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November 5, 2024

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Finding and Trading Oversold Conditions within Long-term Uptrends

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There is only one way to trade in a long-term uptrend: long. Forget about picking tops and breaks below short-term moving averages. Leaning bearish within a long-term uptrend is not a profitable strategy. Instead, we should lean bullish and use oversold conditions to our advantage.

In a long-term uptrend, I am only interested in oversold conditions because these provide setups to trade in the direction of the bigger trend. I ignore overbought conditions because it is normal to become overbought in an uptrend. Oversold conditions, on the other hand, occur after a pullback and this is an opportunity to partake in the long-term uptrend.

The chart below shows SPY with two momentum oscillators: RSI(10) and %B(20,2). I am using both to identify oversold conditions in a long-term uptrend. SPY is well above its rising 200-day SMA (blue line) so the long-term trend is clearly up. %B tells us the location of the close relative to the Bollinger Bands. The indicator dips below 0 when the close is below the lower Band and this is an oversold condition. RSI becomes oversold with a dip below 30.

On the chart above, we can see %B becoming oversold in mid April, late July and last week (green shading). RSI became oversold in mid April and early August, but has yet to become oversold here in early November. On the price chart, notice that SPY is trading near its 50-day SMA (pink line). Prior dips below the 50-day SMA marked pullbacks within the bigger uptrend, not the start of a bigger trend change.

Oversold conditions are not the signal. Oversold conditions simply serve as an alert to be on guard for a short-term reversal. Keep in mind that price can become oversold and remain oversold. Chartists, therefore, need a bullish catalyst to signal a change from oversold to strength. For RSI and %B, we can use their centerlines to identify an upturn in momentum. The chart below shows these centerlines as short red lines (50 for RSI and 0 for %B). 

A bullish signal triggers when RSI becomes oversold and then breaks above 50, while a bullish signal triggers when %B becomes oversold and then breaks above 0. The green arrows show breakouts in late April and mid August. %B became oversold last week and has yet to break above 0. Thus, it is still in oversold condition. RSI did not become oversold. I would like to see both become oversold and then look for the momentum breakouts.

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“Using Breadth for Capitulation, Thrusts, Market Regime and Oversold Conditions”. This report covers four ways to utilize breadth indicators. Capitulation conditions often signal major lows, while thrust signals indicate the start of a bullish phase. Market regime helps distinguish between bull and bear markets, and oversold conditions identify tradable pullbacks within bull markets. We explain the indicators, settings, and signals for each scenario.

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Highlights from Chart Trader (Weekly Reports/Videos):

November 1st Report: Stocks pulled back the last two weeks and we showed five breadth indicators to identify oversold conditions. We are also monitoring the September breakouts and key support levels for QQQ, MAGS, XLK and five other tech-related ETFs. Plus a bearish pattern in SMH. With recent pullbacks, we are seeing oversold conditions in two ETFs and bullish setups in two Healthcare stocks.

October 25th Report: The weight of the evidence remains bullish, but the surge in the 10yr Yield is concerning. We quantify the recent surge and show how stocks reacted to past surges. We continue to monitor the cup-with-handle breakout in SPY, as well as the triangle breakouts in QQQ and the tech-related ETFs. This report also featured trade setups in ETFs and stocks related to industrial metals.

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Equities Hang on to Weaker “Go” Trend as Communications Offers a Helping Hand

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Good morning and welcome to this week’s Flight Path. Equities saw the “Go” trend remain in place this week but we saw weakness with a few aqua bars. GoNoGo Trend shows that the “NoGo” trend strengthened at the end of the week in treasury bond prices. U.S. commodities hung on to the “Go” trend and indeed we saw strength with bright blue bars. The U.S. dollar also remained in a “Go” trend but the indicator paints weakness with aqua bars.

$SPY Shows Weakness with a Pair of Aqua Bars

The GoNoGo chart below shows that we still have been unable to conquer the high from last month. This week saw price gap lower and weaker aqua bars return as price fell further. If we turn our attention to the oscillator panel we can see that after holding at the zero level for a few bars we have broken down into negative territory and volume has increased. We will watch closely to see if this further threatens the “Go” trend that is currently in place.

The longer time frame chart tells us that the trend remains strong but we see another lower weekly close this week after the Go Countertrend Correction Icon (red arrow) we recently noted above price. As price approaches the last high from the summer we will watch to see if it finds support. GoNoGo Oscillator is falling but still in positive territory so we will pay attention to what happens as it gets closer to the zero line.

Treasury Rates Remain in Strong “Go” Trend

Treasury bond yields saw the “Go” trend continue this week and after a couple of weaker aqua bars the week closed with strong blue “Go” colors after price made another higher high this week. GoNoGo Oscillator shows that momentum is still in positive territory but no longer overbought as it falls to a value of 3. We will look for support at the zero level if and when it gets there.

