China rare earths trade spat derails rare earths sentiment - up and then down. Makes a strange week to be adding to commodity investments
Portfolio News
In a week where S&P 500 rose 1.94% and Europe rose 0.61%, my pension portfolio dropped 0.95%. A bunch of drags in commodities - gold mining - top 2 stocks in ASX holdings down 9% each, ASX uranium down in double digits (6 stocks), Oklo (OKLO) long dated calls down over 34% each, NuScale Power down 14% and the associated call options over 45%. The price of leverage on options - no worries as they have lots of time to run. Canada dragged too with gold and silver and uranium sagging.
Big movers of the week were VHM (VHM.AX) (74.1%), AdAlta (1AD.AX) (66.7%), Iondrive (ION.AX) (35.4%), Dawson Geophysical Company (DWSN) (34.7%), Northern Minerals (NTU.AX) (23.5%), Fortuna Metals (FUN.AX) (21.9%), Pilbara Minerals (PLS.AX) (20.5%), Halliburton Company (HAL) (19.2%), Silex Systems (SLX.AX) (17.3%), Beach Energy (BPT.AX) (15.1%), Karoon Energy (KAR.AX) (14.4%), Loop Industries (LOOP) (11.8%), Helloworld Travel (HLO.AX) (11.3%), Zinc of Ireland (ZMI.AX) (11.1%), Rentokil Initial (RTO.L) (10.7%), Woodside Energy Group (WDS.AX) (10.4%), Stuhini Exploration (STU.V) (10%)
A short list of only 17 stocks in the big movers list. The big themes represented this week are from the top - rare earths (3 stocks), alternate energy (3 stocks), uranium (1 stock), silver mining (1 stock). The notable sector showing which is not a big theme is oil and oil services (5 stocks). That proves one of the purchases made below was based on solid instincts.
US Markets bounced a round during the week making several new records and then backing off. Tame CPI print on Friday (Oct 24) pushed out more records.
Rumours started circling coming into the weekend of a one year delay in the implementation of China's rare earths export controls ahead of a Trump-Xi meeting. That put the skids under rare earths stocks. The supply risk has not gone away - it has just been pushed down the road - my view.
Crypto Recovers
Bitcoin price tested the year ago lows and then pushed higher finishing the week 3.6% higher than the open with a trough to peak range of 8.8%.
Ethereum price pushed lower and hen found buyers finishing the week 3.7% higher than the open with a trough to peak range of 13.7% - feels a bit more convincing than Bitcoin
Looking at the altcoin scene the same game seems to be playing - sell to exit and/or stick with Bitcoin or Ethereum
Nuclear Energy Holdings
A few changes in holdings with sales outweighing the net additions - biggest net addition is Paladin Energy (PDN.AX) SPP allocation was made over the previous weekend. Overall valuations went up by 0.7% - not bad in a week where nuclear and uranium was down more than up
One change in categorization - adding allocation for Snow Lake Resources (LITM) at 50% to account for their uranium interests (previously showing as lithium only). Have adjusted the opening balance as well.
Mix of holdings sees Silex Systems Limited (SLX.AX) move up two places into slot 4 and IsoEnergy Ltd. (ISO.TO) move up one place into slot 9. Coming into the Top 10 based on the additions there is Paladin Energy (PDN.AX) into slot 8. Dropping out of Top 10 is NuScale Power Corporation (SMR) - down to slot 12. The number of Others goes up 2 stocks with one new holding and the addition of Snow Lake Resources (LITM) into this analysis. Percentage of portfolios went up just over half a point to 28.9%
A few small changes in holdings by stage with Producing up 0.6 points on the addition there and the other uranium holdings all dropping a bit on valuations. Enrichment goes up 0.7 points on the valuation spike in one stock from the big movers list
Alternate Energy Holdings
A few additions in Lithium and Other (graphite) but a more telling 5.5% drop in valuations
One change in categorization - reducing allocation to lithium for Snow Lake Resources Ltd. (LITM) to 50% to account for their uranium interests
Two changes in rankings with ChargePoint Holdings, Inc. (CHPT) moving up a place into slot 4 and Pilbara Minerals Limited (PLS.AX) coming into Top 10 in slot 10 displacing Leo Lithium (LLL.AX). Some large percentage falls with Westwater Resources, Inc. (WWR) down 1.8 points and JinkoSolar Holding Co., Ltd. (JKS) down 0.5 points. Share of portfolios drops 0.2 points to 6.3%.
Leo Lithium (LLL.AX): Lithium. Following the sale of the Mali mine dividend distributions have been received and the stock delisted - not a pretty story. Have not worked through the delisting ramifications for that yet - still showing a holding at last listed price.
Bought
Paladin Energy (PDN.AX): Uranium. Allocated scaled down parcels in pension portfolio and managed portfolio. Had applied for the full $30k oversubscription (got less than half). Now have way larger parcels that I normally hold. Not a problem with SPP price at $7.25 vs Friday close $9.20 (Oct 17).
