Vince Lanci: Goldman Reports On Uranium Gold Hits Another All-Time High | Arcadia Economics

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Summary

➡ Arcadia Economics talks about the current state of the gold market and how it’s attracting a lot of investment. It also discusses a report by Goldman Sachs about Comeco, a uranium producer, and how it’s in a good position to grow. The report highlights three main reasons for this growth: better prices for uranium, Comeco’s business model that covers the entire value chain, and the potential for increased demand for Cameco’s products. The article also mentions the performance of other markets like silver and copper.

Transcript

Simple comment about gold. Right now, gold is in its fund attraction phase. Yes, a lot of money has gone into it. But what’s going to happen now is every time there’s a new high will attract new buying. Welcome to the morning markets and metals with Vince Lancey where each morning Vince brings you the financial and precious metals news to get you ready for your day. And now, here is Vince.

Good morning, everyone. I’m Vince Lancy and in today’s market rundown we’re going to talk about Comeco, the uranium producer. Best position to take off according to Goldman Sachs report out yesterday. We’ll touch base on gold’s new, new all time high and silver’s breakout. And then we’ll look at some market driving news. But first, let’s look at the markets themselves. We’ll leave CCJ up there for now. The dollar is down four after having a very strong day yesterday at 104.

9. 210 year yields are up again. Four basis points after getting rallying or bonds getting crushed. Yesterday at is 5225 down another 14. Handles the vix is 14. Spot zero three up 37 basis points. Gold is up $5. 87 at 22. 57. Silver is 25 43 above Michael Oliver’s level. I would have you know they’re up $0. 35. Copper is up almost three cents at four spot zero six.

WTI is up another dollar. Natural gas is in the ones 170 down two cent. Plus bitcoin is down 6. 5%. Ethereum is down 6. 2% at 65. 206 and 35. Sorry, 32. 88. Pgms are both up in sympathy it would seem. 1013 in palladium, 912 in platinum, up $8 in palladium and $20 in platinum. Seems to be a stable relationship right now. Grains are all down very slightly.

Soybeans 1181. Corn, 428 and wheat 559 down three and a half cents. Okay. There’s always a lot to talk about. Well, today uranium bumps precious metals off the front page. Today we’re going to talk about uranium and we’re going to talk about a report that came out yesterday which is the reason that Comeco spiked yesterday. And that’s been basically Goldman goes nuclear. All right, Goldman has a 34 page a comment first before we get into what they’re talking about.

Goldman has a 34 page report with copious helpful slides. We’ve also broken out at bottom. It’s a treasure trove of industry information, from the financials to the industry fundamentals to the geopolitical drivers. Frankly, this is stuff I just wrote today. Frankly, it’s all you need to know if you want to get familiar with the investment potential. And if you already understand the industry, you can compare your assessments with theirs.

That’s what the slides I think will help pros do. One thing is certain. This is a coming out report, not an end of the rally report. Now of course you have to be careful of any recommendation, especially when it comes from a bank that’s on the sell side. But it’s not the end of a rally report. It’s a must read for anyone interested. And we have it. All right, let’s go to it.

Now, we’re not uranium experts. We’re commodity experts. And by the end of the month we’ll be uranium experts. But not going around bragging about it. Well, we’ll try to be anyway. All right, so here we go. Goldman Sachs put out a report yesterday. It was on April 1. Be careful of that. But no retraction today yet. The title is attractive. Exposure to uranium supply, demand, fundamentals given. Integrated business across value chain.

Initiate coverage at a buy. Here we go. We are initiating coverage on CCJ. CCO Toronto with a buy rating and us 55 canadian, 74 price targets implying around a 30% upside from current levels. Now the report is, as I said, long. It’s nicely segmented and it’s a treasure trove because it’s about the company’s fundamentals. It’s also about the industry. So if you don’t know the industry. I don’t know the industry that well.

I’m going to read this. I’m going to drill down this very much. And it’s also about the geopolitics which I’m familiar with in the report. They have many angles, but there are three reasons. Three main reasons for the upside. And I’m going to read those and give you a quick translation if you, if you’re scratching your head a little bit. All right. Point one. We goldman see estimate change potential from better realized prices versus consensus estimates longer term.

All right, what does that mean? That means that uranium prices have been relatively stable to muted for multiple reasons. But one of them is there’s been production overhang. There’s been production out there that hasn’t been consumed yet. That overhang is gone now. That overhang is gone with demand outstripping new production while you’re going to have a price dislocation. That’s the gist of what they’re getting out there. And they go through with many charts and observations as to why.

