the red metal appears to have diminished, with Yangshan copper import premiums falling $28.50 per ton last week, which marks the lowest amount since 2012.
ANZ analyst Soni Kumari told Reuters that China’s demand “could decelerate amid tightening financial conditions and slowing credit growth,” but added that persistently strong demand for copper in other countries would likely keep prices buoyant. I’m inclined to agree with his analysis, especially in light of continued global supply tightness for refined copper and copper scrap.
It’s worth noting that copper’s latest “correction” came around the time that news reports out of China suggested a softening of that nation’s manufacturing surge. The South China Morning Post reported that China’s official purchasing managers’ index (PMI) showed a “slight drop in manufacturing sector activity in May, attributed partly to factory closures for the seven-day ‘golden week’ holiday at the start of the month.”
However, this was offset by a slight rise in non-manufacturing sectors as a result of stronger consumer activity during the holiday. Moreover, China’s final PMI number for May came in at 51, slightly lower than April’s 51.1, but still an expansion reading and a sign that manufacturing remains healthy.
Also worth mentioning is a report last week by Chile’s copper commission Cochilco, which revealed that the country’s Codelco copper mine production fell 0.5% year on year to 132,700 tons in April, while global miner BHP’s Escondida mine dropped 17% drop, to 85,700 tons. The reductions further support an optimistic intermediate-term outlook on the metal.
In the short term, however, a rally attempt by the oversold U.S. dollar index (USD) could put some additional pressure on copper prices. The dollar index recent tested a widely-watched benchmark level near 89.50, a level that in the past has temporarily turned back declines and catalyzed short-covering rallies for the greenback.
The latest test of 89.50 obviously triggered some short covering, as did last week’s stronger-than-expected U.S. employment and service sector report for May. If the dollar index rises decisively above 91 in the coming days there will almost certainly be some spillover weakness in copper before the end of the latest correction in this metal.
What To Do Now
Freeport-McMoRan (FCX) is one of the world’s top-four copper producers and is also benefiting from higher gold prices, with recent sales 9% above the company’s guidance in the fourth quarter. Management projects a copper sales increase of 20% over 2020, with gold volumes expected to rise by more than 50%—even as production remains low (projections which will likely prove conservative). Freeport is further benefiting from the “clean” energy transition tailwind now accelerating under the current White House administration, as well as recent computer tech trends (where copper is heavily utilized). The company’s quarterly dividend has also recently been reinstated, tying a nice bow on an otherwise attractive package. I previously suggested using a stop-loss slightly under the 39.35 level on open long positions in the stock. I’m maintaining this recommended stop-loss for now. HOLD
We recently initiated coverage of Taseko Mines (TGB), which I view as an ideal vehicle for gaining some exposure to the strong molybdenum market. Canada-based Taseko is known mainly for being a mid-tier copper miner that operates the Gibraltar Mine, Canada’s second largest open-pit copper mine. Taseko’s Gibraltar mine also boasts proven reserves of 53 million pounds of molybdenum. Total molybdenum production for the company in the first quarter of 2021 was 530 thousand pounds, up 29% from a year ago. In view of previously discussed supply shortages and increased industrial demand for steel (of which molybdenum is a key component to increase hardness, electrical conductivity and corrosion resistance), Taseko looks like a solid story. Long-term-oriented investors can accordingly do some nibbling on pullbacks down to around the 50-day line at around 2.10 (stop). BUY A HALF ON WEAKNESS
Platinum Still Stuck in Neutral
Unlike most major precious and industrial metals, platinum prices have been ambling in a mostly sideways range between $1,150 and $1,250 since peaking at $1,350 in February (its highest level in over six years).
If you’re wondering the reason for platinum’s underperformance, a recent survey from leading industry analysts provides some elucidation.
According to the Platinum and Palladium Focus 2021 by consultancy Metals Focus, platinum will remain in a surplus through 2021.
The analysts at refining and specialty chemicals firm Johnson Matthey, who publish the well-known PGM Market Report, concur. They found that although platinum supply fell to a deficit last year, total gross demand was also lower than the previous year’s demand. All told, the firm predicts total net platinum demand in 2021 to be 2% lower from a year ago.