Lightning Minerals Ltd (L1M.AX): Gold Mining.
Saw a tweet highlighting the latest drill results - gold project. Added a parcel in personal portfolio - am already holding in pension portfolio (under water) but out of cash there. Was originally purchased for lithium deposits in Brazil - see TIB721
A quick wander through what they do - this reflects the challenge of resource investing.
Lightning Minerals Ltd engages in the exploration of minerals that include lithium, gold, base metals, nickel, copper, and PGEs
Their most recent acquisitions were two advanced and highly prospective brownfields gold and copper assets located in Queensland (Mt Turner Projects) and New South Wales (Lachlan Fold Copper Porphyry Project)
How can a team keep focus on so many materials in so many geographies? Truth is it is hard.
Westwater Resources (WWR): Graphite. Added a small parcel for first time in pension portfolio on the selloff. Price kept sliding - scaled in the position 2 days later at 12% lower price. No news catalysts - maybe some nerves as the business transitions from development to production.
Also added a March 2026 expiry 2/5 call spread which offers maximum profit potential of 650% for a 166% move in price from $1.88 close (Oct 20). Did sell a November expiry put to partly fund the call premium - this jumps the maximum profit potential to 2,100% with 20% price coverage.
Let's look at the combined trade chart which shows the bought call (2) as a blue ray and the sold call (5) as a red ray and the sold put (1.5) as a dotted red ray with the expiry date the dotted green lines on the right margins. This looks like a blue sky trade that is hoping for a run similar to the one just happened. The sold put (1.5) makes it a bit more comfortable but that level is well above any support level.
The next chart might help - just change it to a weekly chart and see where price was in 2021 (the left hand edge). What is not clear is what has changed in the business in that time - I was just going at grabbing the current momentum as a punt. Maybe there is important history.
In personal portfolio I made a different trade - created a March 2026 3/2 risk reversal with the sold put (2) fully funding the bought call giving a breakeven of $2.95. This is a punt looking for price to repeat what it did in the last week one more time between now and March 2026 or fail at that but develop over time after March 2026 above the $2 sold put strike.
Uranium market selloff prompts some scaling in trades.
Deep Yellow (DYL.AX): Uranium. Company announced the resignation of John Borshoff, CEO without too much information attached. Market did not like the news as he has been a uranium stalwart going back to the last boom days. Bought a parcel in pension portfolio to scale in holdings there. Developing Tumas project in Namibia though FID has not been made.
Snow Lake Resources (LITM): Uranium/Lithium. Company announced launch of Kadmos Energy Services to build small modular reactors. Market did not like the news - more distraction.
Added to holding in pension portfolio to scale in. Do need to re-calibrate the holding for the nuclear and alternate energy holdings - putting it in both reports with a 50:50 uranium/lithium split and ignoring the rare earths bits.
https://finance.yahoo.com/news/snow-lake-launches-kadmos-energy-113000133.html
Range Nuclear Renaissance ETF (NUKZ): Nuclear Power. Price slid into the middle of the credit spread range - added a parcel in pension portfolio at 3.3% discount to price assigned at the week before. Also put in place a March 2026 75/60 ratio risk reversal.
Let's look at the chart which shows the bought call (75) as a blue ray and the sold put (60) as a dotted red ray with the expiry date the dotted green line on the right margin. The sold put is a ratio of two for one which fully funds the bought call. This is a blue sky trade with breakeven the dotted blue ray. Have chosen to use recent price history for the price scenario - a pullback to the 0.786 Fibonacci level and another blue arrow will take the trade to assignment. The key for that scenario is price would be above the sold put (60) all the way.
Myriad Uranium Corp (M.CN): Uranium. Scaled into personal portfolio.
ERAMET S.A. (ERA.PA): Base Metals/Lithium. Walking through the watch list stocks (stocks that I have owned or am watching) - like the chart. Bought a parcel in pension portfolio.
Company is well positioned in manganese (#1) with processing facilities in US/Europe friendly places, nickel (largest mine in the world), mineral sands (zircon #4, titanium raw materials (#5)), lithium (Argentina and France).
The comparison charts shows a significant gap to leading mineral sands producer, Iluka (ILU.AX - dark blue line) and leading US lithium producer, Albemarle (ALB - light blue line). Close half the gap makes for a 53% profit opportunity.
Alerian MLP ETF (AMLP): US Oil. Oil prices move up 8% on the week on the news of new US sanctions on two Russian oil companies. Added shares in this oil and gas MLP - it always seems to lag big oil and it has a solid options market. Two charts to test the thinking (and my instincts)
First is long run comparison with SPDR Oil Producers ETF (XOP - the bars) going back to the cycle high. Alerian out-performed by 34 points. Now let's look at the chart from the cycle low to test for lag.
There is the 28 point lag - close that is a 50% profit move.
