Anybody look at silver?

hank

Silver spot has jumped about 7% today alone. Now at $21+. Gold’s up $25 today which amounts to a measly 1.5% day’s gain. Appears aluminum, platinum and other metals are also rising sharply. Commodities have been strong ever since the Fed started mainlining the economy. Brent’s in the $44 area. NYMEX just couple bucks below it. .Both seeing over 2% gains today alone.

I happened to talk to a highly knowledgeable guy in the logging / milling / wood distribution business today. He said not only is treated lumber (in halfway decent shape) impossible to get, other wood products are near exhausted as well. In fact, he foresees a real “building materials shortage very soon.”

Take one individual’s comment FWIW. What I’m wondering is if this short supply of materials for building and maintaining homes will have any effect on inflation?

Derf

@hank: Did knowledgeable guy say what was causing the shortages? Maybe it's a regional problem or just a shortage in certain materials
Stay safe, Derf

hank

Derf said:

@hank: Did knowledgeable guy say what was causing.

Covid . Not enough workers to run the sawmills, plus supply chain issues also related to Covid.

Logging / milling is something we don’t often think about when building a new deck. Been around sawmills, and it’s quite remarkable how those big double-trailer rigs off-load gargantuan fresh-cut logs near continuously all day long - day after day. Imagine the steps involved in sawing, smoothing, edging, drying, treating with rot-resistant products, making into plywood. Finished product is measured / weighed / stacked, and than shipped to big warehouses somewhere from which it eventually gets distributed to retailers. What if, for instance, you can’t get enough warehouse workers to accept / catelogue the incoming loads?

Old_Skeet

Hi @hank, not only are the metals on the upward move other types of commodities are as well.

Back on May 28th I purchased a position in BCSAX (Blackrock Commodity Strategy Fund) which holds some mining companies plus other companies that service the industry down to retail distribution in the commodity chain. Thus far, as I write, I am up 7% in this niche type fund in a little less than two months and just recently caught a little dividend payment. I'm thinking that commodities still have a ways to run.

I have provided a link for BCSAX for those that would like more information on the fund.

https://www.blackrock.com/us/individual/products/227413/blackrock-commodity-strategies-class-a-fund

In addition, I made comment in a thread that @bee started, on June 11th, called "Dr. Copper Is Back Working Full Time."

Here is the link to bee's thread. https://www.mutualfundobserver.com/discuss/discussion/56309/dr-copper-is-back-working-full-time

rono

Howdy folks,

Yeppers, silver seems to be breaking out. We'll see. I've got about 2 units in the metals, mostly junior silver miners. Serious nose bleed stuff. Right now for paper bullion, I'm holding CEF and SLV. For miners, I have a little GDXJ, but mostly SIL, SILJ, and for individuals ISVLF, KOOYF, TKRFF and SVM.

BYW, I am still selling equities. Yesterday I sold my TSLA and NFLX. Took the money and ran, as it were. I'm still trimming the equity portion of both mine and wifeys stuff. I've got her down around 10/45/45. I play a bit so my equity stake is higher but . . .

and so it goes,

peace,

rono

Mark

At the start of the shutdown wood products workers were considered nonessential - remember TP shortages. I don't know if they found other work while laid off or mills and manufacturing plants were closed or .... Plenty of variables to choose from. Also I don't know if the border to Canada is closed to wood materials as well as humans.

Adding: GDX the gold miners are up >2% today hitting a 52-wk high.

Old_Joe

Following are excerpts from a WSJ article of July 9th, providing some insight into the current lumber shortage. During the March/May home isolation period my neighbor and I used the time to replace our backyard fencing. We didn't experience shortages of treated lumber or redwood fencing locally, but that may have changed since then.

Gold is climbing toward a record high, oil futures went from minus $40 a barrel to $40 in a month and a half, but the hottest commodity in the U.S. these days is wood.

Prices for forest products like lumber and plywood have soared because of booming demand from home builders making up for lost time, a DIY explosion sparked by stay-at-home orders and a race among restaurants and bars to install outdoor seating areas.

“A lot of saw mills closed up shop and moved into doing maintenance and repairs, figuring demand would drop with people losing their jobs and watching their spending,” said Leroy Ball, chief executive of Pittsburgh’s Koppers Holdings Inc., which makes chemicals used to treat wood for decks, fences and utility poles. “What happened was just the opposite.”

Lumber and plywood started flying off shelves.

“People didn’t go on vacation,” said Leiby Wieder, who manages Tri-State Lumber in Brooklyn, N.Y.’s Greenpoint neighborhood. “They stayed home and built decks, they built fences, they built pergolas. Anything and everything.”

“Demand from our home-center customers at Home Depot, Lowe’s, and Menards has been as strong as we’ve ever seen, and we can barely keep up,” PotlatchDeltic Corp. Chief Executive Michael Covey told investors in June. The Spokane, Wash., company’s stud mills in Minnesota and Michigan were particularly stressed, he said.

In most states, home construction was deemed essential and allowed to continue throughout the shutdown. Work slowed due to social-distancing rules and delayed permits and inspections. But by May construction was booming again. Historically low mortgage rates enticed buyers. Lockdown-weary city dwellers sought suburban living and big landlord companies built houses expressly to rent.

Mills ramped back up and the logjam in the supply chain moved from white wood, which is fresh cut from timber, to so-called green wood, which is treated to last outdoors on patios and along railroads.

Tri-State in Brooklyn has placed orders for five shipments of treated lumber and not yet been given a delivery date or even prices. Besides the neighborhood construction boom resuming and all the decks and pergolas being built, dozens of nearby bars, restaurants and cafes have been slapping together outdoor seating in bids for survival.

Mr. Ball said Koppers and its competitors in chemicals are the pinch point now that mills are sawing again. Orders from some of its largest customers are up as much as 40% year over year. Historically a really good year would see orders rise 6% or 7%.