The Dollar Sees Weakness in “Go” Trend

We saw another Go Countertrend Correction Icon (red arrow) this week right after price made a new high. Since then we have seen consecutive aqua bars that demonstrate some trend weakness.  Price rebounded on Friday with a strong bar and so we will watch to see if the trend will strengthen as it approaches prior highs. GoNoGo Oscillator fell sharply but turned around at a value of 1 and so is now rising at a value of 3 confirming the “Go” trend in the price panel.

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DP Trading Room: Six-Month Period of Favorable Seasonality Begins Now!

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It’s here! The SPY starts a period of favorable seasonality for the next six months. Carl takes us through his charts and explains favorable versus unfavorable periods of seasonality.

Carl covers our signal tables showing new weakness seeping in despite this period of favorable seasonality. The market looks toppy right now.

Today’s market overview covers the weakness that has been developing throughout the market. He also covers Gold, the Dollar, Yields, Bonds, Bitcoin, Gold Miners and Crude Oil among others!

Carl also walks us through the Magnificent Seven in both the short and intermediate terms. Which ones are holding up and which are showing signs of weakness?

Erin drops in on sector rotation discussing the breakdown of nearly all sectors. No sectors hold rising PMOs as of airing of the trading room.

The pair finish the program by looking at viewer symbol requests with an eye toward relative strength and momentum.

01:26 Seasonality Discussion

02:52 Bias Chart and DP Signal Tables

06:41 Market Overview

12:56 Magnificent Seven

19:54 Questions

23:44 Sector Rotation

29:45 Symbol Requests

Join us live in the trading rooms on Monday at Noon ET! Register here: https://zoom.us/webinar/register/WN_D6iAp-C1S6SebVpQIYcC6g#/registration

Try out any of our subscriptions for two free weeks by using coupon code: DPTRIAL2 at checkout!

Introducing the new Scan Alert System!

Delivered to your email box at the end of the market day. You’ll get the results of our proprietary scans that Erin uses to pick her “Diamonds in the Rough” for the DecisionPoint Diamonds Report. Get all of the results and see which ones you like best! Only $29/month! Or, use our free trial to try it out for two weeks using coupon code: DPTRIAL2. Click HERE to subscribe NOW!

Learn more about DecisionPoint.com:

Watch the latest episode of the DecisionPointTrading Room on DP’s YouTube channel here!

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Technical Analysis is a windsock, not a crystal ball. –Carl Swenlin

(c) Copyright 2024 DecisionPoint.com

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.

DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.

Helpful DecisionPoint Links:

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Market Trend Model Flashes Short-Term Bearish, What’s Next?

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In this video, Dave breaks down the three time frames in his Market Trend Model, reveals the short-term bearish signal that flashed on Friday’s close, relates the current configuration to previous bull and bear market cycles, and shares how investors can best track this model to ensure they’re on the right side of the market trends!

This video originally premiered on November 4, 2024. Watch on our dedicated David Keller page on StockCharts TV!

Previously recorded videos from Dave are available at this link.

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Stock Market Today: How to Scan for Post-Election Profit Opportunities

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The stock market closed on a down note on Monday. It’s just one day before the general election and, as you know from experience, elections tend to be like an adrenaline shot to the market, the effects of which can last from days to months.

Positioning Yourself for Post-Election Market Stress

Several analysts have hinted that Wall Street may have already priced in a Trump win. If that outcome materializes, and depending on the outcome of the Senate and House races, the markets may readjust, depending on how it forecasts changes in policy and its effect on the economy.

At this stage of the game, with a market poised for adjustments and overreactions, it might work in your favor to get a big-picture view of how sectors will respond in the coming days, and which stocks within those sectors may be gaining strength as the political fog clears.

Scanning the Market in a Rapidly Shifting  Environment

After Monday’s market close, Energy and Real Estate emerged as the top performers, while Utilities and Financials lagged. To quickly scan this outcome, from your StockCharts Dashboard click the arrow next to the Charts & Tools tab and select MarketCarpets. From the Select Group dropdown menu, choose S&P Sector ETFs.

FIGURE 1. MARKETCARPETS CHART OF SECTOR ETFS ON NOVEMBER 4. The Energy sector was the top performer while Utilities was the weakest performer.Image source: StockCharts.com. For educational purposes.

The top-performing sectors were Energy, up 1.74%, and Real Estate, up 1.15%. Energy stocks got a boost after OPEC+ hit pause on planned oil production increases. Meanwhile, real estate stocks rallied thanks to big acquisition moves and some pre-election bets on policy changes that could favor property.

The big losing sectors were Utilities, down 1.17%, and Financials, sliding 0.80%. Utilities dropped as regulatory concerns emerged after FERC blocked a capacity increase for an Amazon-linked nuclear plant. Financials slid amid pre-election uncertainty, with investors wary of potential policy shifts affecting major institutions within the industry.

Let’s zoom in on the Energy sector to see which industries and stocks are outperforming.

FIGURE 2. MARKETCARPETS CHART FOR THE ENERGY SECTOR. Most industries within the sector are bullishly green.Image source: StockCharts.com. For educational purposes.

