Identifying Macro Trends Ahead of the Curve
Published 26-JAN-2025 14:18 P.M.
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20 minute read
- Commentary: Picking macro themes before they run. Trump’s first week in office - a quick overview. How newly signed presidential executive orders could impact certain small cap stocks.
- This week in our Portfolios: CAY, TG1, MTH
A lot of investing in the small cap market is about being in the right place...
at the right time.
To be invested in the “things” the world suddenly realises it needs, but doesn’t have...
And the corresponding flood of attention and capital that pours into stocks in that particular sector.
Which makes those stocks’ share prices go up.
And allows them to raise money to develop their projects or grow their businesses.
Investing just before a particular macro theme “fires up” seems the obvious thing to do.
Sounds easy.
It isn’t.
There are two ways to try and do this:
- Make a high conviction prediction about the immediate future and make investments just before that macro theme becomes hot...
OR - Sit around for years in a stock... waiting until its macro theme FINALLY swings in your favour.
Attempting (1)... usually leads to “adopting the strategy” of (2).
We’ve all been there.
A global move or trend that suddenly seems obvious, everything is pointing to it happening imminently.
Daily news re-enforcing conviction that it’s literally just about to happen.
Surely it's about to start right? ... right?
Only for it to take a couple more years to properly kick in.
(Or even not at all for some unlucky financial market crystal ball gazers)
The world moves slowly... until it suddenly moves fast.
But well thought out, genuine macro themes do eventually come.
And when they do, they lift a basket of the small stocks that are working on projects in that space.
We put some uranium bets on during a uranium “false start” in 2021...
Uranium sentiment (and price) eventually kicked up properly a few years later at the end of 2023...
Uranium took another breather after that... but now looks like it's coming back again this year.
We went hard and high conviction (very publicly) on gold in early 2023 but were a full year too early on that call, with the benefit of hindsight.
2024 was huge for the gold price, and after a 2 month sideways lurch it’s been quite the run for gold so far in 2025 - gold is back to testing new all time highs again:
Silver is one we managed to time pretty well back at the start of 2024, and has been pushing up too so far in 2025, but lagging the pace of gold... for now:
Silver can move hard and fast when it finally decides to catch up with its yellow bigger brother.
Now... bauxite?
One commodity that has seen a strong run in the past 3 months that hasn’t been talked about much is bauxite.
This week we announced our Wise-Owl Pick of the Year for 2025, Canyon Resources (ASX:CAY), which has an advanced bauxite project in Cameroon.
Bauxite is the key ingredient to make aluminium - which is a critical metal for the energy transition, the defence industry and many general, everyday applications.
We flagged the possibility of supply issues in the bauxite market back in 2022 when we first initiated coverage on CAY:
(Source - our CAY note 2022)
The recent bauxite price run appears to be due to the reasons we flagged back in 2022 - we were just a little early - here’s what has happened since:
- Indonesia eventually went ahead with a bauxite export ban, pushing China to source more of its bauxite needs from Guinea (which now makes up 70% of China’s bauxite imports).
- Guinea flagged the idea of placing their own export restrictions on bauxite.
- A few months ago Guinea blocked a bauxite shipment out of the country, which spooked buyers and drove a search to diversify bauxite supply sources.
- The materialised supply uncertainty risk out of Guinea pushed bauxite prices higher as buyers look to secure and diversify supply:
Last week we examined why the bauxite market has finally moved in more detail. You can read the full article here: Global shifts in bauxite demand and supply..
Interesting fact: during World War 2, U-boats (submarines) would attack and sink ships carrying bauxite cargoes from South America to U.S. aluminium plants.
It was part of a German “cross-Atlantic assault on the Allied oil tankers and bauxite carriers that plied the Caribbean Sea. While oil was the military's lifeblood, bauxite was the chief source of aluminum, from which aircraft components were made.” (Source)
While this is an extreme example from times of war, it is a worst case scenario of the risks associated with not having a local or secure supply of critical metals and energy.
Over recent years after the COVID pandemic (remember that?) we have seen countries start rethinking the security of their supply chains for resources that are critical to their countries.
