Investors Eye Commodities as Fed Prepares to Pivot on Interest Rates

In a report released earlier this week, Goldman Sachs highlights the potential for commodities to rally when interest rates decline. This insight is particularly relevant now, as a number of major financial institutions predict a series of rate cuts this year, perhaps as many as three, though some Federal Reserve officials are reportedly questioning the appropriateness of that number given the persistence of higher-than-average inflation.

The Goldman report maintains a positive outlook on commodities, projecting attractive total returns of 15% by year-end, with some sectors expected to deliver returns exceeding 20%.

For investors seeking to diversify their portfolios and potentially capitalize on these market dynamics, I believe commodities may offer compelling opportunities.

One of the bank’s most significant findings is the historical relationship between commodities and interest rates. Goldman analysts note that materials have historically rallied when interest rates have been lowered in a non-recessionary environment, a trend that could bode well for the sector. The chart below shows the potential price change for a variety of assets following a 100 basis point (bp) drop in rates, with copper and gold being the biggest metal beneficiaries.

The correlation, Goldman says, can be attributed to several factors. These include increased demand for raw materials as borrowing costs fall and the potential for investors to seek out alternative assets in a low-yield environment.

Key drivers in more recent days include the recovery in global manufacturing as companies restock inventories, ongoing geopolitical risks and the possibility of a soft landing for the U.S. economy, where recession is avoided. Additionally, demographic trends, such as aging populations and higher levels of public debt, point toward a more inflationary backdrop for the wider economy. This, in turn, may prompt investors to allocate more to commodities as a hedge against inflation.

Rate Cuts on Both Sides of the Atlantic?

Forecasts for a series of rate cuts, both in the U.S. and elsewhere, certainly support the case for commodities this year. Allianz, the financial services giant, expects the Fed to pivot in July and deliver a total of 100bps in rate cuts by the end of 2024, and a further 75bps by the end of 2025. The firm’s outlook is based on the Fed’s more dovish stance and the progress made on the inflation front. Allianz notes that the Federal Open Market Committee’s (FOMC) “reaction function” has become more accommodative, as they have upgraded their gross domestic product (GDP) growth and core personal consumption expenditures (PCE) inflation forecasts for the end of the year without changing their rate outlook.

The firm expects the European Central Bank (ECB) to take the lead in this rate-cutting cycle—also initiating interest rate reductions in July, but several days before the Fed. This divergence from the historical pattern of the ECB following the Fed is justified by the contrasting economic conditions in the eurozone and the U.S. The eurozone, for instance, faces lower inflation but persistent economic stagnation and the risk of overtightening. As a result, the ECB may find itself compelled to act more urgently than the Fed, a good sign for commodities.

How Global Events Are Redrawing the Map of Commodity Trading

In addition to the potential impact of interest rate cuts, the commodities market is being influenced by forecasts of rising oil and energy demand.

The International Energy Agency (IEA) recently raised its estimate of 2024 oil demand growth by 110,000 barrels per day, citing an improved economic outlook for the U.S. and higher bunker fuel consumption due to attacks in the Red Sea. The ongoing crisis, exacerbated by attacks by Yemen’s Houthi forces on commercial vessels, has led to increased journey times and higher shipping costs, as many ships are forced to take the longer route around Africa. This increased demand is expected to keep oil prices elevated throughout the year, especially when coupled with ongoing OPEC+ production cuts.

And speaking of OPEC, it’s being reported that the Houthis have threatened Saudi Arabia’s oil installations in the event that the kingdom allows the U.S. to use its airspace to combat the group. Saudi Arabia, the world’s number one oil exporter, has been at war with the Houthis since 2015.