The size of the squares is weighted by market cap, and the largest and most recognizable outperformer on this list, Exxon (XOM), is up 3.18%. However, the leading performers aren’t all well-known names; you can see these top stocks listed in the table to the right of MarketCarpets among the day’s top 10.

Real Estate is another sector that’s been quietly creeping up. While the stocks comprising it haven’t been making headline news, investors have made their moves in the sector.

FIGURE 3. MARKETCARPETS CHART FOR REAL ESTATE SECTOR. Lots of green, but not many well-known stocks.Image source: StockCharts.com. For educational purposes.

Fangdd Network Group Ltd (DUO) had the largest jump, up 9.09%, but beware—it’s virtually a penny stock despite its high trading volume and market cap, all of which can be seen in its Symbol Summary.

Public Storage (PSA) had a sizable jump, up 2.71%, while Simon Property (SPG) also had a comparable gain of 2.64%. Again, these aren’t necessarily stocks to invest in, but they are large stocks that help paint a picture of what’s driving the sector. It’s up to you to dig deeper using technical tools to assess whether the sector’s strength—or certain stocks within it—might offer a potential opportunity.

Those were Monday’s strongest sectors. Now let’s look at the weakest sectors in the market.

FIGURE 4. MARKETCARPETS CHART OF THE UTILITIES SECTOR. The sector was dragged down by its largest stocks.Image source: StockCharts.com. For educational purposes.

The regulatory ruling that impacted Constellation Energy Corp. (CEG), causing a 12.46% drop, pulled down the entire Utilities sector. Public Service Enterprise (PEG) faced the next biggest loss, falling 6.23%. While there were a few gainers, none were particularly well-known names.

The manner of Utilities’ decline differs from the Financial sector, as you will see below.

FIGURE 5. MARKETCARPETS CHART OF THE FINANCIAL SECTOR. Bearish pretty much all the way around.Image source: StockCharts.com. For educational purposes.

While negative sentiment painted the financial sector with broad strokes, none of the biggest losers were any of the sector’s heavyweights. But again, neither were its biggest winners. This is the market expressing its pre-election jitters. Weighing the prospect of continuing inflation, whether it’s driven by tariffs or fiscal spending, there seems to be no clear path out of the price conundrum, and that’s what we’re seeing in the sector.

So, what might you do next?

How To Position Yourself During and After the Election

Here are five MarketCarpets tips.

  1. Identify Sector Trends Quickly. Get a fast, visual snapshot of which sectors are leading and lagging.
  2. Monitor Sector Performance. Focus on sectors that are sensitive to policy outcomes.
  3. Look for Surprising Movers. Sometimes, the largest stock movers aren’t the sector’s heavyweights, and sometimes they are. Use MarketCarpets’ display to identify these changes quickly.
  4. Drill Down to Industry-Specific Strengths. Zoom into individual sectors on MarketCarpets to see which industries within sectors are performing best.
  5. Look for Signs of Rapid Reversal. Post-election, stocks and entire sectors might overreact to news, leading to quick sell-offs or rallies. Follow the MarketCarpets to catch any quick reversals in sectors or stocks that signal re-adjustment and drill down on each stock using your preferred technical tools. You might find opportunities early on.

At the Close

MarketCarpets can be a reliable tool for making sense of post-election market chaos. It gives you a clear snapshot of sector trends, showing which areas are gaining or lagging as the market reacts to the evolving political realities. By highlighting top performers, undervalued plays, and industry-specific movers, you can spot the biggest opportunities quickly before swooping in for a deeper dive into your targets.

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

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Anglo American Divests US$1.1 Billion Stake in Australian Coal Joint Venture

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Anglo American (LSE:AAL,OTCQX:AAUKF) announced a deal to sell its 33.3 percent stake in a joint venture that owns the Jellinbah East and Lake Vermont coal mines in Queensland, Australia, for approximately US$ 1.1 billion.

The stake will be acquired by Zashvin, an Australian electric power generation company that already holds a one-third interest in Jellinbah Group, which in turn operates the two metallurgical coal mines.

Japanese trading giant Marubeni (TSE:8002) also holds a third of the venture.

This sale is expected to be completed by the second quarter of 2025, pending regulatory approvals, marking the latest in a series of divestments by the London-listed mining company as it refocuses on its core assets.

CEO Duncan Wanblad, who took the helm in 2023, has been vocal about Anglo’s commitment to repositioning the business as a major player in metals and minerals key for energy transition, such as copper and iron ore.

The company has been assessing options for other parts of its portfolio as well, including its diamond, nickel and platinum units, as it moves toward its goal of becoming a more focused, resilient company.

“We are making excellent progress with our simplification of Anglo American to create an exciting and differentiated investment proposition focused on our world-class copper, premium iron ore and crop nutrients assets — all future-enabling products,” Wanblad said in Anglo’s press release on Monday (November 4).

