₪ David Pescod's Late Edition August 31, 2007
CRUDE OIL: (October Contract) $74.25 +0.89
This has been quite a sell-off in the markets, particularly for junior mining and oil and gas explorers and on liquidity crisis, you’ll be telling your grandkids about. But even in times of crisis, you are supposed to looking at fundamentals and the headlines yesterday were kind of hopeful (maybe) at least for oil prices.
Articles in the Financial Post also talked about “record global oil and gas profits of $243 billion U.S. and record spending of $401 billion U.S.”
But resulting last year in only a 1% increase in world oil reserves...all of it coming from a 1.9 billion barrel addition from Canada’s oilsands, according to a study by John S. Herold, a U.S.-based independent petroleum research company and Harrison Lovegrove.
While the current liquidity crisis may take a little bit longer to get over than we had thought, bargain hunting amongst the oil stocks still sounds to us, as one of the places to be looking, although cautiously…(That’s oil, not natural gas)...
CAPSTONE MINING CORP. (T-CS) $2.70 +0.10
QUADRA MINING LTD. (T-QUA) $16.92 +0.17
ANVIL MINING LTD. (T-AVM) $17.45 +0.05
IAMGOLD CORP. (T-IMG) $7.00 +0.08
OSISKO EXPLORATION (V-OSK) $4.95 +0.15
It’s at times like this that the money managers and folks that run the mutual funds probably make or break their reputations. One fellow, former mining analyst Kevin MacLean has had some of the top performing mining based funds (Sentry Select Precious Metals Fund) over the last several years and has been suffering like many others during the last few weeks.
But hopefully in bargain hunting times like this makes you feel a lot better, a couple months or quarters down the road. While we catch up with Kevin MacLean today to get his top 3 picks in the base metal and gold side, we find him quite busy...and very obliging.
In the base metal side, his top picks in order are: Quadra, Capstone and Anvil Mining. And in his gold stories it’s Osisko, Iamgold and another stock that we cannot mention because it’s currently in restriction here at Canaccord.
With the market malaise going on of late, there’s been lots of talk that it could precipitate a potential recession in the United States and the talk goes (at least by American analysts) that a recession in the United States would cause problems around the world.
In the new world, we don’t think the American economy is as important as it used to be—what with what’s going on in India, China, Asia, South America and the like, but it has definitely had an affect on commodity prices over the last month or so.
Of interest, it now looks as if most commodities have put in some form of bottom. These are short-term, one-year charts on four of the more basic commodities out there and if you are betting on mining stocks, you better be watching what commodity prices are doing.
Three and five-year charts on most metals look as if you’d died and gone to heaven—these prices are so good by historical standards, but still, there’s been a correction in many of them over the last while, particularly nickel. And you can see from charts on most nickel stocks, that many have been clobbered of late. Now, it looks like nickel is putting in a bottom and many are starting to react positively.
Also of note is the price of lead...who would have ever thought that the old commodity lead, would ever be worth more than zinc...but there you have it.
There are not many ways to play lead these days, but one junior we continue to follow is Selkirk Metals (SLK), offers you exposure to both lead and zinc on their Ruddock Creek project that later this year and early next, we have big hopes for.
If you would like to receive the Late Edition, email Debbie at debbie_lewis@canaccord.com |
