Dear New World Investor:

In the wake of the Silicon Valley Bank et. al.failures, Wall Street sentiment has turned from mere “doom and gloom” to outright “apocalyptic.” According to the latest BofA fund manager survey, the majority of Wall Street professionals now expect a “systemic credit event” emerging unexpectedly out of the shadow banking sector – although it’s not clear to me how an unexpected event can be expected by a majority of Wall Street professionals.

And retail investors are fearful, as they always are when stocks are cheap.

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So it’s time to buy another stock. But it has to be a big company, just in case there is another drop in the market ahead. And I wanted to add to our precious metals and oil positions with another commodity stock. Commodities are not keepers – there is a cycle in commodities:

Click for larger graphic h/t @_TruthOutThere

As Kuppy wrote: “The last 9 months sucked for CRBs. We suffered through CBs raising rates and convincing generalists that commodity demand would decline. We suffered through a Chinese lockdown that confirmed the bias of generalists. With the sharp reversals over the past few days, I want to declare the pullback over. It has positively sucked since last summer. For those that survived and averaged down, it’s about to be another golden era for CRB longs. We’re about to have a phase shift. Like when a solid turns to a liquid…Oil is going to trade like a shitcoin. Congrats on surviving this long and even adding at times. This shakeout was surreal, all based on bad data and Chinese lockdowns.

“Where will future supply come from? No one has expanded investment over the past few years. Demand grows every year. JPOW wants to destroy demand, but he’s failing at it. All he can do is destroy banks that lent to shitcoins/VC/PE/CRE. He’s just blowing up his friends. The market is sniffing out that he’s going to pause. When that happens, CRBs will scream out of control. The downside move is over. Now we buy time and continue drawing stocks. The slingshot is coming.”

I’ve been researching different potential commodity investments and one really stands out. There is a MASSIVE supply/demand imbalance in copper that creates one of the most asymmetric bets I have ever seen. We are obsessed with electrifying the world – EVs especially, but also renewable electricity generation, electric stoves, power infrastructure, etc. That creates huge demand for copper, the “metal of electrification.”

EVs require 2.5x more copper than internal combustion engines. Battery packs are responsible for 90% of the copper demand in larger vehicles, like semis. Charging stations, harnesses, capacitors, electric motors – all require copper.

In July 2022, the IHS Markit division of S&P Global published The Future of Copper, subtitled “Will the looming supply gap short-circuit the energy transition?” They concluded that annual demand for copper will double by 2035 from 25 million metric tons (MMt) today to 50 MMt, with extra supply nowhere in sight.

That’s the long term. In the short term, inventories of copper are critically low, which means higher metal and stock prices are immediately ahead.

Copper was first extracted around 8000 BC and was mainly used to make jewelry for the next 5,000 years. Around 3000 BC people discovered that copper could be alloyed with tin to make bronze. The Bronze Age saw copper used in tools, weapons, armor, and household items.

It wasn’t until the 1830s that copper wire was used for Samuel Morse’s telegraph, and the world finally was able to deliver a message without hand-carrying it. Today, most copper is used in its pure form as a superior conductor of electricity.

Click for larger graphic h/t @marketplunger1

Between the energy transition demand and the continued industrialization of less developed countries, copper consumption per capita is soaring:

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Today, miners extract ore that is about 1% copper (all the “easy” high-grade copper has been mined). This is smelted and refined into 99.95% pure copper.

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Right now, copper production is highly concentrated in Chile and Peru. The unmined reserves are in Russia, Australia, the Democratic Republic of the Congo, China, and the US.

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S&P wrote: “The processing of copper has a different geography. Copper is not necessarily smelted or refined where it is mined…Mainland China accounts for 36% of smelting capacity (and an even higher share for actual smelting), despite making up just 7% of mined copper capacity. Japan and Chile each make up more than 7% of global smelting capacity, and no other country has higher than a 5% share of global capacity. The United States accounts for only 3% of global smelting capacity compared with 7% of total global refined copper usage. This mismatch means that the United States is heavily reliant on imports from other countries to fulfill its copper demand. “

Copper demand will grow about 8% per year due to The Great Electrification, but there’s little new supply.

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ESG won’t let us open new mines, but even if they did, it would require $500 billion in capital spending and take decades to come online. Copper prices are headed much higher. High prices make high-cost operations economical and incentivize more recycling. And this is not a 10-year, five-year, or three-year problem. Much higher prices are immediately ahead.