American West Metals Limited (AW1.AX): Rare Earths. Pending order hit in personal portfolio - have learned on Next Investors new portfolios additions to put in a second low ball pending order to reduce the front running premium - 15% lower entry 2nd time around on this stock.
Laramide Resources (LAM.AX): Uranium. Saw a tweet from one of the few people on X I do take notice of (Triangle Investor) about adding a position. Opened a small position in personal portfolio as an options type play.
Laramide Resources Ltd. is focused on the exploration and development of premium uranium assets in Australia and the United States.
The indicated resources are around 50 mlbs each - one in New Mexico and one in Queensland. No PFS available yet and a uranium mining ban in QLD = a long term options idea. They also have options on large land grants in Kazakhstan. Seem to have enough cash to do some drilling here too.
AXP Energy (AXP.AX): US Oil. Consolidation is now completed and lest drilling news is encouraging. Added a small parcel in personal portfolio to get a decent size position - plan is to work toward a breakeven exit. The consolidation was done when it was only possible to buy stock at $0.002 when all the buy orders were sitting at $0.001 - i.e., a 100% premium. Consolidation does improve the liquidity but it also opens up the floor below the old price.
Power Minerals (PNN.AX): Lithium/Rare Earths. Follow up Next Investors idea pending order hit in personal portfolio - a 15% premium averaged down from purchase the week before.
Next Wave Brewing Australian Brewing. Received an OnMarket Bookbuild offer to fund an Australian brewing business that is carving out a niche in brewing gluten free beer. Had to participate as the product is called Two Bays Brewing and my consulting business is called Two Bays Consulting.
Cahboor Farms Australian Food. While was on the OnMarket Bookbuild site I saw an invite for this walnut business - an Australian based business that is looking to become the dominant supplier in Australia and tehn in export markets. Have had good success with Australian almond investing - a similar opportunity here is the question.
The chart shows Select Harvests (SHV.AX) - my prior experience was in 2015 - that peak was 180% from the lows. Subsequent moves have been smaller.
Energy Fuels (UUUU): Uranium. With price opening at $22.49 (Oct 21) put in place a April 2026 23/18 ratio risk reversal in personal portfolio. The 2:1 ratio sold put (18) fully funds the bought call (23) with 25% price coverage. Breakeven on the bought call should it go to assignment is $22.50 - the price on trade day.
Chart has so many trades on = messy - focus on the top right and the colour purple - bought call (23) is the solid purple ray and sold put (18) is the dashed purple ray with expiry the green line on the right margin. It is clear that price is behaving differently to the green and light blue arrow price scenarios. However one could argue that things might go back to those more gentle sorts of moves. Have cloned a blue arrow into a purple arrow and placed it at a 0.786 Fibonacci retracement. If price moves like that the trade will be below the sold put (18) for a while and then should pass the breakeven and the bought call (23) well before expiry
Sold
Silex Systems (SLX.AX): Uranium Enrichment. With price moving strongly on news that Global Laser Enrichment (GLE), the exclusive licensee of the SILEX uranium enrichment technology, has achieved TRL-61, following the completion of its large-scale enrichment demonstration program, took some off the table in personal portfolio for 180.8% blended profit since February/May 2025. Price received is 132% higher than the SPP capital raise price.
ASX Portfolio
The segment reports trading in ASX fractional share portfolio. Trade entries are made based on stock screens looking for undervalued stocks (price to book, price earnings, price to sales) that are showing technical signs of breaking a downtrend. Exits are made at 35% profit or 25% if 52 week high is lower than 35% advance. New buys are in $500 lots. Scale ins and top ups in $250 lots
Did make some changes to tracking spread sheet to differentiate profit targets - standard 35%, gold 45% and uranium 65%. Why? Got a few stocks around those levels and thinking we are in a bull cycle for gold and uranium.
New Buys
Lend Lease (LLC.AX): Property Services. Half portion only. Dividend yield 3.99%. Stock popped up on the screens - the chart shows price has reversed off a level and tested that again and making a short term uptrend.
Something was sitting in the back of my head (hence the half position) - the chart shows an exit from the stock at a loss in July 2024 - Intelligent Investor pulled the stock off their coverage list and urged an exit. Why? Negative ROA and 84% debt to equity ratio. As it happens, the exit was a bit premature but better than the level just bought back. Will look to exit at breakeven or better and take it off the list.
Scale Ins
New Hope Corporation (NHC.AX): Coal Mining. Dividend yield 7.5%. Read Intelligent Investor review of last results - they like the cash generating power and expected dividends flow for years to come. Added another parcel as a scale-in to average down - not quite the strategy but done anyway.
Chart shows the prior entries and a blue arrow price scenario (on the left) which did not play out. Get one from here like that and profit targets will be hit.
Top Ups
Helloworld Travel Ltd (HLO.AX): Travel Services. Dividend yield 6.25%
Chart shows price had been moving ahead from the last entry and the positive sentiment showing in the text box - then pulled back a bit. Gives a chance to average down. Did help that the initial tranche w