Anglo’s planned exit from metallurgical coal, combined with a sharpened focus on copper, is expected to reduce its carbon footprint and align with global shifts toward lower-emission resources.

The sale comes at a time of heightened speculation over Anglo’s future, following its successful defense against a takeover attempt by the world’s largest miner, BHP (ASX:BHP,LSE:BHP,NYSE:BHP), earlier this year.

BHP’s US$49 billion approach was rebuffed by Anglo’s board and shareholders in May. BHP was reportedly interested in Anglo’s portfolio of critical minerals, particularly copper, which is seeing increased demand due to the energy transition.

Speaking at the company’s annual meeting in October, BHP CEO Mike Henry suggested that the firm has moved on from its pursuit of Anglo, expressing respect for Anglo’s plans and commitment to its own growth strategy.

However, BHP later clarified Henry’s remarks in a statement, with the company indicating that it may still consider another bid for Anglo after a six month moratorium on acquisition attempts expires on November 29. According to UK takeover regulations, BHP will be permitted to make a renewed offer at that time, should it decide to proceed.

Anglo has steadily advanced its restructuring efforts in other regions as well. In South Africa, it recently reduced its stake in Anglo American Platinum (OTC Pink:AGPPF,JSE:AMS) and is exploring options for its De Beers diamond business.

Anglo’s goal, as outlined by Wanblad at a Johannesburg mining conference in October, is to position itself as a strong, standalone company. He emphasize that a takeover of the firm won’t be ‘inevitable,’ and reiterated that its restructuring efforts are designed to boost shareholder value and create resilience against potential acquisition bids by competitors.

Anglo American’s refocus on copper has already translated into growth plans in South America, where it aims to significantly expand production by 2030 through its operations in Chile and Peru. Currently, the company aims to achieve a copper output target of approximately 1 million metric tons per year by the end of the decade.

Shares of Anglo experienced a modest uptick following news of the divestment.

As it steps back from coal, Anglo’s remaining assets are projected to align with the demands of a global economy increasingly driven by sustainable energy solutions.

Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.

This post appeared first on investingnews.com

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Augustus Acquires 1,345km2 Gold Exploration Project Near Leonora

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Augustus Minerals Limited (ASX: AUG) has executed a binding share purchase agreement (“SPA”) with MCA Nominees Pty Ltd (“MCA”) to acquire 100% of the issued capital in Music Well Gold Mines Pty Ltd (“MWGM”), an entity which holds the exploration licences comprising the Music Well Gold Project (“Project”). The Project is in the Eastern Goldfields region of Western Australia located 35km north of Leonora.

  • The large contiguous tenement package covers an area of 1,345 sq km in a region that hosts gold endowment of >12Moz1 gold and >450kozpa gold production2 within 50km of the project.

Neighbouring operating mines include:

Northern Star3 (ASX:NST)

    • Thunderbox Mine3 (4.2M oz Au Resources) 20km to the west
    • Wonder Underground (0.9Moz Au Resources3) <1km west

Genesis Minerals4 (ASX:GMD)

    • Hub Project (0.7 Moz Au Resources) adjoining Music Well Project

Vault Minerals5 (ASX:VAU)

    • Darlot Gold Mine (1.9 Moz Au Resources) is located 12km north
    • King of the Hills mine (4.1 Moz Au Resources) 20km to the south west
  • Extensive geophysics, gravity, soil sampling and rock chipping have already been completed with data validation and target prioritization underway
  • Potential for gold discoveries from the dedicated and focused Augustus exploration team over the next 2 years.
Andrew Ford, GM Exploration commented

“The acquisition of such a large prospective gold exploration package in close proximity to operating mines owned by Northern Star, Genesis and Vault Minerals with +12M oz of resources and over 450kozpa gold production2 is a significant coup for Augustus (Figure 1).

“With the gold price now exceeding A$4,000/oz it provides Augustus Shareholders with significant exposure to future discovery in one of the greatest gold provinces in the world”.

Background

Comprising ten granted exploration licences covering an area of approximately 1,052km2 and two exploration licences in application covering an area of 293km2. The total tenement package is 1,345 sq km making the Project one of the largest exploration packages in the region.

Augustus believes that adding a gold focussed exploration project of this size provides optionality and complements its copper/base-metals/uranium focus at the Ti Tree Shear project in the Gascoyne.

Music Well Project

The Project is located within the Murrin Murrin domain, Kurnalpi Terrane of the Yilgarn Craton in the Leonora / Laverton Greenstone Belt of Western Australia.

The Yilgarn is a globally significant mineralised province for gold, nickel and aluminium, and also hosts major deposits of other minerals such as copper, zinc and iron along with other resources such as tantalum, lithium, vanadium, uranium and rare earth elements (“REEs”).

MWGM initiated the consolidation of tenements and commenced field work, on ground exploration and targeting studies from November 2019. In the resulting 5-year period from November 2019 to November 2024 the Company has consolidated a tenement package of 1,345 sq kms and has identified priority targets for follow up exploration work for Air Core, RC and Diamond Drilling.

