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Investor optimism continued to rise this week, pushing the Dow to a record high — but is it too much, too fast?
Commodities are ending the week mixed, with copper flat, gold marginally higher than last Friday and oil off slightly.
Investor attention was mostly focused on stocks this week after the Dow Jones Industrial Average set a new all-time high on Wednesday, closing at 14,253.77 and eclipsing its previous peak of 14,164.53, set on October 9, 2007, before the financial crisis. The blue-chip index then continued pushing into record territory, closing at 14,329.49 on Thursday.
“What’s amazing about this bull market is that people still don’t think it’s real,” Richard Bernstein, chief executive of money management firm Richard Bernstein Advisors, was quoted as saying in a March 5 New York Times article. “We think this could be the biggest bull market of our careers.”
Other analysts, however, are preaching caution. “We are over 500 days without a 10% correction,” said Michael Farr of investment firm Farr Miller & Washington in a March 8 USA Today article. “That is not normal.”
He added, “[i]t’s lulling investors into the false security that this is an ‘only-up’ market. The fear of missing out sure seems to be outweighing the fear of getting caught and losing.”
The Dow’s gains came against the backdrop of a steadily improving employment picture in the US. On Friday, the Department of Labor reported that the country created 236,000 jobs in February, far exceeding economists’ expectations of a gain of 160,000 positions. The strong result pushed down the country’s unemployment rate to 7.7 percent from 7.9 percent. That’s the lowest level since 2008.
In morning trade Friday, Brent crude is down 1.11 percent, at $109.91 a barrel, while copper is down 0.28 percent, at $3.51 a pound. Gold is down 0.04 percent, at $1,574.40 an ounce.
Gold
Randgold Resources (LSE:RRS,NASDAQ:GOLD), which produces and explores for gold in Africa, said this week that it plans to remain a mid-tier gold producer with an eye to increasing its dividend, Mining Weekly reported. Speaking at the Prospectors and Developers Association of Canada conference in Toronto, CEO Mark Bristow said the company can afford to build a new $600-million mine every five years and still maintain its quarterly payout. Bristow’s comments came after Randgold hiked its dividend by 25 percent on December 31.
Bristow also offered his forecast for gold prices. “I don’t think there’s much room to go below $1,500 this year and I believe there’s every potential for it to go $200 above that,” he said in a BDlive article.
QMX Gold (TSX:QMX) aims to find a joint venture partner to help restart its Snow Lake gold mine in Manitoba, according to Mining Weekly. The mine had been operated by Kinross Gold (NYSE:KGC,TSX:K) and High River Gold Mines (TSX:HRG) from 1995 until 2005, producing 822,550 ounces in that time. QMX expects production of 80,000 to 90,000 ounces annually. However, it estimates a mine life of just five years. “Underground mining is becoming a lost art,” said CEO Francois Perron. “People easily forget that on average, from the time an underground mine starts operations, the reserves grow by 2.5 times over the life of the mine.”
Oil and gas
ExxonMobil (NYSE:XOM) expects its oil and gas production to fall by about 1 percent in 2013, Reuters reported. That’s despite the fact that the company plans to invest $41 billion in its operations this year, mostly on exploration and production. However, Exxon expects its output to rise 2 to 3 percent a year through 2017 as new projects, including its Kearl oil sands operation in Alberta and liquefied natural gas plants in Papua New Guinea, come online.
Noble Energy (NYSE:NBL) completed drilling its Leviathan #4 appraisal well, which is located on the Rachel license off the coast of Israel. Noble drilled the well to a depth of 16,992 feet and encountered 454 net feet of net gas pay, the thickest net pay of any well drilled at Leviathan thus far. The company also raised its resource estimate on the field to 18 trillion cubic feet of gas from 17 trillion. Noble operates Leviathan and holds a 39.66-percent interest. Israeli firms Delek Drilling (TLV:DEDR.L) and Avner Oil Exploration (TLV:AVNR.L) hold 22.67 percent each, while Ratio Oil Exploration (TLV:RATI.L) owns 15 percent.
CBM Asia Development (TSXV:TCF) announced a non-brokered private placement of up to 71.4 million shares at $0.21 each, for gross proceeds of up to $15 million. It will use the funds to finance pilot production and/or exploration and development costs at its Indonesian coalbed methane projects, as well as for general expenses and unallocated working capital. CBM expects the offering to close around March 29.
Copper
First Quantum Minerals (LSE:FQM,TSX:FM) expects to produce between 302,000 and 330,000 metric tons (MT) of copper in 2013, as per information in its recently released quarterly results report. To put that in context, First Quantum’s output rose 16 percent in 2012, to 307,115 MT.
Ecuador Gold and Copper (TSXV:EGX) announced drilling results from the El Hito deposit at its Condor gold and copper concessions in Southeast Ecuador. Highlights include hole DEH-07, which intercepted 244 meters grading 0.51-percent copper and 1.28 g/t silver, including oxide mineralization of 0.79-percent copper and 1.58 g/t silver over 76 meters.
Sama Resources (TSXV:SME) reported assay results from its Samapleu Extension 1 deposit in Cote d’Ivoire. Hole SM25-112519 intercepted 122 meters grading 0.32-percent copper, 0.44-percent nickel, 0.03-percent cobalt, 0.94 g/t palladium and 0.17 g/t platinum. The result includes 11 meters grading 0.78-percent copper, 1.88-percent nickel, 0.09-percent cobalt, 2.84 g/t palladium and 0.31 g/t platinum at 84.9 meters below the surface.
Securities Disclosure: I, Chad Fraser, hold no positions in any of the companies mentioned in this article.