Increasing global uncertainty and a new US president sworn in this week with a mandate for some big, sweeping changes is quickly shifting priorities for many countries...
Which shifts where capital is directed.
By governments, the private sector and investors.
For our Portfolio, we are focused on increased global defense spending leading to a push to secure supply of and stockpile critical defense materials.
Also gold and silver as “safehaven” assets in which to park wealth.
We think that "global uncertainty” will be a key macro theme for 2025 while the world digests what the new US presidency will bring...
We started off today talking about macro themes that can drive interest into certain stocks.
This week Donald Trump was a one man global macro-theme stoking machine, as he was officially sworn in as the next US president.
He wasted no time in making a sweeping number of executive orders that affected the global conversation on a number of different issues.
There was a lot to cover, so we’ll do our best to quickly summarise the most important parts.
Trump addresses global leaders at the World Economic Forum
This speech was a very tight and concise summary of all the key things the new US administration is planning to push - you can watch it in full here:
Our key takeaways:
- Trump is pushing OPEC to reduce the price of oil with the intention to reduce inflation and interest rates as well. If interest rates decline then it is a very good sign for ‘risk-on’ assets like small cap stocks.
- A “national energy emergency” has been declared in America to unlock production of energy through oil, natural gas and nuclear power.
- Trump has started “the largest de-regulation campaign in history” - trump wants permitting timelines for projects to be reduced.
- Trump is inviting companies to make their product in America and incentivising them with ‘low taxes’. This includes big tax cuts for domestic producers and manufacturers.
- Need “double the energy” that the US currently has to make AI work in the US. Trump is seeking to reduce timelines for approvals (particularly for small scale, local electrical generating projects).
- Tariffs will be introduced on companies that make their products outside of the US. Interesting comments on Europe in particular, expect there to be some tension between the US and Europe over tariffs.
- Request all NATO nations increase their defence spending to 5% of GDP.
- The US has pulled out of the Green New Deal, Paris Climate Accords and removed the EV Mandate.
Overall we think that this will start a few years of favouritism towards US-based companies across various industries and sectors...
With a particular focus on defence, mineral stockpiling and energy independence - according to the new “Unleashing American Energy” executive order (more on this below).
One of our Investments set to benefit a lot from this is AML3D (ASX:AL3) which already has millions of dollars in sales to the US Navy’s supply chains.
AL3 uses automated 3D printing to produce metal components and structures for ships, planes, submarines etc.
AL3 set up a new manufacturing facility in Ohio USA to be closer to its main customers and it fits well with a major push for defense procurement efficiency in the US.
Trump certainly wants to build up US manufacturing again, and AL3’s localised manufacturing in the US should only aid its case as it pursues further contracts in the US defence supply chain.
Read our recent note on AL3 here.
You can also read this article in the Australian which reinforces just how well positioned AL3 is when it comes to its US business.
Back to Trump's Davos speech - it was really the broad brush strokes of his overall plan for the USA. How much he succeeds in implementing it within the US democracy is another story.
In terms of critical metals and energy specifically - we took a close look at the “Unleashing American Energy” executive order signed on the new president's first day.
Despite the name, it actually covers off a lot of critical minerals policy and rebuilding the USA’s economic and military security.
Trump’s new “Unleashing American Energy” Executive Order to drive investment for US-based mineral projects
On his first day in office Trump signed the executive order: Unleashing American Energy.
Here’s are some of our key takeaways:
- Purpose of these orders are to “rebuild our nation’s economic and military security”
- Energy security in the US is going to be a big focus. Expect to see more oil & gas drilling as well as nuclear energy.
- The US needs to restore its critical minerals stockpiles. It is currently sitting at just 1.2% of the stockpile’s value when compared to 1962. The current stockpiles only cover about 40% of the military’s projected shortfalls in a one year conflict.
- US to become a leading producer of minerals. Expect a number of minerals projects, particularly in the minerals where China has a large dominance, to be supported.
