SCARCITY EQUALS OPPORTUNITY:
Fuse Lit for Metals in 2021!
Nations can’t print their way to prosperity but we can trade what we see, and what we’re seeing right now is a dynamic between the supply and demand of certain commodities that’s indicating a price increase that could surprise the uninformed, while potentially rewarding the early movers.
In 2020, entire job sectors have been damaged severely: airlines, cruise lines, and brick-and-mortar retail shops are on the brink of extinction, according to analysts and to government stats.
Families and small businesses have struggled month after month, desperate for assistance from a sharply divided government. At the same time, the ultra-wealthy have benefited from asset prices that persistently hover near their all-time highs.
Calls for bigger stimulus checks are consistently heralded as a good and necessary thing, regardless of the currency devaluation that it will cause, not to mention the addition to the ballooning national debt.
Courtesy: St. Louis Fed
As the government relentlessly adds to the global money supply of U.S. dollars, the citizens cheer and the career politicians declare victory. As any thoughts of fiscal belt-tightening are dismissed and discarded, the relative values of gold and silver might increase not just steadily, but rapidly.
Retail traders cashed-up in March, only to be dazzled by gold’s clinching of a new all-time high in August of $2,069. Silver, meanwhile, lunged towards $30.
Experts see both gold and silver forging ahead in the coming years. For instance, John LaForge, head of real asset strategy at Wells Fargo, envisions gold prices pushing higher in 2021.
The ramp-up in governmental print-and-spend policy is, as we might expect, the culprit and driver of growth here. “There’s still a lot of money printing going on and that is good for gold and silver,” LaForge said.
LaForge went long when others were waiting: “If you look at the carnage we saw back in March and April, that’s the kind of watershed event you need to frankly get interested in commodities… Right in the middle of it in March, we upgrade commodities. We went favorable for the first time in a long, long time and we expect that to continue into 2021.”
We’re seeing 2020 ending with the dollar at its lowest level in two and a half years. This is an obvious catalyst for gold, which remains range-bound and possibly coiled for another leg up in the first quarter of the new year.
Along with the catalyst of money printing, Wells Fargo sees a catalyst in the global economy growing by 5.2% next year, with most of the growth coming in the second half of the year as the world starts to move past the devastating impact of the pandemic.
Given the highly favorable market environment for mineral assets, the Wells Fargo analyst are bullish on gold, going forward. “For 2021, gold is probably our go-to, it’s our favorite. Gold kind of embodies everything,” commented LaForge.
Based on these drivers, along with the prospect of rock-bottom interest rates for government bonds, Wells Fargo has projected gold rising against the dollar to $2,300 by the end of 2021. Wells Fargo also isn’t the only mega financial institution that’s bracing for much higher gold prices.
Goldman Sachs’ chief commodity strategist, Jeffrey Currie, recently went so far as to suggest that the days of dollar dominance are coming to an end. In particular, Currie wrote that “real concerns around the longevity of the US dollar as a reserve currency have started to emerge.”
With this factor and “more downside expected in US real interest rates” in mind, the Goldman Sachs analyst reiterated his long gold recommendation and raised his 12-month gold price forecast to $2,300 per ounce and his 12-month silver price forecast to $30 per ounce.
Silver is also a great candidate, in terms of its industrial utilities, because electric vehicles use more silver than vehicles with internal combustion engines. The engine, battery pack, and battery management system in electric vehicles all require silver.
On top of that, we also highlight copper and the companies that are focused on it.
No matter which type of electric vehicle you’re looking at, it’s going to use much more copper than a traditional vehicle with an internal combustion engine. Here’s the breakdown of copper usage for each type of vehicle:
- Internal combustion engine: 23 kg. of copper
- Hybrid electric vehicle: 40 kg. of copper
- Plug-in hybrid electric vehicle: 60 kg. of copper
- Battery electric vehicle: 83 kg. of copper
- Hybrid electric bus: 89 kg. of copper
- Battery-powered electric bus: 224 to 369 kg. of copper
The math adds up to a potentially significant increase in the price of copper. By 2027, an estimated 27 million electric vehicles will be on the roads. This could raise copper demand for electric vehicles to 1.74 million metric tons in 2027.
Besides, copper won’t only be required for the vehicles themselves because each electric vehicle charger will add 0.7 kg. of copper. Fast chargers can actually add up to 8 kg. of copper each. Technology improvements, increased affordability, and the deployment of more electric chargers should have a profound and positive impact on the demand for copper.
