Good afternoon
thank you, America! What a great country - except for about 50% of the population voting for a primitive bloody lunatic! Extreme capitalists like D.T. have driven the country to where it is - now they vote him into presidency! Long live the ape, and Darwinism! But Darwinism is probably good for business, definitely in the short run...??!!
When I woke up this morning I looked at outperformance of my fund first thing - it was 0,5% - then I looked at the absolute and I had to look twice...- 5% at that time....and I thought: f..k, he has done it....oh no....even my kids were shocked!
As you would expect, massive volatiliy today..and whatever I am writing, will be done with 30 min later, I guess...But at late afternoon our time in Europe, anything resources-related is trading at the day´s high or thereabouts - but gold is back to where we started!
Anyway...in my opinion, Trump´s election will be bad for bonds ( major spending programs, tax-cuts ), and will be good for US-commodity demand. Back to big cars, big trucks, coal powered energy, But what will it mean to world trade, and to China? His rethoric has certainly been negative in this regard, and we will just have to w ait and see, how much of his crazy talk will be converted to real politics. For bonds, though, this could be really big news...government bond markets are built on trust in a countries policies and it´s central bank - we do not know what either of them will look like in 6 month time!
In any case, iron and steel are making new highs today in Asian markets, and base metals, following a negative start in Asian time zone, are very strong again in London now...all making new highs, some of them new multi-year highs, lead by Mr.copper, which is up by 3% in the moment. Coking coal is trading spot above 300 US$ for the first time since the great flooding in Australia in 2011 - it traded at 76 US$ back in Feb this year!! Obviously, not sustainable - but I guess at 150 US$ all serious producers would be very happy indeed!
Not surprisingly in light of these commodity prices today, major miners in London all with new highs and very strong! And as you would expect with a Trump-win, coal stocks in the US show double-digit price increases today.
Gold with massive swings - trading as high as 1336 US$, when the Australian market closed, and holding just above 1300 as I am writing. The A$ gold price traded as high as 1750 A$/oz - it´s now trading just above 1700 A$, which is obviously a great price for Australian producers.
Panoramic / Horizon Gold - many investors asking me, what they should be doing here. Well I indicated the other day, that this spin-off has been initiated and priced to make shareholders of PAN some well-deserved profits, and at the current A$ gold price, I am sure it will! Looking across the explorer-spectrum in Australia, you have many exploration stocks with no current resources trading at 20-30-50 mill A$ Enterprise Value, as one Australian analyst pointed out to me today. And here you have Horizon, managed by to people, with an EV of 16 mill A$, ample cash for exploration, 600.000oz in serious resources and another 600.000oz in not-so-serious resources - and most probably excellent upside from exploration. I would be very surprised, if this thing would not trade at a premium of 30% initially, and potentially much more over the next few month. In my opinion - cheap in absolute terms, and very cheap in relative terms!
Kingsgate - produced more than 15.000oz in October and are on target to achieve the guidance of 40-45.000oz this Quarter, and on target to be debt ffree by year end. Following another 10 Mill US$ repayment on 15.11., they are down to 35 mill A$ in total debt, and they have 47 mill A$ in cash. I do realise, that the management situation is vulnerable - and that Australian institutions will not buy the stock for as long as Ross Smyth-Kirk, whom most of you have met, is the chairman. But he is not worth the discount the stock is trading at....
Foran Mining - I just cannot believe, that this thing is trading, where it is! Zinc/lead/copper going through the roof, treatment charges falling - the Canadian $ lower than it was at the time of the pre-feasibility study - NPV7 of 382 Mill Can$ and 4.1 years pay-back at the time of the study. At today´s prices, the NPV will be larger, and pay-back quite a bit below 4 years....And all this with Hudson bay, the large smelter, running out of concentrate within 3-4 years and left with a large, enviromental liability going into many hundred million of $´s....
This is a typical example of a company, completely forgotten by the market, trading at a fraction of the NPV...( market cap is about 19 mill Can$!!!!). Pierre Lassonde as a 11% shareholder will make sure, that this stock will not be forgotten forever! I have no idea when - but I do know, that one day, this stock will sky-rocket! Buy straw hats in winter....and as usual, I declare my interest ..this is just about the only Canadian stock I am holding in my portfolio....Just the same way as Panoramic is my option on the nickel price, Foran is my option on zinc/copper - though with a much smaller position.
Have a nice evening and as much as I dislike Trump - you never sip your tea as hot as you cook it!
WS
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