Hot Streak for AI Stocks / Gold Miners Lag / Mixed Bitcoin Outlook
Published: 7/2/2024
Author: FRC Analysts
Key Highlights
- Last week, global equity markets were up 0.7% on average. The S&P 500 was up 0.5% WoW, driven by softer-than-expected inflation and subdued GDP/manufacturing data.
- Metal prices were relatively flat. Gold producer valuations are 21% lower than the past three instances when gold surpassed US$2k/oz.
- Promising third party validation for a biotech company under coverage
- Rising Realized HODL ratio (RHODL) and declining hash rate suggest a mixed near-term outlook for Bitcoin (BTC)
- Major AI indices are up 1% WoW on average, and 12% YoY.
Commentary on Resource Companies Under Coverage
South Star Battery Metals Corp. (STSBF, STS.V)
PR Title: Announces metallurgical results for its BamaStar graphite project (Alabama)
Analyst Opinion: Positive – Metallurgical testing has yielded impressive concentrate grades of up to 99.5% Cg. A Preliminary Economic Assessment (PEA) for this project, which features an open-pittable deposit, is anticipated next month.
North Peak Resources Ltd. (BTLLF, NPR.V)
PR Title: Sampling results from the Prospect Mountain Mine Complex (Prospect MMC) in Nevada
Analyst Opinion: Positive – Recent rock chip sampling returned high gold and silver grades, including values of up to 20.5 g/t Au, and 911 g/t Ag. Prospect MMC is a historic gold-silver-lead producer, directly bordering i-80 Gold’s (TSX: IAU) Ruby Hill project, which hosts a large gold-silver resource. A drill program is currently underway, with one hole completed to date.
Aton Resources Inc. (ANLBF, AAN.V)
PR Title: Sampling results from the Abu Marawat project, Egypt
Analyst Opinion: Positive – Surface sampling at seven regional targets returned bonanza gold grades of up to 183 g/t. Management is planning to drill test these targets later this year.
Fortune Minerals Limited (FT.TO, FTMDF)
PR Title: Alberta refinery site option for the NICO project expires
Analyst Opinion: Negative – FT's option to acquire a site for its planned refinery expired on June 30, 2024. Despite this setback, FT is actively negotiating with the vendor to reach a new agreement. We remain optimistic about securing a new deal, bolstered by recent successful financing efforts. These include grants totaling $16.2M from the U.S. Department of Defense, and the Government of Canada, and convertible securities funding of up to $10M from an institutional investor.
Advanced Gold Exploration (AUHIF, AUHI.CN)
PR Title: Announces a $0.7M private placement
Analyst Opinion: Positive – Proceeds will fund exploration efforts at the Buck Lake property. The property has undergone minimal exploration to date, except for a single drill hole, and a geophysical survey identifying a 2 km long anomaly linked to VMS deposits.
Updates on Financials, Technology, Energy, and Special Situations Companies Under Coverage
Tevogen Bio Holdings Inc. (NASDAQ:TVGN)
PR Title: Announces that the Blood Advances journal has published its phase l clinical trial results for TVGN 489
Analyst Opinion: Positive - TVGN aims to become the first biotech company offering off-the-shelf, cost-effective cell therapies for viral infections, various cancers, and neurological diseases. Last year, the company completed a phase one trial of its flagship drug candidate, yielding promising results. These findings were recently published in Blood Advances, a prestigious peer-reviewed journal of the American Society of Hematology (ASH). We believe this publication marks a significant external validation of Tevogen's scientific approach.
FRC Top Picks
The following table shows last week’s top five performers among our Top Picks, including five junior resource companies. The top performer, New Age Metals, was up 14%. NAM owns an advanced-stage PGM project in Ontario, and several early-stage lithium projects in Manitoba.
| Top Five Weekly Performers | WoW Returns |
| New Age Metals Inc. (NAM.V) | 14.0% |
| Sirios Resources Inc. (SOI.V) | 8.3% |
| Contango Ore Inc. (CTGO) | 4.6% |
| Sabre Gold Mines Corp. (SGLD.TO) | 4.5% |
| Panoro Minerals (PML.V) | 3.6% |
* Past performance is not indicative of future performance (as of July 2, 2024)
Source: FRC
Our top picks have outperformed the benchmark (TSXV) in five out of six time periods listed below.