These high priority targets have been identified by using MWGMs “Three – Schema Gold Prospectivity Model” which incorporates and utilises classical structural mapping techniques, geochemistry such as Ultra Fine + (UFF) soil sampling, rock chip sampling and advanced geophysics. This multi-disciplinary approach to exploration utilising high-resolution airborne magnetics, gravity and radiometric data, including (UFF) soil sampling over + 1,052sq kms also includes the reinterpretation of the solid geology, structure and deformation history of the region to inform local interpretation of the geological framework and identification of the targets completed over a 5-year period within the Project area.

The geological studies, completed with the assistance of a group of technical specialists, including Southern Geoscience, Fathom Geophysics, Tower Geoscience, Geobase Australia, Daishat Geodictic Gravity Surveyors, Walter Witt Experience and GeoSpy Australia utilising high-resolution airborne magnetics, gravity and radiometric data.

The principal target types include gold in shear zones within granitoids and greenstones (analogous to the nearby Wonder Deeps Gold Mine (Northern Star) and intrusion-related gold systems potentially analogous to King of the Hills and Darlot Centenary mines located southwest and north of the Music Well Gold Project respectively. The Music Well Gold Project is considered to be prospective for gold, base metals and also for lithium, tantalum and REE, which will also be investigated.

The tenement area is characterised by a strongly deformed stratigraphy and intrusions and contains numerous predominantly west-northwest anastomosing subparallel shear zones providing links potentially to Wonder Deeps and Thunderbox gold mines (Northern Star) located to the west of the project area; and the Hub (Redcliffe) gold deposit located to the east (Genesis).

In addition, a series of north-northwest and north-northeast structures trend through the project area and structures of a similar orientation host many of the gold deposits in the Leonora / Laverton area.

There are numerous operating gold mines in the district including the Darlot Gold Mine (~12 km to the north), the King of the Hills Mine (~20 km to the west), the Leonora Gold Camp (~30km to the southwest), and the Thunderbox Gold Mine (~20 km to the west) (Figure 2).

Click here for the full ASX Release

This post appeared first on investingnews.com

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Cobalt Market Update: Q3 2024 in Review

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A contraction continued in the cobalt market during the year’s third quarter, with metal values falling from US$27,151.50 per metric ton (MT) on July 1 to US$24,299 by the end of September.

The 10 percent decline is part of a larger 16.56 percent year-to-date contraction.

“This quarter saw minimal pricing movements as the market experienced a prolonged period of low prices,” said Roman Aubry, cobalt pricing analyst at Benchmark Mineral Intelligence.

He went on to note that during the third quarter, all of the cobalt grades Benchmark follows sank to their lowest levels since the company began tracking prices for the battery metal in 2017.

Cobalt metal price chart, Q3 2024.

Chart via Trading Economics.

“Prices for cobalt metal approached US$10 per pound, and cobalt hydroxide, a feedstock for cobalt metal and battery chemicals, approached US$6 per pound due to weak buyer interest and bearish market outlook,” he said.

“Cobalt sulfate prices had initially held a floor of RMB 27,500 per MT (US$3,857.23),’ continued Aubry.

‘However, as the quarter came to an end, cheap recycled cobalt sulfate in China undercut prices from the virgin market and has led to a further decrease in prices.”

Cobalt demand in the doldrums

The cobalt price pressure seen during the third quarter was largely due to a combination of oversupply and weakening demand, particularly from the electric vehicle (EV) battery sector.

The market is grappling with the effects of cobalt’s diminishing role in battery chemistries as manufacturers increasingly turn to lithium-iron-phosphate (LFP) batteries, which contain no cobalt, or opt for nickel-based alternatives with lower cobalt content. This shift has been fueled by efforts to mitigate the environmental and ethical issues associated with cobalt mining in the Democratic Republic of Congo (DRC), the largest cobalt-producing nation.

Additionally, as cobalt production capacity expands in countries like Australia and Angola, oversupply pressures are expected to persist, keeping prices relatively low in the near term.

Industry experts predict that unless there is a significant surge in demand from emerging technologies or battery innovations, cobalt prices will remain suppressed, reflecting a structural change in market dynamics.

“The supply of cobalt has proven to exceed what the market has been able to absorb, and weak buyer interest and full stocks have led to prices being incapable of recovering,” noted Aubry. “Overall, a bearish market is expected through 2025 as participants speculate on what is the lowest price cobalt can fall to.”

Swelling cobalt supply prevents price growth

For Project Blue’s Jack Bedder, the most prevalent trend weighing on the cobalt market in Q3 was oversupply.

“(London Metal Exchange) off-warrant stockpiled cobalt metal has been rising, and trade data indicated an increase in China’s cobalt metal exports to the European market,’ the expert added.

Bedder, who is the co-founder and director of the critical metals consultancy, also pointed to higher output in the DRC and Indonesia as a headwind to cobalt price growth.

