» Macro: Stocks, Dollar, Commodities
» URANIUM! Stock Guidance
» Quickfire: Kutcho, Perpetua, Imperial
Bad Septembers and Black Swans aside, the pullback you’ve seen in the stock market over the past few days is shaping up to be just another monthly blip on the road to new all-time highs.
The Volatility Index remains tempered.
The cause of the few down days in stocks — if you need one other than stocks don’t always go up — is that the dollar has ticked ever so higher over the past week.
Why is the dollar “stronger”? Because you got a lower-than-expected CPI print. So the narrative — at least for this week — will be that inflation isn’t all that bad.
Two things.
First, that’s bullshit. The inflation is horrible. Check out the CRB Commodity Index hitting new cycle highs against that “stronger” dollar if you want a strong laugh.
The stock market ain’t crashing and this inflation ain’t going away. Not for the balance of this year anyway.
Second, the same inflation that’s driving up your grocery and gas bill is also driving stocks higher.
Even commodities you don’t usually hear much about, but that we are well-positioned in, are heading significantly higher.
It’s driving lithium prices higher. There are various types and pricing is fairly opaque, but at one auction this week spodumene concentrate was sold for $2,240 per tonne, up 79% from the $1,250 per tonne it fetched just two months ago in July!
Similar with uranium, which has now leapt to nine-year highs north of $49 per pound, and it has gotten there in a hurry.
Gold, for its part, doesn’t want anything to do with a stronger dollar, whether it’s in quotes or not. It’s been sent to the corner for a time-out.
Here’s the guidance…
Uranium Stock Guidance
I gave you some of my thoughts on uranium’s breakout last week, particularly in light of the acquisition offer made to Azarga Uranium (TSX: AZZ)(OTC: AZZUF) at an implied share price of C$0.71.
The uranium price has continued to rise in the past week, and so have related stocks. Azarga has been as high as C$0.80.
Last week, I said I would like to sell half of Azarga closer to the buyout price. Let’s take the opportunity to do that now. Sell half of Azarga Uranium above C$0.75. The least you should be making there is 127%. We will hold the other half risk free.
That is our fifth — count them, five! — triple-digit winner of the year after Critical Elements Lithium, Harvest Health & Recreation, Kutcho Copper, and Chakana Copper.
Our other uranium stock, Skyharbour Resources (TSX-V: SYH)(OTC: SYHBF) hit a 52-week high of C$0.87 today. That is 135% higher than when we bought it two months ago as the Blind Squirrel stumbles into another nut.
When’s the last time you made 135% in two months? I dug up and updated the chart from the July recommendation.
Skyharbour is now our main uranium horse. We are holding our full position for the ride.
As a refresher, Skyharbour operates as an explorer and project generator. It just delivered it’s highest grade uranium hit ever at its flagship Moore project in Saskatchewan, which is the world’s premier uranium district. It also has several projects being explored by partners.
You can see a recent update interview with CEO Jordan Trimble here.
Quickfire
Kutcho Copper (TSX-V: KC)(OTC: KCCFF) makes quickfire two weeks in a row. Last week, I guessed that news may be coming based on its hiring of a marketing firm. And I said that shares might head higher as a result. This week we got the news, and it was fantastic. It was a tease of the Feasibility Study, which we can expect in full by the end of October. The project will now open pit the majority of the Main deposit, which will increase ore feed from 2,500 to 4,500 tonnes per day. It also re-estimated the resource of the Main deposit, resulting in a 21% increase in tonnes to 22.8 million tonnes grading 2.26% copper equivalent. That works out to 765 million pounds of copper, 1.1 billion pounds of zinc, 280,000 ounces of gold, and 20.6 million ounces of silver. Recoveries also improved. We’ll get the full study next month. On the teaser, shares went up to C$0.85 — nearly 255% higher than our entry price.
Perpetua Resources (TSX: PPTA)(NASDAQ: PPTA) has broken down. The permit delay coupled with last year’s management rearrangement, dilutive financing, and gold’s failure to reach new highs has been too much for the stock. It sits near its 52-week lows at C$6.26 — after going higher than C$20.00 during gold’s record run last year. Sell it on the next bounce above C$6.50. We’ll walk away with an official 40% profit and a spoonful of regret for not selling more higher. It’s medicine that works, if you haven’t noticed. We’ve been much better at hitting the sell button around here.
Imperial Helium (TSX-V: IHC)(OTC: IMPHF) has dipped below our buy under price of C$0.35 as its lockup date has arrived for some shares purchased in the IPO round. It has now been trading for four months. Some selling is generally anticipated around these dates as early investors can sell. I am not selling any of my private shares, and am looking forward to more news on the company’s progress on developing a helium resource, which is expected soon. If you didn’t get your fill on the initial recommendation, or are a new reader, now is the time.
Wrap Up
With Perpetua and Sixty Six gone… we are down to 15 positions filled in our typical 20 position portfolio. You should know I’m always looking for quality speculations. But timing matters. And smaller stocks have had a rougher go of it recently.
Just take a look at our cannabis holdings. That entire group has broken down a bit as Biden has been silent on the weed, making investors think it will be longer for US legalization and the profits that come with it. I’m sticking with those positions for the same reasons I stuck with uranium… it’s a when not an if.
Plus, having success in other areas buys us the flexibility to adjust timelines in others.
Here’s what I’m reading:
Call it like you see it,