Independent Capital Group AG

The ICG Commodity Update is our monthly published comment on the energy, industrial metals and precious metals market. ◾ Energy Oil prices saw heightened volatility in October as escalating tensions in the Middle East fuelled concerns over potential disruptions to energy infrastructure. However, skepticism is growing over whether the conflict will meaningfully impact oil supplies. On Sunday, OPEC+ announced it would extend its 2.2mboep/d production cut through December. The group had planned to begin gradual monthly increases, starting with an additional 180,000 bpd in December, but postponed this due to weak demand. ◾ Industrial Metals Recent governmental measures in China aimed at supporting its faltering economy are enhancing the outlook for metals. The Chinese government’s pledge to invigorate the property sector, a major driver of metal consumption, combined with hints of increased government borrowing, signals a more favorable environment for commodities. Iron ore prices have already shown resilience, rising following these announcements. Furthermore, the stabilization in copper demand is noteworthy, annual consumption has nearly doubled over the past decade, with a robust structural uptrend evident. ◾ Precious Metals The outlook for gold, silver, and precious metals remain exceptionally positive, buoyed by robust demand and strategic investor interest. Gold prices have surged more than 30% this year, reaching record highs, with demand hitting 1,313 tons in the third quarter—an increase of 5% year-on-year. This growth in demand has resulted in the total value of gold surpassing $100 billion for the first time, driven by strong inflows into gold exchange-traded funds (ETFs) and increased investments in bars and coins, highlighting gold’s appeal as a hedge against economic uncertainty and inflation. Find out more about the commodity markets in our comment below. If you wish to receive our detailed monthly update via Email, please send your informations to research@independent-capital.com. #commodities #energy #oil #preciousmetals #gold #silver #industrialmetals #copper #steel #mining #metals #markets #investing #stocks #equities #stockmarket

The ICG Commodity Update is our monthly published comment on the energy, industrial metals and precious metals market. ◾ Energy Analysts note the market hasn’t fully factored in risks to Iranian oil facilities or the possibility of Iran blocking the Strait of Hormuz, a threat made but never carried out. A recent BMO study of 120+ oil and gas companies shows the “all-in” cost to cover expenses and generate a 10% return has risen to $70.84/boe in 2023, up 16% YoY. While costs are now slightly above pre-pandemic levels, they remain significantly below the peak observed during the 2014 cycle. ◾ Industrial Metals With copper and other industrial metals projected to see soaring demand due to the energy transition and technological advancements, miners are increasingly looking to expand operations through strategic acquisitions. Recent deals reflect a growing trend where companies invest in established assets rather than solely relying on exploration. As large players leverage their balance sheets to acquire companies with promising projects, this trend can lead to greater efficiencies and increased supply. ◾ Precious Metals The recent surge in gold prices has attracted significant attention from institutional investors, indicating a growing confidence in the long-term prospects of the sector. However, the industry is exercising caution, with leaders emphasizing discipline in spending and a focus on shareholder returns. Notably, companies like Newmont and Barrick Gold are now prioritizing responsible acquisitions and cash flow management to avoid the pitfalls of the past. Despite the positive market conditions, junior miners continue to face challenges, struggling with capital flows and discounted valuations. Find out more about the commodity markets in our comment below. If you wish to receive our detailed monthly update via Email, please send your informations to research@independent-capital.com. #commodities #energy #oil #preciousmetals #gold #silver #industrialmetals #copper #steel #mining #metals #markets #investing #stocks #equities #stockmarket

The ICG Commodity Update is our monthly published comment on the energy, industrial metals and precious metals market. ◾ Energy Geopolitical concerns have not had a significant impact on prices so far, despite the escalating conflict in the Middle East raising concerns that the conflict may spiral into a broader war involving the US and Iran, possibly hampering crude exports. On the corporate side, the battle between Chevron and Exxon over Guyana’s $1 trillion oil field took another twist last week when arbitrators announced they would need nearly a year to settle the dispute. ◾ Industrial Metals China’s substantial accumulation of commodities, including record-high copper reserves, is reshaping the global industrial metals market. This buildup has been driven by various factors, including uncertainties surrounding US elections, potential trade restrictions, and geopolitical tensions, such as possible conflicts with Taiwan. These concerns have led to weaker performance in commodity prices recently, especially in industrial metals like copper. However, several bullish indicators suggest a positive long-term outlook for the sector. ◾ Precious Metals Over the past three months, Agnico Eagle, Kinross Gold, and Alamos Gold collectively generated over $1 billion in free cash flow. Specifically, Agnico Eagle reported a 5.7% FCF yield based on Q2 FCF of $557 million, Kinross achieved a remarkable 12.4% FCF yield from $364 million in Q2, and Alamos posted a 6.0% FCF yield with $107 million in Q2 FCF. This substantial increase in free cash flows, alongside stabilizing costs, underscores a positive shift in the sector and highlights the attractiveness of these companies to investors. Find out more about the commodity markets in our comment below. If you wish to receive our detailed monthly update via Email, please send your informations to research@independent-capital.com. #commodities #energy #oil #preciousmetals #gold #silver #industrialmetals #copper #steel #mining #metals #markets #investing #stocks #equities #stockmarket

