The Gold & Metals Weekly Navigator (June 7th, 2020)

Weekly Performance Recap

The global stock markets continued its charge ahead shrugging off COVID-19 and mass protests in the United States, the S&P 500 was up 5% on the week.

Gold and silver both sold off -3% during the week as investors rotated capital from safe haven assets to equities. Senior gold miners (NYSE: GDX) were off -5.4% vs. junior gold miners -3.7% (NYSE: GDXJ).

Source: YCharts

Gold maintains its high inverse correlation with US 10-year real yields. Real yields moved higher on the back of US 10-year treasury yields rising from 0.65% to 0.89%, the 10-year treasury is still a 100bps lower from the start of the year.

Copper Enters Bull Market

As reported in the FT, the world’s most important industrial metal is now in a bull market – up 20% from it’s March 2020 lows.

Demand for copper in China (half of global demand) has picked up significantly since the easing of lockdown restrictions.

Ole Hansen of Saxo Bank views that a push over $2.50/lb in copper could push further speculation extension to the upside.

Sierra Metals Restarts Operations in Peru

On Friday Sierra Metals announced that it will be restarting its flagship mine in Peru – Yauricocha, a very positive development for the company as it’s operations are now back online in its two mining jurisdictions: Peru & Mexico.

Yauricocha Mine (Peru)

The Peruvian Government has activated phase two of its economic recovery plan effective June 5, 2020, phase two includes mining and mining-related activities in Peru.

CEO Luis Marchese stated the company is in a position to ramp up Yauricocha back to full capacity and the operations have flexibility to recover lost production due to COVID-19.

The restart of operations should provide a strong catalyst for the stock (TSX: SMT, NYSE: SMTS), which had meaningfully lagged its large cap copper peers last week.

Source: YCharts

Sierra Metals had strong Q1 2020 results, the restart of operations now provides the runway to resume its trajectory of strong production output.

Source: Sierra Metals

Sierra Metals is a market awareness client of Capital 10X.

Editor

Capital 10X gets down to the real money business, actionable financial insights for traders and investors. We analyze company earnings, interview management teams and help teach the fundamentals of financial analysis and options trading. Our mission is to hunt for genuine 10 baggers.