Performance by Sector
| Total Return | 1 Week | 1 mo | 3 mo | 6 mo | 3 yr | Since launch |
| Mining | -1.7% | -9.4% | 4.3% | 7.9% | -40.4% | 7.6% |
| Cannabis | N/A | N/A | N/A | N/A | -45.4% | -23.6% |
| Tech | 0.0% | -38.0% | -20.0% | -26.0% | -31.7% | -4.5% |
| Special Situations (MIC) | 9.6% | 7.1% | 3.8% | 11.6% | -16.1% | -11.0% |
| Private Companies | N/A | N/A | N/A | N/A | 20.5% | 30.5% |
| Portfolio (Total) | 0.5% | -7.9% | 1.7% | 4.7% | -20.9% | 4.9% |
| Benchmark (Total) | 0.2% | -6.3% | -0.4% | 2.5% | -41.4% | -36.0% |
| Portfolio (Annualized) | - | - | - | - | -7.5% | 0.5% |
| Benchmark (Annualized) | - | - | - | - | -16.3% | -4.1% |
1. Since the earliest initiating date of companies in the list of Top Picks (as of July 2, 2024) 2. Green (blue) indicates FRC's picks outperformed (underperformed) the benchmark. 3. Past performance is not indicative of future performance. 4. Our complete list of top picks (updated weekly) can be viewed here: Top Picks List
Market Updates and Insights: Mining
Last week, global equity markets were up 0.7% on average (up 0.8% in the previous week). The S&P 500 reached a new record high last week, and is currently up 0.5% WoW, driven by softer-than-expected inflation and subdued GDP/manufacturing data. We continue to believe that the Fed will cut rates in Q4-2024.
Source: FRC / Various
Last week, metal prices were up 0.8% on average (up 0.1% in the previous week).
Gold producer valuations were down 0.2% last week (down 3.6% in the prior week); base metal producers were up 0.9% last week (down 0.6% in the prior week). On average, gold producer valuations are 21% lower (unchanged) than the past three instances when gold surpassed US$2k/oz.
| 24-Jun-24 | 02-Jul-24 | ||||
| Gold Producers | EV / R (forward) | EV / EBITDA (forward) | EV / R (forward) | EV / EBITDA (forward) | |
| 1 | Barrick | 2.99 | 6.28 | 2.98 | 6.24 |
| 2 | Newmont | 3.18 | 7.29 | 3.12 | 7.10 |
| 3 | Agnico Eagle | 4.38 | 8.20 | 4.34 | 7.97 |
| 4 | AngloGold | 2.14 | 4.83 | 2.22 | 5.12 |
| 5 | Kinross Gold | 2.41 | 5.38 | 2.57 | 5.70 |
| 6 | Gold Fields | 2.69 | 4.98 | 2.70 | 4.97 |
| 7 | Sibanye | 0.70 | 3.74 | 0.63 | 3.45 |
| 8 | Hecla Mining | 4.50 | 13.97 | 4.21 | 12.93 |
| 9 | B2Gold | 1.59 | 3.11 | 1.60 | 3.14 |
| 10 | Alamos | 4.67 | 8.94 | 4.63 | 8.83 |
| 11 | Harmony | 1.67 | 5.08 | 1.72 | 5.25 |
| 12 | Eldorado Gold | 2.39 | 4.92 | 2.33 | 4.71 |
| Average (excl outliers) | 2.62 | 5.70 | 2.62 | 5.68 | |
| Min | 0.70 | 3.11 | 0.63 | 3.14 | |
| Max | 4.67 | 13.97 | 4.63 | 12.93 | |
| Base Metal Producers | EV / R (forward) | EV / EBITDA (forward) | EV / R (forward) | EV / EBITDA (forward) | |
| 1 | BHP Group | 2.90 | 5.59 | 2.94 | 5.65 |
| 2 | Rio Tinto | 2.20 | 4.68 | 2.20 | 4.67 |
| 3 | South32 | 1.58 | 7.31 | 1.62 | 7.37 |
| 4 | Glencore | 0.45 | 5.80 | 0.44 | 5.80 |
| 5 | Anglo American | 1.92 | 5.67 | 1.86 | 5.50 |
| 6 | Teck Resources | 2.86 | 6.60 | 2.89 | 6.67 |
| 7 | First Quantum | 3.68 | 11.82 | 3.76 | 12.28 |
| Average (excl outliers) | 2.23 | 6.78 | 2.24 | 6.85 | |
| Min | 0.45 | 4.68 | 0.44 | 4.67 | |
| Max | 3.68 | 11.82 | 3.76 | 12.28 | |
Source: S&P Capital IQ & FRC
We are revising our full-year average metal price forecasts after adjusting for prices in Q2; changes are highlighted in red.