The ICG Commodity Update is our monthly published comment on the energy, industrial metals and precious metals market. ◾ Energy Historically over the last few years, oil and gas companies were less sensitive to price drops, but now, even with higher prices, their shares are lagging. Analysts attribute this to equity investors’ concerns with cyclical stocks in the current environment. Fundamentally, companies in the upstream sector are performing well. Cash margins are at record highs, free cash flow yields remain in double digits, and valuations continue to be at record lows. Recognizing this, companies are actively pursuing M&A across the industry. ◾ Industrial Metals The International Energy Agency forecasts global grid spending to reach $450 billion this year, up from $300 billion in recent years. Additionally, the U.S. electrical equipment manufacturing index is now 14% above pre-pandemic levels, compared to a 1% rise in overall industrial output. As electricity production is part of industrial output (and tend to go hand in hand with metals demand), this should enhance global industrial growth and bolster the capital expenditure cycle. On the supply side, raw material markets are facing significant constraints. ◾ Precious Metals Investor focus remains on maximizing returns amid favorable gold prices while managing ongoing challenges. The ability of gold miners to adapt to evolving market conditions and effectively allocate capital will be crucial in maintaining investor confidence and sustaining growth momentum in the sector. Find out more about the commodity markets in our comment below. If you wish to receive our detailed monthly update via Email, please send your informations to research@independent-capital.com. #commodities #energy #oil #preciousmetals #gold #silver #industrialmetals #copper #steel #mining #metals #markets #investing #stocks #equities #stockmarket

The ICG Commodity Update is our monthly published comment on the energy, industrial metals and precious metals market. ◾ Energy M&A activity in 2024 is expected to remain high and could surpass the 2023 level of $258bn, according to Rystad Energy. Barron’s magazine noted that a series of M&A deals resemble the reassembly of Standard Oil, which was broken up by the Supreme Court in 1911. Standard Oil of New Jersey became Exxon, which merged with Mobil in 1999, and Exxon has recently merged with Pioneer Natural Resources. Chevron is attempting to merge with Hess, and last week, ConocoPhillips announced its merger with Marathon Oil for $23bn. ◾ Industrial Metals According to Goldman Sachs, driven by data centers, AI, and the electrification of everything, Europe’s power demand could grow by over 40% in the next ten years. Combining the increasing demand for additional electricity generation with the adoption of renewable energy technologies—both of which are highly metals-intensive—creates a strong long-term fundamental case for industrial metals. ◾ Precious Metals This year is expected to be a solid year for total silver demand, which is forecast to grow by 2%. Industrial fabrication should post another all-time high, rising by 9%, propelled by an anticipated 20% gain in the PV market and healthy offtake from other industrial segments. Nevertheless, compared to the historical average gold to silver ratio of 61x, the metal has still some catch up to do, as the ratio is currently standing at almost 77x. Find out more about the commodity markets in our comment below. If you wish to receive our detailed monthly update via Email, please send your informations to research@independent-capital.com. #commodities #energy #oil #preciousmetals #gold #silver #industrialmetals #copper #steel #mining #metals #markets #investing #stocks #equities #stockmarket

The ICG Commodity Update is our monthly published comment on the energy, industrial metals and precious metals market. ◾ Energy Although overall production, particularly in the U.S., is at record levels, the efficiency of oil recovery per foot drilled in the Permian Basin has declined by 15% from 2020 to 2023, matching levels seen a decade ago, as reported by Enverus. This drop is attributed to decreased fracking efficiency. ◾ Industrial Metals The biggest producers all want to increase copper output to take advantage of rising demand in electric vehicles, grid infrastructure and data centers. Production from existing mines is set to fall sharply in the coming years, and miners would need to spend more than $150 billion between 2025 and 2032 to fulfill the industry’s supply needs, according to CRU Group. ◾ Precious Metals Investing in precious metals equities offers the advantage of gaining beta exposure to increasing gold and silver prices. This operational leverage, realized as miners expand margins, leads to significant outperformance compared to physical gold during market rallies – a trend which has yet to materialized. Most analysts see the upside potential for precious metals equities, or mining equities in general, as substantial. Find out more about the commodity markets in our comment below. If you wish to receive our detailed monthly update via Email, please send your informations to research@independent-capital.com. #commodities #energy #oil #preciousmetals #gold #silver #industrialmetals #copper #steel #mining #metals #markets #investing #stocks #equities #stockmarket

Pablo Gonzalez, CFA Gonzalez, Senior Portfolio Manager at Independent Capital Group, added, "Uranium miners and developers present a unique opportunity for investors. New entrants, free from legacy contracts, are well-positioned to capitalize on the rising uranium prices." #mining #uranium #commodities