Another near-term factor is the temporary closure of the Port of Baltimore due to the recent tragic collapse of the Francis Scott Key Bridge. The port is the second-largest coal exporting hub in the U.S., accounting for 28% of total U.S. coal exports in 2023, according to the Energy Information Administration (EIA). The closure is expected to decrease bunker fuel consumption and may impact the volume of U.S. coal exports in 2024. While other nearby ports, such as Hampton Roads, have additional capacity to export coal, factors such as coal quality, pricing and scheduling will affect how easily companies can switch to exporting from another port.

The Importance of a Selective and Informed Approach

I believe it’s essential to approach the commodities sector with a selective and well-informed strategy. The Goldman Sachs report advises investors to consider both cyclical and structural factors, as well as geopolitical risks, when making investment decisions. By carefully analyzing the various factors at play and maintaining a diversified portfolio, investors may be well-positioned to benefit from the potential opportunities presented by the commodities market.

Index Summary

• The major market indices finished mixed this week. The Dow Jones Industrial Average gained 0.07%. The S&P 500 Stock Index rose 0.32%, while the Nasdaq Composite fell 0.14%. The Russell 2000 small capitalization index gained 1.22% this week.
• The Hang Seng Composite lost 1.95% this week; while Taiwan was down 0.26% and the KOSPI fell 0.33%.
• The 10-year Treasury bond yield fell 6 basis points to 4.201%.

Airlines and Shipping

Strengths

• The best performing airline stock for the week was Frontier Air, up 16.5%. According to Bank of America, JetBlue lowered June capacity by 200 basis points, and July/August capacity by 315 basis points. Cuts were primarily domestic but extended to Latin America and some Atlantic flying as well. Domestic cuts were primarily driven by a reduced footprint in Los Angeles as the airline works to eliminate unprofitable routes.

• Hapag-Lloyd CEO says the company has seen a “good” recovery post-Chinese New Year. Rolf Habben Jansen, CEO of Hapag-Lloyd, told CNBC earlier this month that he has an improved view on trade for the rest of 2024.
• According to JPMorgan, it has been reported that Lufthansa has reached an agreement on the main features of a wage deal for ground staff (following an arbitration process) with the Verdi union. This has been the main cause of strike days during the first quarter.

Weaknesses

• The worst performing airline stock for the week was Azul, down 7.6%. JPMorgan is lowering its Boeing fiscal year 2024 cash generation estimate to $1.5 billion and its first quarter cash burn to $4 billion. These numbers are consistent with management commentary for positive, low-single-digit billions this year and a $4.0-4.5 billion outflow in the first quarter.
• According to Stifel, the DALI, a 10kTEU container vessel, crashed into the Francis Scott Key Bridge which crosses the Patapsco River in Baltimore. In a common time charter contract, the charterer, Maersk, bears commercial responsibility, which usually includes damage to/by the ship to/by third parties while the charter company is responsible for the technical soundness of the vessel. As reported, the vessel seems to have lost power after departure, which might indicate a technical issue that falls under the responsibility of the charter company Synergy Marine rather than human error, which might have placed the responsibility with Maersk.
• Boeing announced several management and board of directors’ changes with Dave Calhoun, CEO, to step down at the end of 2024, commented RBC. Stan Deal, the Boeing Commercial Airplanes (BCA) President and CEO, is also retiring, with Stephanie Pope now appointed to lead BCA. The company’s Board Chair, Larry Kellner, has also informed the Board that he does not intend to stand for re-election with Steve Mollenkopf to succeed him as independent Board Chair.

Opportunities

• Indigo hosted an analyst meeting, reports JPMorgan, and reiterated its guidance of expanding fleet to 600+ by 2030 (10% CAGR). A part of this growth is being driven by India’s low seat-per-capita and investments in airport infrastructure.
• JPMorgan thinks the scope for spot freight rates will rebound as major container liners are set to implement a general rate increase (GRI) of 20-50% (effective from April 1) and continued charter rate uptrend. In addition, the bank says demand print has also been trending better than expected, affirmed by Hapag-Lloyd at a recent investor meeting.
• As reported by Morgan Stanley, the FAA will relocate control of the Newark airspace to Philadelphia to alleviate congestion at airports. In an effort to address staffing issues and congestion in the New York City area ahead of the summer, the FAA and the National Air Traffic Controllers Association (NATCA) are moving control of Newark at New York Terminal Radar Approach Control to Philadelphia.