“Oversupply of cobalt intermediate continues, underpinned by increased production from the DRC’s cobalt hydroxide and Indonesian Ni-Co MHP (nickel-cobalt mixed hydroxide precipitate),” he said.

While Bedder explained that declining prices have caused companies to reschedule production plans and reduce their production guidance, there is still promise on the development side.

In mid-August, Electra Battery Materials (TSXV:ELBM,NASDAQ:ELBM) received a US$20 million grant from the US Department of Defense to support its cobalt refinery project in Ontario, which it says is set to be North America’s first producer of battery-grade cobalt sulfate. Located in Temiskaming Shores, the C$250 million facility aims to strengthen the EV supply chain and reduce US reliance on foreign sources for critical minerals.

The funding aligns with the US’ strategy of securing essential minerals for defense and technology sectors.

Less than a month later, the company garnered another funding infusion.

“Electra received ample financial backing from the US government to develop its cobalt sulfate refinery in Canada,” said Bedder. “The company has received a total of US$40 million in Q3 2024.”

Electra’s Department of Defense funding wasn’t the only news on the development side.

In late June, Nth Cycle commissioned a 21,000 square foot facility designed to refine metal scrap, e-waste and refinery waste into high-purity critical metals like nickel and cobalt.

US and Canada boost EV tariffs

In addition to building domestic cobalt mining and refining capacity, the US and Canada are working to reduce purchases of Chinese EVs. Both countries have implemented steep tariffs on EVs originating in China.

At the end of August, the Canadian government levied a 100 percent tariff on Chinese EVs. The heightened tariff followed a similar announcement out of the US in May. America also added smaller tariffs on strategic goods necessary for EV production, such as solar cells, semiconductors and lithium batteries.

While the spirit of the new EV taxes aims to spur on domestic production and EV sales, both Aubry and Bedder said they don’t see the tariffs supporting cobalt price growth.

“It is unlikely to have any effect in the short term, as Chinese EVs still remain much cheaper than their western counterparts, even with the tariffs in place, so there is limited incentive for North American producers to build domestic capacity as they are not cost competitive,” said Aubry.

China adds to cobalt-refining capacity

As North America looks to bolster ex-China supply, the Asian nation continues to build its cobalt presence.

“In August, GEM (SZSE:002340) commenced commercial production of a 10,000 MT per year refinery in Hubei province, China. The refinery will be using recycled material to produce standard-grade cobalt metal 99.8 percent,” Bedder said.

He also noted that Tengyuan Cobalt (SZSE:301219) has announced plans to build a new nickel-cobalt refinery in Ganzhou province, China. Commercial production is planned for the fourth quarter of 2025.

“Last year, the company produced 15,400 MT of cobalt metal after completing expansions in December 2022,” he said.

Some of that increased output could be earmarked for China’s strategic cobalt reserve. In late May, reports surfaced that the country’s State Reserve Bureau planned on purchasing 15,000 MT from domestic producers.

“Although this purchase was significantly bigger than previous years, the increased tonnage of the purchase is largely believed to have been a measure taken by the Chinese State Reserve Bureau to offset the significant ramp up in Chinese cobalt metal production capacity,” he said. “As a result, it did not have the strengthening effect that many hoped it would, as Chinese metal production still exceeds what the market is able to absorb.”

What factors will move the cobalt market in 2024?

Benchmark’s Aubry advised monitoring cobalt contracting.

“The price floor for cobalt hydroxide is currently set due to long-term contracts that are set to expire early in 2025, and as a result we may see further price erosion moving into next year,” he said.

While he cautioned that the supply/demand story is still very weak moving forward, he noted that cobalt’s future is heavily correlated to copper. “If prices come off further, we may see margins squeezed due to an increasing oversupply next year,” he said. “If the copper market stays strong, producers in the DRC will be incentivized to continue mining copper and cobalt, even if the price of cobalt hydroxide declines below US$6 per pound.”

Moving into to 2025, Bedder is tracking cobalt stockpiling from China’s State Reserve Bureau.

High quantities of Chinese cobalt flowing into European markets, coinciding with existing London Metal Exchange warehouse inventories, is another development he is monitoring.

Elsewhere, Bedder noted the ongoing dispute between Glencore (LSE:GLEN,OTC Pink:GLCNF) and the DRC government.

“Much like the situation with CMOC Group (OTC Pink:CMCLF,SZSE:603993) in 2022, the DRC government has alleged that Glencore’s subsidiary, Kamoto Copper, owes the state 800 million euros (US$894 million) related to royalty payments,” said Bedder. “As we approach Q4 and 2025, we are eager to see how this might impact cobalt prices, particularly if significant evidence supports the claim. Notably, this also comes after Glencore’s recent decision to halt cobalt hydroxide stockpiling in the DRC.”

Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.

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Joe Cavatoni: Gold Demand Hits Q3 Record, Western ETF Buyers Back in Action

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Referring to the World Gold Council’s latest report, he highlighted the return of western exchange-traded fund investors. With interest rates on the decline and geopolitical turmoil still strong, they’ve been more eager to buy.