We participated in 𝗗𝗲𝗻𝘃𝗲𝗿 𝗚𝗼𝗹𝗱 𝗚𝗿𝗼𝘂𝗽’𝘀 “𝗚𝗼𝗹𝗱 𝗙𝗼𝗿𝘂𝗺 𝗘𝘂𝗿𝗼𝗽𝗲” held during April in Zurich, Switzerland. We're delighted to share with you the key insights gathered from the conference. The Conference Summary offers an in-depth analysis of the prevailing factors influencing the global gold markets. Furthermore, we took advantage of the opportunity to engage with several companies and have spotlighted significant developments. 𝗛𝗶𝗴𝗵𝗹𝗶𝗴𝗵𝘁𝘀   ◼ Compared to last year, this year’s Gold Forum Europe saw a significant increase in attendance, giving us the opportunity to connect with numerous portfolio companies. This surge isn’t surprising given the continual rise in gold prices, reaching new all-time highs. ◼ The cost pressure stemming from tight supply chains has eased and is no longer a significant concern. Companies are now in a phase where cost are largely flat and coming down in the near term leading to companies’ margins expanding - a sweet spot. ◼ Many companies have expressed frustration over the perceived undervaluation of their reserves and resources, as well as their growth profiles by analysts. This suggests that they believe there is a considerable amount of hidden value in their stocks. ◼ Smaller companies face survival challenges, highlighting the importance of size and diversification. To thrive, companies should focus on achieving economies of scale, enhancing productivity, and improving visibility and liquidity to attract new shareholders. ◼ Analysts highlight that equities could catch up due to improved quarterly results in the future. This could prompt analysts to revise their estimates and lead to inflows from ETFs.   𝘍𝘪𝘯𝘥 𝘰𝘶𝘵 𝘮𝘰𝘳𝘦 𝘪𝘯 𝘵𝘩𝘦 𝘗𝘋𝘍 #GoldForumEurope #gold #goldmining #preciousmetals #silver #commodities #equities

The ICG Commodity Update is our monthly published comment on the energy, industrial metals and precious metals market. ◾ Energy The oil and gas industry has witnessed a surge in dealmaking activity with $84bn in M&A transactions, driven by economies of scale and valuation premiums for large-cap companies. Despite challenges, the industry is actively seeking to attract “general” investors and regain its prominence in the broader market. While the energy sector’s weight in the S&P has declined in recent years to 3.7%, projections suggest a potential rebound. At least on earnings power it is expected that it will comprise over 6% of S&P earnings in 2024 and 2025, according to Jefferies. ◾ Industrial Metals Mining stocks ride the wave of rising commodity prices thanks to their built-in leverage. This leverage becomes especially apparent during cyclical upturns, making equities a more attractive option than futures. Yet, it’s important to recognize that mining companies can face various challenges, like operational issues, geopolitical risks, and rising costs. Given these risks, we recommend a diversified portfolio strategy, encompassing both commodity and geographic diversification, as the most prudent approach. ◾ Precious Metals  Analysts point out that US investors have largely stayed out of this rally as you can see with the outstanding shares for the GLD, the largest physical gold ETF in the world, as the ETF has seen consistent outflows. A Bank of America survey revealed that a majority of advisors hold less than 1% of their portfolios in gold. Find out more about the commodity markets in our comment below. If you wish to receive our detailed monthly update via Email, please send your informations to research@independent-capital.com. #commodities #energy #oil #preciousmetals #gold #silver #industrialmetals #copper #steel #mining #metals #markets #investing #stocks #equities #stockmarket

We participated in 𝗦𝘄𝗶𝘀𝘀 𝗠𝗶𝗻𝗶𝗻𝗴 𝗜𝗻𝘀𝘁𝗶𝘁𝘂𝘁𝗲'𝘀 “𝗠𝗶𝗻𝗶𝗻𝗴 𝗜𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 𝗖𝗼𝗻𝗳𝗲𝗿𝗲𝗻𝗰𝗲” held during March in 𝗭𝘂𝗿𝗶𝗰𝗵, 𝗦𝘄𝗶𝘁𝘇𝗲𝗿𝗹𝗮𝗻𝗱. We're delighted to share with you the key insights gathered from the conference. The Conference Summary offers an in-depth analysis of the prevailing factors influencing the global metals & mining markets. Furthermore, we took advantage of the opportunity to engage with several companies and have spotlighted significant developments. 𝗛𝗶𝗴𝗵𝗹𝗶𝗴𝗵𝘁𝘀   ◼ At the conference, there was an evident sense of optimism as gold finally broke out of the range it had been confined since the early part of the decade, soaring to a record $2’200/oz this month ◼ Strategic moves by foreign central banks, particularly China, to diversify reserves into gold highlight a broader trend ◼ Gold equities have decoupled from historically high gold prices and are trading at a record discount ◼ Industrial metals, notably copper, anticipate significant price surges driven by demand dynamics and limited new discoveries, underscoring the critical role of mining in meeting evolving global infrastructure needs ◼ Participants expect the mining industry to consolidate   𝘍𝘪𝘯𝘥 𝘰𝘶𝘵 𝘮𝘰𝘳𝘦 𝘪𝘯 𝘵𝘩𝘦 𝘗𝘋𝘍 #metals #mining #preciousmetals #uranium #commodities #atalayamining #dundee #drdgold #stallionuranium #westgold #ivanhoemines #denisonmines #skyharbour #montagegold #lotusresources