Threats

• The FAA is stepping up United Airlines scrutiny following recent safety headlines, writes JPMorgan. If any issues are found, potential temporary measures include restrictions on new routes and placing new aircraft into service.
• According to Stifel, last year, there were 226 VLCC fixtures (contracted cargo loading) from the U.S. Gulf Coast. This almost exactly matches the number of Suezmax fixtures (224) because there is limited VLCC loading capacity.
• Given the departure of Boeing’s CEO, set for the end of 2024, his successor will be assuming the tasks of addressing any further FAA required changes, reports JPMorgan. This includes overseeing the potential acquisition and subsequent integration of Spirit AeroSystems, and rebuilding trust with customers, investors, and travelers.

Luxury Goods and International Markets

Strengths

• Last quarter, Dubai led the world in sales of residential properties over $10 million, according to a March 23 edition of Mansion Global entitled, “Dubai, the Hottest Luxury Market in the World, Is Getting a Fresh Influx of Sparkling New Builds.” In January, the city logged a record $9.6 billion in sales, representing a 27% increase from the prior year.
• China’s industrial profits rose 10.2% in the first two months of 2024, reversing a decline of 2.3% in 2023, government data showed Wednesday. Observers said that the steady performance showed that China’s industrial sector had bottomed out and entered an expansionary phase, laying a concrete foundation for GDP growth this year, according to Global Times.

• Sleep Number Corporation was the best performing S&P Global Luxury stock, gaining 17.5% in the past five days. This surge occurred despite minimal news coverage surrounding the company.

Weaknesses

• Apple iPhone shipments in China fell about 33% in February from a year earlier. The February decline marks a second consecutive month of lower shipments. In January, the company shipped a total of roughly 5.5 million units, or about 39% fewer handsets than in the prior year, according to China Academy of Information and Communications Technology figures, as reported by Bloomberg.
• Germany expects the country’s economy to grow by 0.1% in 2024, slashing its prior forecast of 1.3% as high interest rates, weak global demand, and political uncertainty dent hopes for a stronger recovery. The country now forecasts GDP to increase by 1.4% in 2025, revised from 1.5% previously. The economic output was currently barely higher than before the pandemic.

• Faraday Future Intelligence was the worst performing S&P Global Luxury stock, losing 26.0% in the past five days. Similarly to the above comment related to the best performing stock, shares of Faraday Future Intelligence declined despite light news coverage.

Opportunities

• Last week, Kering provided a sales update, expecting weaker sales from its Gucci brand due to troubles in the Asia-Pacific region. Shares declined by 16% last week. According to our internal oscillator, Kering appears to be in oversold territory, with a possible rebound expected.

• Barclays has become more positive on luxury spending in China, seeing improvement in sentiment and growth expectations. Barclays analyst Carole Madjo downgraded LVMH to equal weight from overweight last September, citing concerns over Chinese demand. However, on Tuesday, she switched LVMH’s rating back to overweight and raised her price target to EUR937 ($1,015.17) from EUR825 ($893.83).
• Tesla has launched a series of initiatives over the past week designed to promote its Full Self-Driving software. The compaby is offering a free month-long trial of its Full Self-Driving software. This could significantly increase Tesla’s profit margins.