We’re already seeing the signs of a long-term breakout because copper reached its highest price in eight years in December of 2020. With the demand driven by the renaissance in electric vehicles and chargers, copper’s bull cycle might be set to match or exceed those of gold and silver.
Another price driver for copper will be China’s economic recovery, as that nation is copper’s biggest consumer.
Along with those factors, copper will serve as an essential component in renewable green energy. Copper is highly conductive, so it’s used in renewable energy systems to generate power from solar, hydro, thermal, and wind energy around the world.
Furthermore, copper is one of the few materials that can be recycled 100% over and over again without a loss in performance. There are clean energy initiatives not only in the United States, but also in China and other developing nations.
We’ve already witnessed government proposals that would have the U.S. spending as much as $2 trillion to improve roads, bridges, and seaports; incentivize solar panels and other clean energy sources; add electric vehicle charging stations; convert school buses to zero emissions; and other changes that all translate to a copper-friendly market environment.
Additionally, not long ago, the International Lead and Zinc Study Group estimated that global mined zinc production would shrink 4.4% to 12.33 million metric tons in 2020. This meaningful supply deficit is largely a result of the supply chain disruptions to copper mining operations around the world.
The world’s second-largest economy plays a significant role here again. Refined zinc output in China, the world’s top producer, fell to 562,300 tons in November of 2020, down by 6,900 tons from October.
Also skewing the balance for copper is a pickup in Chinese demand as the country’s industrial activity continues to recover post-COVID. The country’s manufacturing PMI recently touched a two-year high and China accounts for about 50% of global zinc consumption.
In assessing zinc’s path to higher prices, the narrative echoes that of copper in many respects. Thus, as Helen O’Cleary of CRU Group explains, “Zinc has traded in tandem with copper this year, and commodities markets across the board have benefited from a weaker US dollar, huge stimulus and more recently the COVID-19 vaccine rollout.”
Zinc is currently rallying to its highest price since April 2019, yet the 70% rally from the March low could really be just the starting pistol in a marathon run for this essential “base” metal, in our estimate.
Altogether, four different metals present positive price potential: gold, silver, copper, and zinc. The combination of a lopsided supply-demand curve, government currency-printing, and the recovery of emerging economies ought to provide sustained tailwinds for all of these high-potential metals.
Callinex Mines (TSX-V: CNX & US: CLLXF) is developing and exploring the Canada’s prolific base and precious metal districts.
Callinex Mines stock has appreciated 900% from the CAD$0.28 bottom:
President, CEO, and Director Max Porterfield has built a multi-mineral developer; 28% of Callinex shares are owned by management and associates while another 21% are held by institutional and family offices.
The company’s projects are located across three world-class mining districts in Canada, each with impressive stats:
- Pine Bay project in the Flin Flon Mining District, Manitoba:
- Previously explored by Place Dome in the 1990s, where the company had a mandate to discover a 30-million ton volcanogenic massive sulfide deposit
- An emerging high-grade copper discovery with gold, silver and zinc, named the Rainbow Discovery is being expanded;
- The Rainbow discovery is located within a mineral lease adjacent to a high-voltage power line and historic shaft with direct road access to processing facilities
- Nash Creek project in the Bathurst Mining District, New Brunswick
- Two emerging near surface silver discoveries 6.8 km apart and in close proximity to Nash Creek zinc/lead/silver deposit
- The Nash Creek deposit hosts an indicated resource containing 963 million pounds of zinc equivalent contained within 13.6 million tons grading 3.2% zinc equivalent and an inferred resource containing 407 million pounds of zinc equivalent contained within 5.9 million tons grading 3.1% zinc equivalent
- World-class infrastructure including highway and transmission lines 1 km from deposit and seaport, smelter, railway, and power plant less than 25 km by road
- Point Leamington project in the Buchans Mining District, Newfoundland
- A previously reported historical inferred mineral resource of 14.1 million tons grading 6.2% zinc equivalent including 1.86% zinc, 1.07 grams per metric ton of gold, 17.12 grams per metric ton of silver, and 0.42% copper, containing 577 million pounds of zinc, 484,000 ounces of gold, 7,755,000 ounces of silver, and 130 million pounds of copper*
- The deposit starts at the surface and extends to a vertical depth of 350m, where high-grade mineralization is open for expansion
- A number of regional isolated airborne electromagnetic geophysical targets have been identified for follow-up
All of these assets are situated in regions with convenient access to power, water, roads, and processing facilities in major mining-friendly districts. Typically, the local governments gladly accommodate mining businesses, since the community is dependent on the jobs that a company like Callinex looks to create.