MikeM

Our local Lowes has no PT decking. Home Depot has a limit for carry out only, no delivery (which limits bigger jobs). I guess I'll wait until next year to replace my deck floor.

Mark

Good stuff @OJ. I don't access the WSJ unless someone links an article.

Old_Joe

Thanks, Mark. Note to @hank- the WSJ article certainly squares with your situation.

hank

Yes - Very good stuff from OJ. What I did was split up the “pot” I’d set aside for extensive travel this year - particularly for theater / cultural enrichment. With no travel due to Covid, that left quite a surplus. Part I reinvested when the markets were down. The rest I committed to some home improvement projects, including addition of a small side deck and new entrance / storm doors to go along with it. The doors arrived and are sitting in my garage. But the wood for the deck isn’t available.

No sweat. Certainly life will go on. I mentioned this because I get the feeling a lot of other consumers did the same thing - used travel and entertainment money already set aside for home improvement instead. ... Oops - That’s exactly what OJ’s excerpt says: “People didn’t go on vacation,” said Leiby Wieder, who manages Tri-State Lumber in Brooklyn, N.Y.’s Greenpoint neighborhood. “They stayed home and built decks, they built fences, they built pergolas. Anything and everything.”
-

PS - Good news ... The new food freezer I ordered at the end of March from Home Depot will finally arrive next week after a 3-4 month wait. The current 25 year-old one is starting to groan and rattle pretty loud. Hopefully it lasts one more week.

hank

As @Mark noted, miners were up about 2% today. While there’s some correlation with the metals, the miners often seem to go their own separate way. On a really good day, look for the miners to pick up 3-5%.

I have limited exposure to miners and commodities. From what I do have, some numbers from today: : OPGSX +1.8%, BRCAX +1.45%, PRNEX +2%, PRAFX +0.9%. More broadly diversified PRPFX gained a bit over 1% today.

BenWP

A friend of mine confirms Hank's experience with a shortage of home appliances. I had a leak in my home A/C and my service guy can't keep up with demand for repairs because so many people are working from home that they can't go more than a day without A/C. MI has been searingly hot recently. He can't hire anyone to help because of lack of daycare keeps his former employees at home or (he opined) they are doing fine with the extra $600 in unemployment, at least through this week. Stuff is still not on certain shelves of our hypermarket, although it is hard to generalize based on our experience.

WABAC

hank said:

PS - Good news ... The new food freezer I ordered at the end of March from Home Depot will finally arrive next week after a 3-4 month wait. The current 25 year-old one is starting to groan and rattle pretty loud. Hopefully it lasts one more week.

How old is the food in the freezer?

Having spent so many years in California, and now Arizona, I'm pretty used to the idea of fresh food.

In Arizona we would have to rebuild the garage to keep the freezer from driving our electric bills through the roof. Few basements out west.

I never get excited about silver. There's just too much of the stuff lying around. Every time the prices jack, people cash in Aunt Minnie's old candlesticks they never use.

Something else you can't find? Dumbbells. Everybody is working out at home. I won't be investing in dumbbell ETF's any time soon.

I gave blood today. I might be a little loopy.

rono

Howdy folks,

We too, spent our stimulus $ on projects around the house. All of it and a bit more and spent locally. feh.

and so it goes,

peace,

rono

rono

Howdy folks,

As for silver, several things are impacting the market. Sprott CEF is buying $1.6B worth of physical silver (i.e. taking delivery on contracts). In addition, Pan American Silver had to close a couple of mines due to Cv19.

Here are a couple of articles from Kitco Silver. Please note that Kitco is a bullion website/service and undeniably biased to a degree.

https://www.kitco.com/news/2020-07-21/Gold-prices-gearing-up-to-take-all-time-highs-silver-could-reach-30-Citi.html

https://www.kitco.com/news/2020-07-22/PRECIOUS-Gold-firms-near-9-year-high-on-stimulus-bets-silver-jumps-5.html

and so it goes,

peace,

rono

Old_Skeet

@hank and others,

BCSAX was up much what you reported with your subject funds ... +1.5%. This now puts this fund up 8.5% since my purchase of May 28th. I'm thinking there is more upside to come ... and, with this, I plan to keep with it and might even add to it, in the near term, should it make +10% in the next week, or so.

hank

Hi Ol’Skeet - I’ve kept around 10-12% in commodity related funds for the past 2 decades. More bad years than good. I hung in there because I figured that, like John Hussman, I was bound to be “right” some day. Who knows where the stuff will be a year or two out? I’ve always looked at gold and the commodity linked stuff as adding “insurance” to my portfolio against seriously higher inflation. I’ve accepted the losing years as the cost of that additional insurance.

Fleck commented yesterday that he expects retail investors to move into gold now that it’s done well and that their participation could drive it much higher. I’ve actually reduced my gold exposure in recent weeks because the fallout from any sharp drop can wreak havoc on a portfolio. But, most of what came out of gold went into other commodity type funds that are more even-keeled than metals / miners.

Old_Skeet

@hank,

I too have played in the commodity space, off and on, and from time to time, with some good success as far back as the last twenty years. I hold BCSAX in my niche fund sleeve rather than a spiff. Although, it makes up about only 15% of it's sleeve I may bring it up to a full position (about a third) and continue to hold it for diverisfication reasons. I'm thinking the metals and other related commodities are going to continue their upward move and a diverisfied commodity fund such as BCSAX will do well as the economy recovers as it contains miners and producers, processors and some end of chain outlets plus the commodity paper itself.

Derf

@Old_Skeet: Afternoon greetings. I took a peek @BCSAX Tuesday & appears another 7 to 10 % increase may be in the cards.
Stay Safe, Derf