- Intention is to ‘reduce global influence of adversarial states’ (like China and Russia). This bodes well for minerals that China has total dominance over including lithium production, rare earths and antimony.
- Specifically the QUAD is mentioned (Japan, India, Australia, US) for opportunities to advance mining and processing of minerals in the US.
- Regulatory and permitting requirements are streamlined for mining and processing projects in the US.
- US critical minerals list to be updated. “Uranium” was specifically mentioned as a suggestion to be included in the list.
- EV mandates and subsidies in the US are now eliminated (including removal of emissions efficiency schemes for petrol cars).
- State-assisted mineral projects abroad may be reviewed.
This sentiment was shared by new Secretary of State Marco Rubio in his Senate Confirmation Hearing where he said:
"If we don't change course - we will live in a world where much of what matters on a daily basis, from our security to our health - will be dependent on whether the Chinese allow us to have it or not."
Over the last four years, the US Department of Defence has already announced funding support for a number of US based projects across lithium, rare earths, antimony, cobalt, uranium and graphite.
We expect under the Trump administration that there will be many more projects supported that advance.
Particularly those projects that help the US become energy independent and restore American mineral dominance.
Winners from the new era of Defence-Critical Minerals & US Energy Security
There is an entire section in the executive order dedicated to removing some of the burdensome permitting requirements for mining and processing projects in the US.
This benefits our US-based development stage precious metals stocks SS1 and JBY.
One of the orders says to “reduce global influence of adversarial states” - this puts a spotlight on minerals that are controlled by China.
In particular metals where there are existing export controls... like antimony.
Antimony is a critical metal for many military uses and the USA doesn’t have ANY local supply.
Sun Silver (ASX:SS1) is currently drilling to expand its giant 423Moz Eq silver resource in Nevada, USA.
This silver resource is based on ~200 historical drill holes that have NEVER been assayed for antimony (only for gold and silver at the time).
Based on recent antimony grades in many of SS1’s NEW drill holes, SS1 is trying to figure out if its giant silver resource is also full of antimony too.
Basically this means re-assaying historical drill cores for antimony, and confirming if they also have a giant antimony resource baked into their giant silver resource.
SS1’s project is located within US borders - in the already mining friendly state of Nevada.
Yesterday antimony prices hit new highs:
(Source)
Read our latest note on SS1’s antimony potential here
Uranium was one of the chosen commodities specifically mentioned by name in the new executive order “for potential inclusion in the US critical minerals list”.
Trump announced a US$500 billion “Stargate” venture to build data centres for Artificial Intelligence (AI) in the US.
AI is going to need a lot of localised power, and nuclear power has already been flagged as a solution.
This is all good news for US-based uranium exploration companies GUE and GTR.
GTi Energy (ASX:GTR) has three uranium projects in Wyoming which was once the biggest uranium producing state in the USA.
Wyoming, which is the traditional heartland of US uranium production, where mine re-starts are underway.
Global Uranium and Enrichment (ASX:GUE) has a number of uranium projects in the US including its ~52Mlb JORC resource uranium project in Colorado, USA.
It also has another project in Colorado which has an exploration target of 4.3 to 13.3 million pounds of uranium.
One of the main reasons we Invested in GUE is its ownership of a 21.9% share in a uranium enrichment technology company.
Uranium enrichment is a process which brings uranium ore mined from the ground to a state where it is suitable as fuel for reactors.
Read our most recent note on GUE here
Localised and secure mineral supply is important, but we are also seeing mineral processing technology exports being restricted by adversarial countries to cause trouble.
Having supply of a mineral is just the first step
The technology to process it into its final useful form is another.
A few weeks ago China proposed export controls on technologies to process lithium into battery grade materials.
While lithium has been out of favour with investors recently, over the long term lithium and its processing into battery grade material still poses a strategic supply headache for many countries, including the US.
We think that the mineral will still be considered “strategic” given China’s dominance over the industry and its uses in battery storage systems.
The US Department of Defence has already funded a number of lithium projects in the US including the Thacker Pass Lithium mine.