Threats

• A Hermes client from California opened a lawsuit against the company, stating that customers are required to purchase expensive items before being allowed to order popular Hermes bags. Some bag orders require a long waiting period, and simply getting on a waiting list can be difficult, as customers are ranked based on previous purchases and their reputation with the company.
• According to AAA, retail gasoline prices will hit $4 per gallon in the summer. This would put upward pressure on inflation. Gasoline futures, which lead gasoline retail prices by six weeks, will be key to monitor, says Ed Hyman from Evercore ISI.
• Lululemon recently highlighted signs of soft consumer behavior in the U.S., which seemed to receive outsized attention given its higher-end positioning. Earlier in March, Nordstrom stated that it continues to see a cautious consumer who is mindful of discretionary purchases. Williams-Sonoma also pointed out that consumers have shifted away from home purchases and toward experiences, remaining hesitant about furniture purchases, according to FactSet.

Energy and Natural Resources

Strengths

• The best performing commodity for the week was wheat with a 2.70% lift, sugar was right behind that, rising 2.36%, as both sugar and cocoa crops around the world are being impacted from severe droughts. According to JPMorgan, crude oil demand in February 2024 achieved the second-highest daily rate in at least six years. The bank estimates aggregate global crude oil demand averaged 102.9mmbbl/d in February. Consumption increased 3% on the prior month and was 2% higher than the prior corresponding period.

• According to Bloomberg, iron ore held its largest weekly advance in six months on quietly increasing optimism over the chances of an economic recovery in top consumer China. Chinese Premier Li Qiang downplayed problems in the country’s economy in a speech to the China Development Forum on Sunday, saying there is still plenty of space for more policy support.
• There have been a few announcements around the U.S. Department of Energy’s (DOE) $6 billion funding package for emission reduction, reports BMO, as part of the Bipartisan Infrastructure Law and Inflation Reduction Act funding. Overall, $1.5 billion was allocated to the iron and steel sector, and $935mm to aluminum/metals (the majority of which is pledged to a new aluminum smelter for Century Aluminum).

Weaknesses

• The worst performing commodity for the week was lithium carbonate, dropping 7.28%, following nearly a month of gains, perhaps on some profit taking. According to Bloomberg, copper swung between gains and losses in a mixed session for metals after Chinese Premier Li Qiang downplayed concerns about challenges facing the country’s economy and sought to reassure investors that Beijing will step up measures to support expansion.
• The Port of Baltimore is the second largest terminal for coal exports in the U.S., writes Bank of America, moving approximately 24 million short tons of coal last year, with two of the U.S. Atlantic’s five export coal terminals (three are in Hampton Roads, VA).
• According to Bloomberg, aluminum fell with other industrial metals, as the recent rally in prices runs into a lack of buying interest in China, the top consuming country. But consumption continues to disappoint in China, where the usual pickup in spring activity has not fully materialized.

Opportunities

• The DOE announced $1.2 billion in funding for companies in the chemical/refining sector to adopt projects/technologies that will help drive the reduction in emissions over the next several years, according to BMO. In addition, other sectors such as iron, steel and aluminum were awarded funding for projects that will utilize blue/green hydrogen.
• Copper exchange inventories have tracked in line with expectations of an inventory build to open the year, reports RBC, although at a more significant magnitude when compared to historical seasonality. The primary driver of the inventory build is due to metal fabricators taking downtime over the holiday period while smelters continue to operate with the outsized move this year likely attributable to higher copper imports and domestic production growth.
• Commodities will advance this year as central banks in the U.S. and Europe move to reduce interest rates, helping to support industrial and consumer demand, according to Goldman Sachs Group Inc. Consumers won’t be the only ones on the hunt as Kinder Morgan Inc. noted it was evaluating opportunities for mergers and acquisitions too, considering the recent flurry of deals. With Kinder Morgan’s backbone of pipeline infrastructure, securing an LNG deal could be very complimentary to its existing asset base.

