Historical silver squeeze & CDFund +65% YTD
Historical silver squeeze & CDFund +65% YTD
September was another exceptionally strong month for the Commodity Discovery Fund. The NAV closed at 104.88, an increase of +12.42% and the first double-digit month this year.
It resulted in a YTD performance of +58.86%. Additionally, with a strong influx of funds, the fund had over €183 million under management by the end of September.
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The bull market in precious metals and commodities continued strongly in September. Silver explosively broke through the $40 mark and closed +18% higher at $47.
Then, on October 9, the old double top of $50 (2011, 1980) was reached. Gold rose +12% and reached $3,850, uranium was quoted at $82 per pound (+7%) and copper also rose +7%.
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In the copper market, we saw new disruptions in production. After earlier issues at Ivanhoe Mines in the DRC and the Cobre Panamá mine, Freeport-McMoRan (FCX) declared a force majeure in Indonesia.
At the second largest copper mine in the world, a massive mudflow (800,000 m3) entered the underground Grasberg mine. This mine is responsible for 4% of global copper production, with an annual output of 800,000 tons of copper.
It will surely take until 2027 for production to return to normal levels. Due to an options strategy, our position in this company was over-hedged, allowing us to benefit overall from the correction. Furthermore, we had already positioned ourselves for a breakout of copper stocks, as we reported in the previous Commodity Update. As expected, the COPX broke out above $50, and this ETF ultimately rose by +20% in September.
On the macro front, the interest rate policy of the American Fed was once again decisive. Chairman Powell announced a first rate cut of 0.25%, with the prospect of two more cuts later in 2025.
As the American economy weakens significantly, the market is counting on the next step in October. The new government shutdown increases economic and political concerns. With total government spending of $7.2 trillion and a budget deficit of $1.9 trillion, it is clear that budget discipline is still lacking. As a result, the dollar has already declined by 13% this year.
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At the corporate level, there was also a lot of movement. Anglo American and Teck Resources announced a merger into "Anglo Teck", creating one of the largest copper producers in the world with approximately 70% exposure to copper.
The CEO exits on the same day at Barrick and Newmont were very striking. Especially Mark Bristow's sudden departure from Barrick is surprising. Until the merger with Barrick in 2019, he built Randgold into a major player with a distinctly aggressive approach. He did not hesitate to build gold mines in countries like Mali. Since then, he has tried to do so again with Barrick.
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His choice to also invest heavily in the Pakistani megaproject Reko Diq sparked significant resistance. Additionally, he shifted the focus towards copper, just before the start of this new bull market in gold.
This is in contrast to other gold majors, whose prices have already benefited in recent years, such as Agnico and Gold Fields.
Meanwhile, the American government has begun investing in critical metals companies. Last week, it acquired a 5% stake in Lithium Americas (LAC), and another 5% in LAC's Thacker Pass project, where also
General Motors owns a third of it. This led to the LAC stock price rising nearly +100% in one day. It marks the Western urgency to become less dependent on China.
After the very strong growth of our fund, we have nearly completed the repositioning of our fund. This remains focused on new discoveries in monetary and battery-related metals, but in addition to about fifty.
Significant positions in the largest yet-to-be-developed gold, silver, copper, and uranium projects through positions in exploration companies are accounting for an increasingly larger part of our portfolio invested in already.
producing raw material companies, which are significantly less volatile and more liquid. We can also hedge these efficiently with options. This combination makes our fund ready for further
growth to several hundred million euros, with a much lower risk for future corrections, while still maximizing profits from upward movements in this bull market for commodities.