‘Overall holdings of gold in investment portfolios has been stable, but actually adding to gold allocations has required that opportunity cost, or that carrying cost, to come down for the investor in the western market, and that’s what we’re starting to see,’ Cavatoni explained during the interview.

Cavatoni also spoke about how the upcoming US election may impact gold, as well as other segments of demand for the yellow metal, including bar and coin demand, jewelry demand and technology demand.

‘Where the election will have impact (for gold) is on how policies will develop,’ he said.

‘That tends to show up six months or so post an election outcome when policies can be discussed, clarified and potentially start to be implemented. That’s why we think that six months into the election outcome is when you’re going to start to see more of an effect on the gold price,’ Cavatoni said, adding that there may still be short-term volatility.

Watch the interview above for more of his thoughts on gold market trends to watch right now.

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

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Top 10 Iron Ore-producing Countries (Updated 2024)

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Iron ore prices have displayed volatility in the past few years as the world has dealt with the economic uncertainty surrounding COVID-19 lockdowns, the Russia-Ukraine war and rising levels of inflation.

Prices for the base metal reached a record high of over US$220 per metric ton (MT) in May 2021, but it wasn’t long before they declined to a low point of US$84.50 in November of that year. At the time, analysts identified lower demand from China alongside rising supply levels as reasons why prices dropped so drastically in late 2021.

Iron ore prices rebounded to trade in the US$120 to US$130 range in 2023, spurred on by supply issues in Australia and Brazil, as well as the Russia-Ukraine war; higher export duties in India and renewed demand from China have also contributed to the commodity’s higher prices.

However, that positive sentiment in the iron ore market evaporated in 2024 as the global economic outlook weakened on higher interest rates, lower demand and challenges in China’s property sector. After starting the year at a high of US$144 per MT, iron ore prices slid to a low US$91.28 per MT on September 10. China’s recent announcement of economic stimulus measures and the Fed’s move to cut interest rates may give iron a boost.

To understand the dynamics of the iron ore market, it’s helpful to know which countries are major producers. With that in mind, these are the top 10 for iron ore production by country in 2023, using the latest data provided by the US Geological Survey. Production data for public companies is sourced from the mining database MDO.

1. Australia

Usable iron ore: 960 million metric tons
Iron content: 590 million metric tons

Australia is the largest iron producing country by far, with usable iron ore production of 960 million metric tons in 2023. Australia’s leading iron ore producer is BHP (ASX:BHP,LSE:BHP,NYSE:BHP), but Rio Tinto (ASX:RIO,LSE:RIO,NYSE:RIO) and Fortescue Metals Group (ASX:FMG,OTCQX:FSUMF) are also large producers.

The Pilbara region is the most notable iron ore jurisdiction in Australia, if not the world. In fact, Rio Tinto calls its Pilbara Blend ‘the world’s most recognised brand of iron ore.’ One of the company’s iron producing operations in the region is Hope Downs iron ore complex, a 50/50 joint venture with Gina Rinehart’s Hancock Prospecting. The complex hosts four open-pit mines with an annual production capacity of 47 million tonnes.

As for BHP, the major iron miner’s Western Australia Iron Operations joint venture comprise five mining hubs and four processing hubs. One such hub is Area C, which hosts eight open-cut mining areas alone. The company also has an operating 85 percent interest in the Newman iron operations.

2. Brazil

Usable iron ore: 440 million metric tons
Iron content: 280 million metric tons

In Brazil, iron production came to 440 million metric tons of usable iron ore production in 2023.

The largest iron ore districts in the country are the states of Pará and Minas Gerais, which together account for 98 percent of Brazil’s annual iron ore output. Pará is home to the largest iron ore mine in the world, Vale’s (NYSE:VALE) Carajas mine. Headquartered in Rio de Janeiro, Vale is the world’s biggest producer of iron ore pellets.

“In 2023, supply ramp up will be led by Brazil and India, while Australian shipments will stay largely rangebound,” said David Cachot, research director for steel and raw materials at Wood Mackenzie. Indeed, Brazilian iron ore exports were on the rise in 2023. That trend has continued well into 2024.

3. China

Usable iron ore: 280 million metric tons
Iron content: 170 million metric tons

China’s iron production amounted to 280 million metric tons of usable iron ore in 2023. The Asian nation is the world’s largest consumer of iron ore, despite being only the third largest iron-producing country.

China’s top producing iron ore mine is the Dataigou iron mine in Laioning province, with production of 9.07 million MT in 2023. The underground mine is owned by Glory Harvest Group Holdings.

With China being the world’s largest producer of stainless steel, its domestic supply is not enough to meet demand. The country imports over 70 percent of global seaborne iron ore.

4. India

Usable iron ore: 270 million metric tons
Iron content: 170 million metric tons

India’s iron production for 2023 totaled 270 million metric tons of usable iron ore, climbing from the previous year’s total of 251 million metric tons. Its iron content production rose from 156 million metric tons to 170 million metric tons.