Threats

• According to Bloomberg, the collapse of a major Baltimore bridge is likely to shut down coal exports for as many as six weeks and block the transport of up to 2.5 million tons of coal, said Ernie Thrasher, chief executive officer of Xcoal Energy & Resources LLC.
• The price of lithium carbonate – the white salt that goes into making lithium-ion batteries – is down 80% from its 2022 peak, reports Bloomberg. It is forcing miners of the raw material, spodumene, to cut production and headcount to preserve capital while opening opportunities for consolidation in the industry.  
• River water near some of Democratic Republic of Congo’s biggest copper and cobalt mines is toxic and may be causing widespread health problems, according to Bloomberg. Scientists from Congo’s University of Lubumbashi tested water in four rivers this month near some of the country’s largest mines and found them to be “hyper-acidic” or “very acidic.”

Bitcoin and Digital Assets

Strengths

• Of the cryptocurrencies tracked by CoinMarketCap, the best performer for the week was Mantle, rising 43.62%.
• Michael Novogratz’s Galaxy Digital Holdings swung to a profit in the fourth quarter, bolstered by rising digital asset prices and increased trading volumes. Net income was $301.5 million, or 90 cents a share, compared with a loss of $288.88 million in the year-earlier period, writes Bloomberg. 
• Investors added a net $323.8 million to iShares Bitcoin in the last session for which data is available, increasing the fund’s assets by 1.9% to $17.2 billion, according to Bloomberg.

Weaknesses

• Of the cryptocurrencies tracked by CoinMarketCap, the worst performer for the week was KuCoin, down 17.08%.
• Bored Ape Yach Club NFT #9258, once owned by American comedian Kevin Hart, was traded for around 13.26 ether in late March – equal to $46,200. Hart purchased the NFT in January 2022 for 79.5 ether, worth over $200,000 at the time, writes Bloomberg. Hart is one of the many who have experienced one of the pitfalls that come with digital trends, reports Yahoo! Tech.
• This week’s NFT sales have taken another nosedive, intensifying the downtrend that began with a 16.55% decline from March 9 to March 16, 2024. The last seven days have witnessed an even steeper drop, with NFT sales plummeting by 18.57%, according to Bitcoin.com.

Opportunities

• Steve Cohen’s Point72 Ventures is part of a group of investors betting that blockchain technology can be used in the U.S. to simplify vehicle registrations. Champ Title raised $18 million in a series C funding round led by Point72 Ventures, writes Bloomberg. 
• Thanks in part to the digital asset market’s recovery, including the rebound in Bitcoin since the start of the year, many crypto companies are hiring again. Coinbase Global, which recently returned to profitability, is looking to fill 200 positions worldwide. Rival exchanges Kraken, Binance, and Gemini are hiring as well, writes Bloomberg.

• Mike Novogratz, Galaxy Digital’s founder and CEO, says Bitcoin participation is only going to increase and it will play a big role in the 2024 elections, reports Bloomberg.

Threats

• U.S. prosecutors charged KuCoin, one of the world’s largest cryptocurrency exchanges, and two of its founders for failing to comply with American anti-money laundering rules. Since KuCoin’s inception in September 2017, the exchange “willfully failed” to establish and maintain a program to keep the platform from being used for illicit activity, including terrorist financing, federal prosecutors in Manhattan alleged Tuesday, reports Bloomberg. 
• Ripple labs should pay more than $2 billion in fines and penalties for selling its XRP token to institutional investors, the U.S. SEC told a federal judge, saying the company has increased sales of the cryptocurrency since it was sued by the regulator, writes Bloomberg. 
• Short sellers are still betting billions of dollars that the rally in cryptocurrency-linked stocks, fueled by a surge in Bitcoin, will eventually end. Total short interest, or the amount that contrarian traders have pledged against crypto stocks, has increased to nearly $11 billion this year, writes Bloomberg.

Defense and Cybersecurity

Strengths

• General Dynamics’ subsidiary was awarded a $343.7 million contract by the U.S. Navy for fiscal year 2024 maintenance, repair, and modernization of the USS Bataan (LHD 5), with work to be completed in Norfolk, VA, by May 2026.