We have two US-based lithium investments in PFE and MAN looking to develop lithium brine projects leveraging Direct Lithium Extraction (DLE) technologies.
Pantera Minerals (ASX:PFE) is based in the historical smackover oil field in Arkansas, next door to energy super major Exxon who is making a foray into lithium.
Trump’s old press secretary is the Arkansas governor - and she’s made lithium a major state priority - read our note on PFE here
Meanwhile Mandrake Resources (ASX:MAN) has already secured some US Department of Energy funding for well re-entries for its lithium brine project in Utah, USA.
Last year MAN announced it had successfully converted its lithium rich brines into 99.9% pure, battery grade lithium hydroxide in just one processing step using DLE technology from Melbourne based ElectraLith:
So we have battery grade lithium produced from MAN’s USA based lithium brines, using Australian lithium processing technology.
Two weeks ago, Melbourne based ElectraLith secured US$17M supported by energy major Chevron AND a US Central Intelligence Agency backed venture firm In-Q-Tel
(Source)
We are looking forward to seeing an update on MAN’s potential strategic partnership with ElectraLith soon.
Finally, there was another executive order that Trump signed which was called Unleashing Alaska’s Extraordinary Resource Potential.
This order lifted many of the restrictions on exploration for mineral resources and oil & gas in the state.
A clear winner from this is 88 energy (ASX:88E), who has a number of Alaskan oil & gas projects.
You may remember back when Biden first took office there were questions over 88E’s exploration licence with the new orders that were signed to prevent exploration in the region.
Although 88E hasn’t had issues with permitting before or since that, we think that increased activity in the region (and subsequent infrastructure) will make the company’s projects more attractive.
With Trump promising investment in these industries, and the US Government stockpiles low, we think a couple winners could emerge from this developing theme.
We are currently looking to make some more advanced stage US-based investments in the critical minerals space. Please respond to this email with your suggestions, we read every one.
What we wrote about this week 🧬 🦉 🏹
Canyon Resources (ASX:CAY)
This week we announced our 2025 Wise-Owl Pick of the Year:
Canyon Resources (ASX:CAY).
CAY is aiming to bring to market one of the largest undeveloped, high grade, direct shipping bauxite deposits globally - located in Cameroon, Africa.
It's a genuine Tier 1 asset - which means it has massive scale, an extensive lifespan, and economically efficient production costs.
We think it has a very strong chance of quickly getting into production.
Just as the bauxite price appears to be entering a strong upwards trajectory.
Read: ⛏️ Canyon Resources (ASX: CAY) - 2025 Pick of the Year
Techgen Metals (ASX:TG1)
$5M capped TechGen Metals (ASX:TG1) now has a giant copper-gold target to drill this year...
TG1 put out EM results from its copper-gold project in WA (Blue Devil project).
A good time for it with strong copper and gold prices.
It's early days, but TG1’s new big red EM blobs look highly drillable...
Read: ⛏️ TG1: Reveals new giant copper-gold drill targets at Blue Devil project
Mithril Silver and Gold (ASX:MTH)
Our high grade gold-silver exploration Investment Mithril Gold & Silver (ASX:MTH) just announced more gold and silver intercepts in the first target area around its existing resource in Mexico.
One of the holes hit 7.37m @ 4.16 g/t gold, 69.5 g/t silver.
These results are part of a plan to double its current 529k gold equivalent JORC resource by the end of this quarter... in just this ONE target area.
Read: ⛏️ MTH: More gold and silver hits as gold price runs again - just at the first target of many
Macro News - What we are reading & listening to 📰
Artificial Intelligence:
Trump announces up to $500 billion in private sector AI infrastructure investment (CBS News)
- President Trump announced a $500 billion joint venture called "Stargate" with OpenAI, SoftBank, and Oracle to build AI infrastructure in the U.S., expected to create over 100,000 jobs.
- Elon Musk cast doubt on the funding, claiming SoftBank lacks the secured capital, sparking a public dispute with OpenAI CEO Sam Altman.