That is one of their main points. The second point, this is one I understand very well. Although I will not say that I understand Cameco that well yet integrated business model provides exposure to entire value chain versus more isolated peers. Okay, if you want a pure uranium play, you buy uranium. If you want a pure, a good company play, you buy a major. I’m sorry, if you want a good industry play, you buy a major.

By that I mean Exxon isn’t an oil producer using a parallel. Exxon is an energy producer and a refiner, end user and seller. So they are all through the value chain. So if you want to own, you don’t know where the industry is going to make its money in the value chain. Is it going to be at the commodity end, is going to be at the refining end? Is it going to be at the sales end? You want to own the big boy, especially early in a market move or early in an industry coming out, you want to own the integrated business model, which basically means they’re vertically integrated from soup to nuts and they own the whole value chain.

So they’re not going to be giving away any profits from beginning to end. And I understand that model and there’s risks with it as well. But at this point in the cycle, this is the type of company you want to own. You want to get fancy with. I want to own this point of supply chain. That’s minutiae. It’s like if there’s a war, you don’t want to own companies that make this type of missile or that type of bullet.

You want to own military companies. Sorry, it’s a bad analogy, but it’s been on my mind. People are talking about military companies anyway. . 3. That’s. . 2. 3 estimate revisions should be aided by the migration of demand to Cameco. All right, that’s a little bit misleading, that title. I mean, I’m not saying it’s wrong, but their point is that the industry is estimating x production for Cameco and Goldman.

This is where they’re going to add their own value. Goldman believes from their own work and their own research that the tailings or the extras coming out are going to be significantly bigger than the industry assesses. And so therefore they believe that estimate revisions, production estimate revisions will be raised. And if you’re making more of something that no one else is making and you can get it and no one else can get it because it’s in some country you’re not in, well, and the price is going up, well, you’re going to make more money.

So that’s it. They have that benefit. Those are the three points and there’s a ton more I’d like to move now. And we’ll actually touch on that a little bit more at the bottom. Oh yeah, let’s touch on the bottom. Macro market recap. Yesterday was an important day for understanding the relationship between gold and silver and other markets. This is something I wrote at the end of the day yesterday.

I’ll read it to you. So PMI, the purchasing manager’s index came out strong at 945, implying the economy is not only strong, but has handed off leadership from consumers back to manufacturing. And that’s why commodity strength will uptick, because now they’re making stuff to replenish inventory that they’ve already emptied. So commodity strength is warranted in these, as partner observed two weeks ago and we informed subscribers, June rate.

And this is what happened the rest of the day. June rate cuts. June rate cut, hopes fade some. Everything does what you’d expect. Oh, they’re not going to cut. Stocks come up. Oh, they’re not going to cut. Bonds come up. Oh, they’re not going to cut dollar rallies and gold dips. But mind you, it’s already up $20 overnight. There’s another thing, though, bonds really got soft. Like ridiculously soft.

I’m worried about something more than a fed rate cut. I’m worried about the debt problem. And when that happened, gold decoupled from the dollar strength and re rallied. And I have a little chart there to that effect. Anyway, the point is, gold is not beholden to the dollar anymore. Gold is beholden to the bond market. Gold is a hedge on bonds and gold. I’ve said this before, I’ll say it again.

Gold historically is money and it’s a store of value. And if you go back to the eighties, before my time, believe it or not, gold wasn’t traded on the commodity desk. Banks put it on the bond desk. You always traded gold with bonds. And that’s it. Okay, so that’s what’s going on right now. There’s some comments on that. Let’s go to the charts. Okay, let’s do that. First of all, I’m looking at the monthly and Cameco, and it’s not chemico, right? It’s canadian metals, Canadian Mining and Energy Corporation.

So it’s, okay, so it’s Comeco. I want to make sure that I don’t get roasted by everyone, all right? But we have a lot of uranium commentary and we just don’t talk about it too much. Look at that monthly chart there. You have the high the pullback and now the re rally. So if this report were not out, I’d be saying to you, you don’t want to be buying this until we make new highs.

You want to be looking right now. You see people that are long at looking to sell it, they’re like, oh, I missed it and they’re selling it. Scale up selling. But there’s a report out now. So that report, the same behavior is in effect for Cameco. But what’s different is you now have an incentive to buy. And so the buyers are coming in and that selling is still there, but it’s getting absorbed.