Providing a more sanguine outlook, the World Platinum Investment Council also expects platinum supply to increase this year. Yet it’s also forecasting a demand increase of 5%, driven by continued global economic recovery and underpinned by widespread fiscal and central bank stimulus measures.
Of note, a major driver for demand this year will be the autocatalyst market (previously platinum’s biggest industrial use). “Autocatalyst demand will recover markedly as vehicle numbers, despite semiconductor shortages, significantly surpass 2020 levels,” said Metals Focus.
The hydrogen fuel-cell market is also expected to be a key driver for platinum in 2021. Based on Johnson Matthey’s analysis, this industry is forecast to have the biggest growth at 40% year-over-year. This compares to a projected 17% growth bump based on the World Platinum Investment Council’s forecast.
Metals Focus further forecasts an annual average platinum price of $1,200 per ounce for 2021, which represents an increase of more than 33% from last year’s average, and the highest since 2014.
Taken at face value, the demand drop referenced by two of the three consultancies would explain the lethargy in the platinum price in recent months. For this reason, I’m not overly optimistic on the near-term platinum price outlook.
Yet the fundamentals don’t support a bearish view, either. All things considered, I recommend that we embrace a wait-and-see approach and maintain our conservatively bullish exposure to our platinum ETF (see below) while keeping this position on a very tight leash.
What To Do Now
We recently purchased a conservative position in the GraniteShares Platinum Shares ETF (PLTM), which is backed by the physical metal and is held in allocated bars (a daily updated bar list is posted at GraniteShares’ website at https://graniteshares.com). Platinum and the platinum ETF have lagged the recent gold and silver rallies, and PLTM is now testing a key trend line that I don’t normally emphasize, namely the 120-day moving average. Accordingly, I recommend that we maintain our long position in PLTM and keep the stop-loss unchanged at slightly under the 11.50 level where the influence of the 120-day line is now being felt. A decisive violation of 11.50 on a closing basis would break this key psychological support and would convince me that sellers have no intention of relinquishing their hold on the metal in the near term. HOLD
Steel Price Weakness Likely Temporary
Hot-rolled steel coil prices have risen 60% in 2021, and are up 200% from a year ago. Feverish demand for steel on the back of China’s manufacturing rebound has allowed steel mills to raise prices for the commodity.
Despite the threat of an export tax on steel by China, the world’s largest steel producer, supply constraints continue to be a problem for the global steel industry, which should keep prices buoyant in the months ahead.
As with other industrial metals (notably copper), however, steel prices are undergoing a “correction” and may face some additional weakness in June before the next rally. Domestic hot-rolled coil margins averaged $152 per metric ton in May, but fell to $41 per metric ton by early June, according to data from S&P Global Platts Analytics. According to Platts, the margin squeeze is attributable to weaker finished steel prices and high iron ore prices.
Platts further expects additional downward pressure on steel prices this month as global steel production is expected to increase in the face of softer seasonal demand due to the start of China’s rainy season.
Nonetheless, Wall Street remains bullish on domestic steel producers, as evidenced by recent ratings upgrades on several big-name companies. Among them was an upgrade by investment bank UBS, which raised its rating on shares of U.S. Steel (X) from “sell” to “hold” while doubling the price target from 15 to 30 per share. Morgan Stanley also upgraded U.S. Steel from “hold” to “buy” recently, raising the price target from 24 to 32 based on strong steel market fundamentals. Morgan Stanley analysts believe the current steel cycle will remain “stronger for longer” based on tight supplies.
Also boosting the steel outlook is the White House’s recent $6 trillion budget proposal for fiscal year 2022 that would expand fiscal spending for roads, water pipes, EV charging stations and other infrastructure that would necessitate higher steel production volumes.
Although hot-rolled coil, scrap and rebar prices are below their early May peaks, I’m not expecting the latest corrective dip to persist beyond June. Accordingly, I recommend that we maintain exposure to our lone steel stock position, Cleveland-Cliffs, as discussed below.
