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Metals, U.S. Treasuries Seen As Safe Haven As Oil And Stocks Crash

By Jeb HandwergerCommoditiesJan 20, 2016 01:08
ca.investing.com/analysis/metals,-u.s.-treasuries-seen-as-safe-haven-as-oil-and-stocks-crash-380574
Metals, U.S. Treasuries Seen As Safe Haven As Oil And Stocks Crash
By Jeb Handwerger   |  Jan 20, 2016 01:08
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It is important to study the beginning of trading in January as major pools of capital tend to re-position around this time for the new year 2016. So far this year it has been ugly, one of the worst starts in history. Oil is crashing below $30 down over 20% year to date. The NASDAQ and Russell 2000 are already down more than 10% year to date. Mostly all markets are in the red except precious metals and treasuries.

China’s stock markets started falling followed by the US. Europe is already in a bear market and the US may be near that zone soon on a few more down days like last Friday. The fear of a global financial crisis is beginning. The US Central banks may once again have to step in.

Be careful as this could be a challenging quarter for earnings in the US as the strong US dollar may weigh on sales growth. This is the second major correction in six months for US equities which may signal the four year bull market is in need of a more significant downturn.

For weeks I didn’t like this rally in general equities in the US while commodities such as oil and copper fell off a cliff. Eventually the losses in the commodity sector will be felt by the banks as they are sitting on a lot of debt.

The 30-Year US bond is near record highs at 160 which could be a near term top. The US dollar which has already broken out into new 5 year high territory could also be on the verge of turning over. Investors want liquidity and are moving capital out of junk bonds and equities into precious metals and US treasuries.

The Dow Jones 30 has plunged below August support at 16,000 and the four year rally in general equities could be ending as this is the second correction in six months. Capital is searching for safe havens as investors may be realizing the global economy could be on a downswing. Investors are flocking to what they believe are the most liquid assets in US Bonds and precious metals which are continuing to hold value.

The strong dollar has made other currencies such as the Canadian, Australian dollar and British pound look very weak. However, the rising dollar is going to start making a drag effect on the US markets and the ability of the US to attract foreign investment. The US is getting expensive to foreign investors. They can no longer afford US stocks and real estate and may soon look into the historically discounted precious metals arena and junior mining sector.

The opportunity could be in gold and silver as capital flows from stocks to precious metals as a safe haven. If the US markets continue to follow the Chinese markets lower I expect a whole new round of global quantitative easing.

Spot Price Per Tonne
Spot Price Per Tonne

One market that is soaring in price despite this carnage is lithium. Watch some of the high quality junior lithium miners in Argentina and Nevada such as: Western Lithium USA Corporation (TO:WLC), Dajin Resources Corp (TO:DJI), and Pure Energy Minerals Ltd (TO:PE). Argentina appears to be turning positive to mining development and exploration after the recent election.

Also keep a close eye on uranium especially after the recent Chinese deal with Fission Uranium Corp (TO:FCU). Fission 3.0 Co (TO:FUU) and Canex Energy Corp (TO:CSC) may soon get more interest as grassroots exploration has been dormant in the Athabasca Basin. Plateau Uranium Inc (TO:PLU) may be on the verge of publishing an updated Preliminary Economic Assessment on their Macusani project in Peru.

Don’t be surprised to see a major rotation into the beaten down juniors which are already way oversold in my opinion. The TSX Venture is below 500 a historic low yet there are many companies coming out with exciting news. Be careful of the naysayers who tell you the junior sector is dead. These are the sort of words that are mentioned at major bottoms.

Despite the supposed death of the sector many of the stocks we follow continue to make progress with significant news.

1) Fission Announces Execution of Subscription Agreement and Offtake Agreement with CGN Mining

Dev Randhawa, Chairman and CEO, of Fission Uranium, commented, “This is an historic moment for Canada’s uranium industry. It is the first time a Chinese company has invested directly in a Canadian uranium company. We are thrilled that CGN Mining has chosen to invest in Fission, PLS and the Triple R deposit. CGN Mining’s understanding of the uranium business is superb and we are excited at the opportunity to work with them. CGN Mining’s knowledge and expertise will be invaluable as we progress PLS and add to shareholder value.

2)Ucore Comments on Royalty Conversion and Positive Outlook of New 10% Shareholder

“We’re extremely pleased to welcome Mr. Johnson as a Reporting Insider of Ucore,” commented Jim McKenzie, President and CEO of Ucore. “Randy has built an impressive industrial resume in Alaska and beyond, and his experience in company-building will be a significant asset and resource to us as Ucore enters its early production phase. What’s more, his substantial recent investments in Ucore, and his commitment to retaining and progressively expanding his ownership position over the long term, are significant votes of confidence in the prospects of the Company. We look forward to rewarding this commitment with continued growth and return on investment.

3)Pele Mountain Resources Appoints Wayne Richardson as Chairman of its Board of Directors

Mr. Richardson is President and Chief Executive Officer of Enirgi Group (“Enirgi“), a privately held specialty chemicals & diversified industrials company headquartered in Toronto, Canada. Enirgi owns and operates a portfolio of diversified assets and operations focused on Power Storage, Chemicals, Resources, Innovation, Environmental Services, and Agriculture. Mr. Richardson is a well-regarded and highly respected results-oriented professional with decades of international business development experience and a history of successful management of turnaround, growth, and start-up companies worldwide. He has led the impressive development and growth of Enirgi Group since its inception and holds Management and Board positions at LeadFX Inc (TO:LFX), a TSX listed Canadian public company, and several privately held companies that operate under the Enirgi Group umbrella.

4)Treasury Metals Director Expects Gold to Turn Soon, Says Goliath Could Be a Cash Machine

Treasury Director Christophe Vereecke said in the interview, “Every great mining project has two things in place: a good deposit and a competent management team. When I met Treasury’s Chairman Marc Henderson I was very impressed with his experience. He’s been in the business for over 30 years and has built mines before, so he’d like to see Goliath through to production. Also, the fact that Goliath is located in a mining-friendly country like Canada is important to me as a European – if you want to open a mine in France, for example, it’s nearly impossible. I also see potential to increase Goliath’s mine life longer than the 10 years that’s quoted in the PEA. There’s only been a small amount of drilling along the east side of the property, and it’s looking very promising.”

Disclosure: I own share and/or options/warrants in companies linked above. Companies mentioned are either current or past sponsors of the website. Do your own due diligence as I have a conflict of interest and may be biased as I would benefit if the value of the shares go higher. Please be aware that mineral exploration is very risky. Make sure to read the risk factors on public filings. Do your own due diligence as I have a conflict of interest as I would benefit if share price goes higher. This is not investment advice.

Metals, U.S. Treasuries Seen As Safe Haven As Oil And Stocks Crash
 

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Metals, U.S. Treasuries Seen As Safe Haven As Oil And Stocks Crash

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