* CEO Max Porterfield noted the impressive rise in Callinex stock (900% appreciation since bottoming).
* Mr. Porterfield also highlighted key discoveries across Callinex’s robust project portfolio, as a driver of growth for both the company and the share price. Callinex released the details of the high-grade copper results with gold, silver, and zinc from the ongoing drilling campaign to expand the Rainbow discovery at Flin Flon:
As related in the press release, the company intersected the orange zone of the Rainbow discovery with 5.00m of 10.63% copper equivalent comprised of 8.79% copper, 1.38 grams per metric ton of gold, 24.02 grams per metric ton of silver, and 1.79% zinc.
Principals of Wealth Research Group are long-time shareholder of the company!
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Callinex furthermore intersected the yellow zone with 5.40m of 4.43% copper equivalent comprised of 3.22% copper, 0.61 grams per metric ton of gold, 10.43 grams per metric ton of silver, and 1.84% zinc.
Callinex has also received a $300,000 grant from the Manitoba Mineral Development Fund (overseen by the Manitoba Chamber of Commerce) to advance the Rainbow discovery.
Manitoba Chamber of Commerce President and CEO Chuck Davidson clearly views the grant as an investment in the local economy. “Northern Manitoba has been through a lot over the past few years. Callinex is a great partner and their team is extremely passionate about our province. We look forward to continuing to work with them on this exciting project that shows strong potential to bring jobs and prosperity to the Flin Flon area,” he stated.
The Rainbow discovery was a pivotal highlight in 2020; Callinex Mines also elaborated on their progress at the Nash Creek project. After reprocessing and interpreting a previous geophysical survey conducted at the site, Callinex significantly enhanced its drill targets along the trend of silver discoveries at Nash Creek.
As the update revealed, Callinex identified numerous conductive drill targets along the 6.8 km trend between the two discovery holes at Nash Creek. Moreover, the company announced two recent silver discoveries: one drill hole intersecting 28.6m of 57 grams per metric ton of silver including 16.5m of 94 grams per metric ton of silver and another drill hole intersecting 19m of 36.53 grams per metric ton of silver, plus 0.52% lead and 0.38% zinc; those discoveries were made before the airborne targets were later identified.
The Nash Creek update underscores a clear path to significantly enhance the project’s economics with additional exploration that could extend the potential mine’s life and/or yield higher-grade material. Furthermore, the results from the two widely-spaced silver discoveries at Nash Creek put Callinex on a potential geological program to realize this opportunity through further exploration.
Looking ahead, Mr. Porterfield’s thesis is that investors should take a serious look at Callinex stock now, since mining discoveries can lead to sizable upticks in the share price.
The elements are all in place: debt-free, a tight share structure, dedicated insider ownership, multiple mineral-rich assets with consistently better-than-expected data, a top technical team of resource and finance experts and best of all, a portfolio of advanced-stage exploration projects in Canadian mining districts with significant exploration upside.
*The historical resource estimate is contained a Technical Report dated July 4, 2013 titled “Technical Report and Resource Estimate on the Point Leamington Property, Newfoundland, Canada” prepared by Tetra Tech Inc. (“Tetra Tech”) for Raystar Capital Inc. The historical mineral resource estimate, termed “inferred mineral resource”, which is a category set out in CIM, was based on previous drill hole assays, and calculated using ordinary kriging to estimate gold grades in 10 x 10 x 10 foot blocks. Accordingly, Callinex considers this historical estimate reliable as well as relevant as it represents key targets for exploration work by Callinex. Callinex has not done sufficient work to classify the historical estimate as a current mineral resource and Callinex is not treating this historical estimate as current mineral resources.
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On October 6th, 2020, in connection with our agreement with Callinex Mines Inc., we received $100,000USD to Future Money Trends LLC. Wallace Hill Partners LTD owns shares of the company. We contracted with Callinex Mines Inc. to provide advertising services for a period of 12 months. We have been previously compensated for agreements with Callinex Mines that have since expired.