What To Do Now
Cleveland-Cliffs (CLF) is one of North America’s largest integrated steel makers and is seeing higher steel demand (and higher steel prices) thanks to global economic recovery and tight supplies. Recently quarterly results provided some insights into why things are rolling for Cleveland-Cliffs, as discussed in previous issues. Since then, Bank of America has reinstated coverage of the company with a “buy” rating and an upside target of 25, referring to it as a free cash flow “machine.” I recommended that investors maintain our recently purchased conservative position in CLF provided the 18 level (our latest stop-loss) isn’t significantly violated on a closing basis. This level was recently tested, but the stock seems to have been met with supporting bids around this benchmark. HOLD
Rare Earths: Neodymium-Praseodymium in Focus
Neodymium prices are up over 90% from a year ago, while praseodymium prices have risen by nearly the same amount. Both rare-earth minerals are used heavily in the $25 billion global magnet market, which has many applications in the red-hot automotive sector.
Neodymium oxide is the strongest permanent magnet material ever discovered and is widely used in permanent magnets, lasers, microphones and headphones, computer hard disks, electric motors and generators. It’s primarily mined in China, India, the U.S. and Brazil.
Praseodymium oxide is used in alloys with magnesium for the production of high-strength metal for aircraft engines, as well as magnets used in electric motors. Praseodymium compounds are used for coloring glass and enamel, and related compounds improve UV absorption and are used for eye protection glasses used by welders.
Neodymium-Praseodymium alloy is accordingly highly valued in several global manufacturing and high-tech applications—including the high-value electric vehicle market—and analysts forecast that neodymium in particular will lead the rare-earth metals market in terms of value, particularly in China.
With this in mind, let’s take a look at one of the leading companies with exposure to this lucrative market.
Rare earths play a pivotal role in the booming market for electric vehicles, and it’s predicted that the rare earth elements market will increase by 40% to $3.8 billion by 2026. And with the EV market widely expected to mushroom between now and then, the companies that mine them will reap substantial benefits (along with those who invest in them).
MP Materials (MP) is regarded as one of the biggest (if not the biggest) rare earths producers in the Western Hemisphere, currently accounting for around 15% of total global supply and with most of its production taking place at its Mountain Pass, California mining site.
Most of the resulting rare earth concentrates MP produces are eventually sold to China through an intermediary (where those concentrates are processed). However, the company is working towards completing a Stage II optimization project next year that would allow the firm to bypass the middleman by fully processing the materials and selling rare earths straight to end-users.
Upon completion, Stage II is expected to produce around 20,000 metric tons of separated rare earth oxides annually, including over 6,000 metric tons per year of Neodymium-Praseodymium, which in turn will be used primarily to make magnets for the EV market, as well as for wind turbines, drones and robots.
In the first quarter, MP posted consensus-beating earnings per share of 13 cents, thanks to rising production and prices for the rare earth metals it produces. But it was the company’s eye-popping top line that captured Wall Street’s attention, as MP reported revenue of $60 million—up 190% from a year ago and 36% above the consensus expectation.
Production of the firm’s rare earth oxides rose 2% to nearly 10,000 metric tons in Q1 due to a “modest improvement” in processing operation efficiencies and a higher ore feed rate. Where it really impressed, however, was in the realized sales price for its oxides, which mushroomed 132% to nearly 6,000 metric tons.
MP Materials also boasts strong balance sheet with cash and equivalents of $1.2 billion (including $672 million in net proceeds raised through a convertible “green bond” offering—the largest in the country, according to MP). Its liquidity position was further increased by $21 million in free cash flow during the quarter.
Looking ahead, analysts expect the company to grow the full-year 2021 top and bottom lines by 77% and 93%, respectively, with continued double-digit earnings and revenue growth in the next two years. It’s a solid story and worth a closer look, in my opinion, if you’re looking to gain some exposure to the rare earths space.