Market Updates and Insights: Cryptos
Prices of mainstream/popular cryptos were up 3% on average last week (down 8% in the previous week).
| July 2, 2024 | ||
| Cryptos | WoW | YoY |
| Bitcoin | 1% | 102% |
| Binance Coin | -0.5% | 135% |
| Cardano | 7% | 43% |
| Ethereum | -1% | 76% |
| Polkadot | 10% | 21% |
| XRP | 1% | -0.4% |
| Polygon | -1% | -15% |
| Solana | 10% | 691% |
| Average | 3% | 132% |
| Min | -1% | -15% |
| Max | 10% | 691% |
| Indices | ||
| Canadian | WoW | YoY |
| BTCC | 1% | 96% |
| BTCX | 2% | 106% |
| EBIT | 2% | 105% |
| FBTC | 1% | 43% |
| U.S. | WoW | YoY |
| BITO | -6% | 30% |
| BTF | 1% | 60% |
| IBLC | 5% | 64% |
Source: FRC/Yahoo Finance
The global MCAP of cryptos is US$2.44T, down 10% MoM, but up 95%YoY.
Total Crypto Market Cap Chart
Source: CoinGecko
Last week, BTC was up 0.7%, while the S&P 500 was up 0.5%. The U.S. 10-year treasury yield was up 0.2 pp.
Source: FRC/ Yahoo Finance
The global hash rate of BTC (defined as calculations performed per second/an indicator of network difficulty) is 559 exahashes per second (EH/s), down 8% WoW, and 6% MoM. The decrease in hash rates is positive for miners as their efficiency rates (BTC production per EH/s) are inversely linked to global hash rates.
Total Hash Rate (BTC)
The Realized HODL ratio (RHODL), which gauges the activity of short-term holders relative to long-term holders, was up 2% WoW, and 290% YoY. We interpret the increase in RHODL as a sign of strengthening demand, suggesting potential for an uptick in near-term prices. Historically, BTC prices have moved in tandem with this ratio. By tracking RHODL, we believe we can identify potential turning points in BTC prices.
Source: FRC/ Various
Companies operating in the crypto space are trading at an average EV/R of 6.4x (previously 5.9x).
Source: S&P Capital IQ/FRC
| July 2, 2024 | |
| Crypto Stocks | EV/Revenue |
| Argo Blockchain | 1.9 |
| BIGG Digital | 5.6 |
| Bitcoin Well | 0.8 |
| Canaan Inc. | 1.3 |
| CleanSpark Inc. | 13.6 |
| Coinbase Global | 14.6 |
| Galaxy Digital Holdings | N/A |
| HIVE Digital | 3.3 |
| Hut 8 Mining Corp. | 8.2 |
| Marathon Digital Holdings | 12.3 |
| Riot Platforms | 7.7 |
| SATO Technologies | 1.5 |
| Average | 6.4 |
| Median | 5.6 |
| Min | 0.8 |
| Max | 14.6 |
Source: S&P Capital IQ/FRC
Market Updates and Insights: Artificial Intelligence/AI
Major AI indices are up 1% WoW on average (down 1% in the previous week), and 12% YoY.
| July 2, 2024 | ||
| AI Indices | WoW | YoY |
| First Trust Nasdaq AI and Robotics ETF | 1.9% | -7% |
| Global X Robotics & AI ETF | 0.2% | 6% |
| Global X AI & Technology ETF | 1.8% | 29% |
| iShares Robotics and AI Multisector ETF | 1.3% | 1% |
| Roundhill Generative AI & Technology ETF | 1.2% | 30% |
| Average | 1.3% | 12% |
| Min | 0.2% | -7% |
| Max | 1.9% | 30% |
Source: FRC/Various
The following table highlights some of the most popular large-cap AI stocks. Shares of these companies are up 1% WoW on average, and 117% YoY. Their average P/E is 41.7x (previously 42.5x) vs the NASDAQ-100 Index’s average of 32.1x (previously 31.9x).
| July 2, 2024 | |||
| AI Stocks | WoW | YoY | P/E |
| Arista Networks | 7.5% | 124% | 49.6 |
| Dell Technologies | 3.5% | 162% | 29.2 |
| Microsoft Corporation | 2.3% | 36% | 39.6 |
| NVIDIA Corp | -3.0% | 189% | 72.6 |
| Micron Technology | -7.7% | 107% | n/a |
| Palantir Technologies | 5.6% | 67% | n/a |
| Qualcomm | -0.01% | 67% | 26.7 |
| Super Micro Computer (SMCI) | -0.7% | 236% | 45.1 |
| Taiwan Semiconductor Manufacturing | 1.0% | 66% | 29.3 |
| Average | 0.9% | 117% | 41.7 |
| Median | 1.0% | 107% | 39.6 |
| Min | -7.7% | 36% | 26.7 |
| Max | 7.5% | 236% | 72.6 |
Source: FRC/Various
Key Developments:
- Amazon (NASDAQ: AMZN) is planning to spend more than US$100B over the next decade on data centers, underscoring its commitment to providing the computing power needed for advanced AI applications.
- Alibaba (NYSE: BABA) is going global by launching an English version of its AI model hub, ModelScope, targeting a wider audience of developers and businesses worldwide.