The question is how much selling is left and we get to the new highs. If we get to the new highs, not going wood, I’m not long it, at least not yet. If we get to the new highs, then you’re going to see when that selling is done that started this whole washout. Then you’re going to see is there anyone left to sell it. And that’s how it works.

Which brings us to gold. Let’s go to the daily. Okay, simple comment about gold. Right now, gold is in its fund attraction phase. Yes, a lot of money has gone into it. But what’s going to happen now is every time there’s a new high will attract new buying, okay? Because now it’s on everyone’s radar, not just the macro discretionary guys. CTA’s are already long. They’re going to add more.

People are going to start taking money out of things to put it in gold because they’re chasing profits. And that’s a two pronged, that’s a two sided coin. So if you’re watching the market, so you’re sitting back and you’re having your mint julep or whatever it is you’re drinking and you’re watching the market when it makes a new high at night. No, don’t think know that new buying comes in.

If new buying comes in and the market keeps going, well you know why? If new buying comes in and the market doesn’t come in on the highs, well then you have to say, well then there is some residual selling and that selling tells you that the market’s buying maybe running out of steam. The second thing is this, ive said this before, ill say it again. There is no organic selling of gold now.

There is no natural selling. There are no shorts. There are only buys, there are only longs looking to buy. And thats whats happening now. Whos selling it? Well, longs are selling it, people are taking profits. I think what you had happen in here is you had the first wave of profit taking and the market just didnt care about it anyway. Thats it. The point is, there’s still no natural selling.

There is profit taking. You probably won’t see a washout on this unless you have a very confusing data number or an event piece breaking out, some interest rate event that I haven’t thought of yet, like maybe yield curve control starts. And for some reason the bond market likes it. Who knows? Let’s move on to silver. But that’s it. That’s my take on that. Silver is a much simpler, is a much simpler thing to talk about.

Right. I’ve drawn this line there. This is like this whole area here I’ve been talking about. This is like the land of the dead, these wicks. Well, now we’re in it. Now we’re really in it. Okay. And if you look at it from a, from a wedge point of view, something that Michael Oliver would say, we’re above 25 26. That’s all you need to know. Right. Michael’s number is 2525-2526 in spot.

And if we get above, if we close the month above that, okay, then you’re bullish. And I said yesterday, well, that’s hard to do. What if we’re trading 25 52? Do I wait another 29 days? No. If you have ten to buy, keep it simple. If you have ten units of something to buy and you have 30 days to buy it, you divide that into 30 days. Right.

So ten units, you buy one every three days. And that’s what you do. You express a percentage of your risk capital over time. This way, if it keeps going up, youre exposed, but youre not chasing. And if it goes down, youre exposed, but youre buying at better prices anyway. Thats my advice. If youre looking for a way to use good technical levels that are accurate but not precise, well, thats it.

Okay. As I said, we have, sorry about your eyes there. As I said, we have, oh, we have news, right? The news is basically, it’s basically american companies cutting losses and chinese companies adding industry. That’s what’s going on right now. Geopolitics, it’s encroachment and tipping points. The world is, half the world is trying to pull the other side, other team offsides, and the other half of the world that’s watching, people like me are going, where’s the tipping point where this to doesn’t come back? Meaning it gets too bad.

Data on deck today, manufacturing orders at 10:00 a. m. . And there’s a ton of speakers today. Speakers will affect the market today. I’m not sure how much, but they will. And as I said, we have the Goldman report and excerpts with complete presentation slide deck I’m Vince Lancy. That’s all for today. Thank you for watching and let’s see how it goes. Thanks for watching this morning’s markets and metals update with Vince Lancy, brought to you each day by Miles Franklin.

Precious metals for this week’s special is 2023, dated 1oz silver cougrands for only $3. 10 over spot. Kougurands come from one of the major sovereign mints in South Africa and are also IRA eligible. Find out more about how precious metals IRA works. To get your Cougarans, call or email us at 833-326-4653 or arcadia ilsfranklin. com. Please note that this video is not intended as legal licensed financial trading advice and is to be used for informational purposes only.

Please contact your financial advisor before making any decisions. And thanks for watching. .

See more of Arcadia Economics on their Public Channel and the MPN Arcadia Economics channel.

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Comeco's business model copper market trends current state of gold market gold market investment trends Goldman Sachs report on Comeco increased demand for Cameco's products silver market performance uranium price trends uranium producer growth value chain in uranium production

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