Canadian Insider

In our weekend Globe and Mail Who is Buying and Selling feature, we returned to the gold mining group, this time with a peak at Guyana. At the end of March, a clip of President Irfaan Ali went viral. It featured his spirited defence of Guyana's climate and resource policies in a BBC interview with Stephen Sackur.

Guyana President Irfaan Ali on BBC Hardtalk March 29, 2024

The discussion centred around oil & gas, but the President is also an advocate of mining, according to Omai Gold Mines (OMG), a stock we featured in the April 12, 2024 Morning INK Report.

In the weekend Globe and Mail Who is Buying and Selling feature, INK highlighted Spanish Mountain Gold (SPA). In the original INK Research report published on April 10th, we recognized that smaller junior mining stocks have been lagging global producers. However, if the gold producer rally continues, we suspect that investors may start to value the reserves in the ground of junior stocks more favourably.

Spanish Mountain Gold featured in the April 12, 2024 Globe and Mail

That is one reason why Spanish Mountain Gold caught our attention.

The share price of uranium miner Cameco (T:CCO; NYSE: CCJ) has been rallying on the back of a bullish report from a US investment bank. However, as Wall Street says buy, insiders sell.

Nevertheless, as we have seen in the US technology sector over the past decade, insider selling into Wall Street hype does not necessarily foreshadow an immediate price trend reversal. Cameco stock could still move higher despite insider profit-taking. For those investors who want to outperform the Wall Street herd, there may be better opportunities than Cameco in the uranium mining space.

In a report was originally published for Canadian Insider members on March 13, 2024, we looked at three mining stocks with insider buying that were still trading below where they were a year ago.

The names were OceanaGold, Vizsla Silver and Aurion Resources.  All three are up meaningfully from report date.

In the Monday market update, we highlighted the large outperformance (4.88%) in Q1 of the INK Canadian Insider Index outperformance over the S&P/TSX Composite Index. What we did not point out was the INK CIN Index pulling ahead of the S&P 500 which it did last week. You have to look a lot closer to see the gap, a tiny 0.49% in favour of the INK CIN Index as of March 28th. The INK CIN Index subsequently widened its gap a bit against the S&P 500 on the first trading day in Q2.

The INK CIN Index widened its 2024 lead versus the S&P 500 on the first day of Q2

With the move being driven by oil & gas stocks, it reminds us of 2022 when the Index outperformed most broad market benchmarks globally in the aftermath of the start of the Russia-Ukraine War.

From the April 1, 2024 Market INK Report - The INK Canadian (CIN) Insider Index which tracks 50 stocks on the TSX preferred by insiders advanced 10.65% in the first quarter of the year, outperforming the S&P/TSX Composite Index by 4.88% during the period. Since going live on November 14, 2014, the INK CIN Index is up 126.75% versus 49.99% for the TSX Composite Index on a price basis.

The INK Canadian Insider Index tracks 50 stocks listed on the TSX preferred by insiders

Despite this substantial outperformance, legacy media, without exception, ignores the INK CIN Index, preferring to play it safe by exclusively quoting the S&P/TSX Composite despite its lacklustre performance. However, the way we see it, this is a bit of a blessing for those who use insider activity and holdings in their investment decision-making.

From the March INK Top 20 Mining & Crypto Report - Gold continues to advance even as the Federal Reserve drags its feet on cutting rates. Even copper has managed to make progress, poking above US$4.00/lb. The defiance of these two major metals even as US interest rates remain high has led to some spectacular moves among some junior mining names.

Awale Resources (ARIC) debuts in the Top 20 at #17

This raises the question of how gold and copper and some juniors can be doing so well even as we hear remarkable bravado from Fed officials that interest rates are likely to stay higher for longer.

From the February, 2024 INK Top 20 Mining & Crypto-equities Report - Next week, the hard rock mining industry will gather in Toronto for the annual Prospectors and Developers Association of Canada convention. We expect there may be a sense of frustration that many mining shares have not followed the gold price to new highs. Looking at the market-cap weighted mining benchmarks and ETFs, that does appear to be the case.

The February INK Top 20 Mining & Crypto-equities Report

However, if one looks in a different direction, there is a more optimistic picture.

From the January 30, 2024 INK Top 20 Mining & Crypto Equities Report - The US dollar has enjoyed a rally of sorts over the past month, primarily on the back of a reassessment of the number of interest rate cuts the Federal Reserve is expected to deliver. Last fall, traders were betting on up to six rate cuts this year, but that has been revised to three because of stickier inflation, or so the story goes.

Ride image by Rusty Watson

In our view, there are circumstances at work that will impact Fed policy that extend well beyond the central bank's stated mandate of targeting 2% inflation or full employment. While the central bank will have to strive for those two mandates over the medium term, there are two new immediate objectives the Fed must achieve.

So far, Canadian stocks are helping investors navigate the risky waters of 2024. The INK Canadian Insider Index advanced 0.9% last week, leaving it up 1.4% in the new year. The gains took place despite a rough start for big Basic Materials stocks with the S&P/TSX Capped Materials Index down 2.0% for the year. In a notable divergence, the S&P/TSX Venture Index, which is a proxy for junior mining, has advanced 0.6% year-to-date.

The INK Canadian Insider Index is leading in early 2024 (click for larger)

Retail investors appear more optimistic than institutions about the prospects for mining and other materials names.