• On March 25, the Canadian Commercial Corporation (CCC) and the U.S. Army initiated a contract to expand General Dynamics Ordnance and Tactical Systems Canada’s artillery propellant production in Quebec. This will enhance the North American defense industry’s capacity to fulfill increasing demands for 155mm artillery rounds. This is critical to supporting Ukraine and the resilience of the Canada-U.S. defense supply chain.
• Virgin Galactic was the best performing stock in the XAR ETF this week, rising 7.25%. This came after a long path of falling and appears to be more of a technical bounce.

Weaknesses

• Hamas rejected the U.S.’s latest proposal in hostage negotiations, reaffirming its demands including Israeli withdrawal and prisoner exchanges. Ismail Haniyeh is planning a second visit to Tehran amid discussions on a cease-fire and the UN’s positive view on recent resolutions.
• The largest terrorist attack in the history of modern Russia resulted in 143 people killed and approximately 180 people injured. The attack was allegedly carried out by ISIS. Terrorism worldwide by the Islamic State poses a colossal risk to the civilian population and, in general, to all states.
• Archer Aviation was the worst performing stock in the XAR ETF this week, falling 5.52%, without any major sentiment or news surrounding the drop.

Opportunities

• Airbus is considering purchasing parts of Spirit Aerosystems, whose Northern Ireland operation, a major Airbus wing supplier and key manufacturing business, might be affected by Boeing’s potential acquisition. This is amidst ongoing efforts to maintain a stable partnership.
• Glen Kelp’s startup, GaltTec, which focuses on producing lighter, more energy-efficient fuel cells using ceramic microtubes, joined NATO’s first business accelerator, DIANA, as part of a €1 billion fund initiative aimed at investing in technology startups that contribute to energy resilience, cyber security, and surveillance.  This comes at a time of Europe’s increasing concerns over energy security and the broader implications of climate change on global security.
• On March 26, KULR Technology Group announced receiving a significant contract from Lockheed Martin for the development of phase change material heat sinks for missile thermal regulation. This marks a milestone in its long-standing commitment to advanced cooling solutions in high-stakes sectors like defense and aerospace.

Threats

• The FBI is investigating a crime related to a Boeing 737 Max losing a door-plug panel midflight over Oregon, impacting passengers with sudden cabin pressure loss but resulting in a safe landing. The news comes amid a broader criminal investigation into Boeing’s adherence to a 2021 settlement after two fatal crashes.
• Russia has started mass production of heavy FAB 3000 bombs; previously, the FAB 1500 had already influenced the course of the war in Ukraine, causing colossal damage to Ukrainian forces and destroying the defensive lines of Ukrainian defenders.
• Russia vetoed a UN Security Council resolution to extend the expert panel on North Korea’s nuclear program, highlighting stronger Moscow-Pyongyang ties amid accusations of North Korean arms support to Russia for Ukraine aid, with implications for regional security.

Gold Market

This week gold futures closed the holiday shortened week at $2,242.50, up $60.90 per ounce, or 2.79%. Gold stocks, as measured by the NYSE Arca Gold Miners Index, ended the week higher by 6.45%. The S&P/TSX Venture Index came in up 2.01%. The U.S. Trade-Weighted Dollar rose 0.11%.

Strengths

• The best performing precious metal for the holiday shortened week was gold, up 2.79%. According to Bloomberg, gold was steady ahead of a slew of inflation reports that may offer more clarity on when central banks will start cutting interest rates. The Federal Reserve’s preferred measure of underlying inflation — the core personal consumption expenditures index, which excludes food and energy costs — is due Friday.

• The Silver Institute notes that the physical silver market has been in a deficit position for the last two years with another deficit forecast for 2024. Silver had been lagging gold earlier this year this year but in the last month, silver has gained 9.44% while gold is up 8.55%. Silver is likely to be well supported with expanding solar cell production.
• According to Bank of America, China boosting imports of gold for nonmonetary use by 51% to 367 tons in January and February; to put that number into context, the global annual physical gold market is usually around 4000 tons. The purchases have been driven by a confluence of factors, including somewhat constrained domestic investment options, with the health of equity markets and housing a continued concern.