What To Do Now
After hitting a yearly high at 50 in March, shares of MP fell to 25 in May before finding support at this level. A turnaround attempt is in progress, and the stock has just posted its first weekly close above the widely-watched 50-day moving average since March. Investors can purchase a half position in MP on weakness, using a level slightly under 25 as the initial stop-loss on a closing basis. BUY A HALF ON WEAKNESS
EV Market Growth Fuels Cobalt Demand
Cobalt prices have had a great run in the last several months, and are up over 40% from a year ago. Cobalt is used in a wide variety of industrial and technological applications, including turbine blades for gas turbines, jet aircraft engines and rechargeable batteries for electric cars, as well as the pigments and catalysts markets.
Analysts are forecasting steadily higher prices for cobalt in the years ahead based on solid global industrial demand, particularly from the EV market (and especially after 2025, when analysts expect EVs to reach cost parity with gasoline-fueled vehicles).
On the supply side of the equation, lower mine output is expected to result in a bigger deficit between demand and supply.
Among the world’s major producers, China is expected to be the primary contributor to global refined cobalt production into 2025, with around 60% of total growth.
A top player in the cobalt market is Wheaton Precious Metals (WPM), which also happens to be a world-class precious metals streaming company. Wheaton features a high-quality portfolio of long-life, low-cost assets. (Streaming companies make an upfront payment, plus a fixed payment per ounce of metal—often 20% of spot price—giving them the right to a percentage of a mine’s future production and allowing them to leverage rising metal prices.)
As the world’s largest silver streaming company, with 14 silver purchase agreements, as well as gold and palladium agreements, Wheaton focuses mainly on high-quality, high-margin operations with a goal of returning a minimum of 30% of cash flow to its shareholders, with the remainder used to grow the company.
But aside from precious metals, one of the main drivers behind Wheaton’s stock price in recent months has been the company’s growing exposure to the valuable cobalt market. Last year, Wheaton closed a cobalt streaming agreement for the Vale-owned Voisey’s Bay Mine for $390 million and will make ongoing payments of 18% of the cobalt spot price per cobalt pound delivered until the delivery of 31 million pounds of cobalt and 21.2% of cobalt production thereafter for the life of mine. (Wheaton recently reported the first production of cobalt from the Voisey’s Bay mine.)
What To Do Now
With gold, silver and cobalt prices on the upswing, WPM should be able to benefit from the accelerating growth in demand. Investors can nibble on weakness down to around 43.30 (near the 50-day line). BUY A HALF ON WEAKNESS
Current Portfolio
| Stock | Price Bought | Date Bought | Price on 6/7/21 | Profit | Rating |
| Barrick Gold (GOLD) | 23 | 5/11/21 | 23 | 2% | Hold |
| Cleveland-Cliffs (CLF) | 20 | 5/11/21 | 19 | -3% | Hold |
| Freeport-McMoRan (FCX) | 41 | 5/11/21 | 41 | 1% | Hold |
| GraniteShares Platinum Shares (PLTM) | 12 | 5/11/21 | 12 | -4% | Hold |
| iShares Gold Trust (IAU) | 35 | 5/11/21 | 36 | 3% | Hold |
| iShares Silver Trust (SLV) | 25 | 5/11/21 | 26 | 4% | Hold |
| MP Materials (MP) | 32 | 6/8/21 | 33 | 5% | Buy a Half |
| Newmont Minint (NEM) | 67 | 5/11/21 | 72 | 7% | Hold |
| Taseko Mines (TGB) | 2 | 5/24/21 | 2 | 7% | Buy a Half |
| Wheaton Precious Metals (WPM) | 48 | 6/1/21 | 48 | 1% | Buy a Half |
Buy means purchase a position at or around current prices.
Buy a Quarter/Half means allocate less of your portfolio to a position than you normally would (due to risk factors).
Hold means maintain existing position; don’t add to it by buying more, but don’t sell.
Sell means to liquidate the entire (or remaining) position.
Sell a Quarter/Half means take partial profits, either 25% or 50%.
The next Sector Xpress Gold & Metals Advisor issue will be published on June 22, 2021.
Cabot Wealth Network
Publishing independent investment advice since 1970.
President & CEO: Ed Coburn
Chief Investment Strategist: Timothy Lutts
Cabot Heritage Corporation, doing business as Cabot Wealth Network
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