Defence:
China Hacks: TikTok Isn't Trump's Biggest Cyber Threat (Bloomberg)
- Chinese hackers are targeting critical U.S. infrastructure, exposing vulnerabilities that could disrupt daily life in a potential conflict with China.
- FBI warns Beijing-backed hackers outnumber U.S. cyber agents 50-to-1, demanding urgent investments and public-private collaboration to counter cyber threats.
Department of Defense Awards $26.4 Million for Low-Cost Domestic Production of High-Purity Niobium for Defense Applications (US Department of Defence)
- The Department of Defense awarded $26.4M to Global Advanced Metals USA to produce high-purity niobium oxide domestically, strengthening critical supply chains.
- This initiative reduces reliance on foreign sources, supporting U.S. defense and aerospace industries under the National Defense Industrial Strategy.
Hypersonic Hegemony: Niobium and the Western Hemisphere’s Role in the U.S.-China Power Struggle (CSIS)
- China's advancements in hypersonic technology and control of critical minerals like niobium are reshaping global military power dynamics, posing significant challenges to U.S. defense readiness.
- Strengthening domestic production, diversifying supply chains, and securing strategic reserves of niobium are essential for the United States to mitigate risks and maintain its strategic edge.
The U.S. Military and NATO Face Serious Risks of Mineral Shortages (Carnegie Endowment)
- Critical minerals are essential to military power, enabling production of platforms like tanks and munitions, but supply chain vulnerabilities threaten NATO defense capabilities.
- Rising military demand, foreign export controls, and disrupted sea-lanes amplify mineral shortage risks for the U.S. and its allies, necessitating urgent policy actions.
Unleashing American Energy (The White House)
- Promote energy exploration and production on federal lands and waters to strengthen U.S. energy leadership and national security.
- Revise or eliminate burdensome regulations to expedite energy project permitting and reduce costs for consumers.
Metlen confirms it will build first-ever industrial gallium plant in Greece (Mining Weekly)
- Metlen Energy & Metals announces a €295 million investment to produce bauxite, alumina, and gallium in Greece, enhancing Europe’s critical minerals capacity.
- The project includes 2 million tonnes/year of bauxite, 1.2 million tonnes/year of alumina, and 50 tonnes/year of gallium, with full-scale production expected by 2028.
Bulk Commodities:
Smelters will close without green aluminium funding, Albanese warns as Dutton labels $2bn pledge a ‘con job’ (The Guardian)
- Albanese announces a $2bn incentive to help aluminium smelters switch to renewable energy, securing jobs and industry future in Australia.
- Opposition leader Dutton criticizes the plan as impractical, advocating for nuclear power instead of relying solely on renewables.
Copper:
BHP copper output jumps as electrification era ramps up (AFR)
- BHP's copper production rose 10% to nearly 1 million tonnes, driven by Escondida, despite a $150M loss from a South Australian outage.
- Rumored merger talks between Rio Tinto and Glencore could challenge BHP’s position as the world's top copper producer.
Graphite:
Syrah Resources declares force majeure for graphite mine in Mozambique (mining.com)
- Syrah Resources' shares dropped 28% after declaring force majeure at its Balama graphite mine due to ongoing civil unrest in Mozambique.
- The unrest triggered defaults on US government-backed loans, disrupting operations and transport at the mine.
Lithium:
Lemont GeoLithium: A geothermal power plus lithium-in-brine project in Tasmania (Australian Geothermal)
- Direct Lithium is developing the Lemont GeoLithium Project in Tasmania, using geothermal energy to power Direct Lithium Extraction (DLE) from lithium-rich granites.
- The project aims for a Tier-1 lithium resource, with a deep drillhole planned to confirm feasibility and provide key data.
Battery Metals:
Hancock hunting party signals cash splash in US under Trump (Roy Hill)
- Gina Rinehart and her executives are exploring investments in the US, focusing on mining, oil, gas, and agriculture, as Trump returns to the presidency.
- The group is in the US to support Trump’s policies and assess investment opportunities, while criticising Australia's investment climate and government policies.
What we are watching:
Guy on Rocks: Canyon Resources (ASX:CAY)
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