Weaknesses

• The worst performing precious metal for the holiday shortened week was silver, but still up 0.63%. According to BMO, Silvercorp’s off-market takeover offer for OreCorp has expired with the company not achieving the minimum 50.1% acceptance condition. The company will not match a competing offer to acquire OreCorp. Companies are remaining disciplined on transaction as Ramelius Resources walked away from pursuing an offer to acquire Karora Resources.
• Zimbabwe’s platinum miners are asking the government to help reduce their electricity tariffs and fiscal charges where they are paying 50% more than last year and PGM prices have also fallen and are expected to remain soft to weaker.
• According to Scotia, Endeavour Mining reported Q4/23 financial results with adjusted earnings per share (EPS) from continuing operations of $0.17 (versus consensus of $0.27). The earnings miss was driven mostly by higher income tax expense, royalties and depreciation, offset slightly by lower exploration and G&A expenses. M&A appears to not be off the table versus focusing on execution.

Opportunities

• According to MarketWatch, “gold-mining stocks look set to outperform physical gold.” Gold bullion has outperformed gold mining company shares over the past three years by one of the largest margins in decades. Gold recently hit a new all-time high above $2,200 an ounce, while the Philadelphia Gold and Silver Index is below where it stood three years ago. The lag in performance reflects the failure of profit margins to materialize while gold prices rose yet due to rising input costs and wages. Input costs have stabilized, yet wages are still an issue for some operators. If the Fed does start cutting rates and gold lifts, investors will be keen to watch for margin expansion.
• Alamos Gold announced an agreement to acquire Argonaut Gold for a total consideration of C$0.40 per share, a 34% premium to yesterday’s closing prices. The consideration consists of C$0.34/share of Alamos shares and a SpinCo holding Argonaut’s assets in Mexico valued at C$0.06/share. Shares of Alamos jumped 7% on the news as this deal does have true synergies with Argonaut’s in construction Magino Mine now being able to share Alamos’s production facilities at their nearby Island Gold Mine.
• According to BMO, for MAG Silver in their view the most significant impact of the new technical report is to remove the previous uncertainty that was driven by an outdated technical report. With the market now having more visibility on Juanicipio’s expected performance based on the technical report, they expect the increased confidence in Juanicipio to translate into strong performance for MAG shares.

Threats

• According to Bloomberg, lawmakers in South Africa’s National Assembly passed the Gold and Foreign Contingency Reserve Bill Tuesday, enabling the government to tap a portion of funds in the account held by the central bank to pay down its debt.
• Orezone Gold provided 2024 guidance that is below CIBC’s expectations, and despite connection to the Burkina Faso national grid, all-in sustaining costs (AISC) are expected to be higher year-over-year. Also, the company reported that it is negotiating a bridge loan with its Burkinabe lender as it expects to access higher-grade ore at Siga East in H2/24.
• Scotiabank says it is awaiting an update from the Government of Canada on the timeframe for implementation of the global minimum tax (GMT). The Canadian federal budget is scheduled to be presented on April 16, which makes it unlikely that the GMT will be enacted before the end of this quarter. This is expected to impact the earnings of some royalty companies, depending on their corporate structure.

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Holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more accounts managed by U.S. Global Investors as of (12/31/2023): 

JetBlue Airways

Deutsche Lufthansa

Maersk

United Airlines

Boeing

Kering

LVMH

Tesla

Silvercorp Metals Inc.

Ramelius Resources Ltd.

Karora Resources Inc.

Alamos Gold Inc.

Argonaut Gold Inc.

*The above-mentioned indices are not total returns. These returns reflect simple appreciation only and do not reflect dividend reinvestment.

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