India’s largest iron ore miner, NMDC, hit a production milestone in 2021 of 40 million MT per year, the first such company to do so in the country. NMDC is targeting an annual production rate of 60 million MT by 2027. The company operates the Bailadila mining complexes in Chhattisgarh state, and the Donimalai and Kumaraswamy mines in Karnataka state.

5. Russia

Usable iron ore: 88 million metric tons
Iron content: 58 million metric tons

Russia’s iron ore production came in at 88 million metric tons for 2023, making comes it the fifth largest iron-producing country in the world.

The region of Belgorod Oblast is home to two of the country’s biggest iron ore producing mines: Metalloinvest MC’s Lebedinsky GOK, which in 2023 produced an estimated 22.05 million metric tons per annum of iron ore; and Novolipetsk Steel’s Stoilensky GOK, which last year produced an estimated 19.56 million metric tons per annum of iron ore.

In response to serious economic sanctions on the country over its aggressive war against Ukraine, Russia’s iron ore exports fell dramatically in 2022 to 84.2 million metric tons from 96 million metric tons in the previous year. Together, these two countries previously accounted for 36 percent of global iron or non-alloy steel exports. The European Union has restricted imports of Russian iron ore.

6. Iran

Usable iron ore: 77 million metric tons
Iron content: 50 million metric tons

Iran amassed 77 million metric tons in iron production in the form of usable iron ore in 2023. The country’s iron output has been on the rise in recent years — it was the eighth highest iron producer in 2022 and the 10th in 2021. One of the most important iron ore mines in the country is Gol-e-Gohar in Kerman province.

The Iranian government is targeting production of 55 million MT of steel per annum by 2025 to 2026. To reach this goal, the country’s iron ore industry will need to produce 160 million MT of iron ore. To better meet the requirements of domestic steel producers, Iran began levying a 25 percent duty on iron ore exports in September 2019. This has changed multiple times since, and in February 2024 the country cut duties on these products significantly.

7. Canada

Usable iron ore: 70 million MT
Iron content: 42 million metric tons

Canada’s iron production totaled 70 million metric tons of usable iron ore and 42 million metric tons of iron content in 2023.

Champion Iron (TSX:CIA,OTC Pink:CHPRF) is one company producing iron ore in the country. It owns and operates the Bloom Lake complex in Québec. Champion ships iron concentrate from the Bloom Lake open pit by rail, initially on the Bloom Lake Railway, to a ship loading port in Sept-Îles, Québec. A Phase 2 expansion, which entered commercial production in December 2022, has increased annual capacity from 7.4 million MT to 15 million MT of 66.2 percent iron ore concentrate.

In 2024, Champion is upgrading half of its Bloom Lake mine capacity to a direct reduction quality pellet feed iron ore with up to 69 percent iron.

8. South Africa

Usable iron ore: 61 million metric tons
Iron content: 39 million metric tons

South Africa’s iron production was 61 million metric tons of usable iron ore and 39 million metric tons of iron content in 2023. The country’s output has declined significantly in the past few years, down from 73.1 million MT and 46.5 million MT two years earlier. South Africa’s mining industry is grappling with transport and logistics issues, most notably due to railway maintenance challenges.

Kumba Iron Ore (OTC Pink:KUMBF,JSE:KIO) is Africa’s largest iron ore producer. The company has three main iron ore production assets in the country, including its flagship mine, Sishen, which accounts for a large majority of Kumba’s total iron ore output. Anglo American (LSE:AAL,OTCQX:AAUKF) owns a 69.7 percent share of the company.

9. Kazakhstan

Usable iron ore: 53 million metric tons
Iron content: 8.8 million metric tons

Kazakhstan’s iron production came in at 53 million metric tons of usable iron ore in 2023. It has also slipped in recent years.

Kazakhstan has several iron ore mines in operation, with four of the top five owned by Eurasian Resources Group. The largest of these iron ore mines is the Sokolovsky surface and underground mine located in Kostanay. Last year, it produced an estimated 7.52 million tonnes per annum of iron ore.

The Sokolov-Sarybai Mining Production Association (SMPA) in Northern Kazakhstan was the main supplier of iron ore to Russia’s Magnitogorsk Iron and Steelworks prior to the country’s invasion of Ukraine. Since then, the SMPA has halted iron ore shipments to Magnitogorsk.

10. Sweden

Usable iron ore: 38 million metric tons
Iron content: 27 million metric tons

Sweden’s iron production for 2023 was 38 million metric tons of usable iron ore. Iron ore production in the country has been increasing over the last decade and a half.

The country’s largest iron ore mine is state-owned Luossavaara-Kiirunavaara’s (LKAB) Kiruna mine, which has been in operation for more than 100 years. Kiruna is also the world’s largest underground iron ore mine. According to Mining Data Online, Kiruna’s iron ore pellets and fines production totaled 13 million metric tons in addition to 0.6 million metric tons of lump ore used in the blast furnace ironmaking process.

Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.

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