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Buy Freeport-McMoRan

Freeport McMoRan (FCX) is a Phoenix-based miner of copper, gold, molybdenum, silver, and other metals in North America, South America, and Indonesia. The company’s assets include the Grasberg minerals district in Indonesia; Morenci, Bagdad, Safford, Sierrita, and Miami in Arizona; Tyrone and Chino in New Mexico; Henderson and Climax in Colorado; Cerro Verde in Peru, and El Abra in Chile. It also operates a portfolio of oil and gas properties primarily located in offshore California and the Gulf of Mexico.

FCX is America’s biggest copper supplier and one of the biggest copper producers worldwide. It’s also the world’s largest producer of molybdenum, a key element for every renewable energy tech you can think of, from wind and solar to nuclear energy, geothermal, wind, hydro and – you guessed it – EV batteries.

Freeport closed today at a $59 billion market capitalization and a 16.8x price/earnings ratio on trailing 12-month earnings. They’ll report their March quarter in about three weeks. Analysts are expecting revenues to fall 26.5% from last year to $4.85 billion with earnings down 62.6% to 40¢ a share. Both earnings and guidance should surprise to the upside. In the last few years, Freeport slashed its net debt and tripled its dividend. Buy FCX under $44 for a $65 target within two years.

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Market Outlook

The S&P 500 added 2.6% since last Thursday after last Friday’s very bullish reversal off 3908. It held above the 200-day moving average and closed back above the 20 DMA, then confirmed that the March 13 low was an intermediate-term low by breaking above the 50 DMA this week. The Index is up 1.7% year-to-date. The Nasdaq Composite gained 1.9% and is up 14.8% for the year. The small-cap Russell 2000 climbed 2.8% and is (barely) back in positive territory at +0.4% in 2023.

This table of US equity returns from 1900 to 2020 focuses on seasonality. April is normally super bullish.

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April is the S&P 500’s #2 month in pre-election years. The average gain in 18 pre-election year Aprils since 1950 was 3.5%. The only S&P 500 April loss was in 1987.

Click for larger graphic h/t @AlmanacTrader

Why the Stock Market Makes You Feel Bad All the Time

The last new all-time high for the S&P 500 was on January 3, 2022. That means it’s been almost 450 days since we’ve experienced new highs in the stock market. That feels like a long time.

But based on the history of bear markets, it’s really not all that long. It might be a while until we hit new highs again if we use history as a guide. Let’s look at every bear market going back to 1950 to see how long it has taken for the market to reach new all-time highs from the previous peak.

This table looks at the drawdowns for each bear market, the number of days it took to go from peak to trough, and the number of days to go from the prior peak to new highs. If we include the current bear market, the average peak-to-trough drawdown is a loss of a little less than 35%.

The average number of days to go from peak to trough is 381, so just over a year.

The average number of days to go from the previous peak to new all-time highs is 1,166 days or more than three years.

The shortest round-trip from peak to peak was the COVID crash in March 2020. We saw new highs in six months. Before that slingshot of a bear market, the shortest amount of time to see new highs again was 436 days in 1950. So it can take some time to fully recover from a bear market.

Click for larger graphic h/t @awealthofcs

The fractal dimension is making a tentative move towards a new trend. A strong April would get it close to signaling an upside move. Sell in May and watch in dismay?

Top 5

Changes this week: None

Near-Term – chronological order
EQT EQT – natural gas price rebound
OIL iPath Pure Beta Crude Oil Exchange-Traded Note – crude should rise quickly
GBTC Grayscale Bitcoin Trust – Bitcoin is coming out of one of its periodic sharp drops
BLPH Phase 3 results mid-2023
VLD Velo3D – Rapid revenue growth; low market cap

Long-Term – alphabetical order
EQT EQT – largest US natural gas company
NVTA Invitae – the winner-take-most of genetic testing
META Meta – a (the?) leader in the metaverse
RKLB Rocket Lab – #2 to SpaceX in space
VLD Velo3D – Return manufacturing to the US

Coming Events
All times below are ET, and most presentations and slides are archived on the companies’ websites so you can listen to them.

Friday, March 31
Personal Consumption Expenditures Index – 8:30am

Wednesday, April 5
APTO – Aptose Therapeutics – 12:00pm – Cantor Future of Oncology Virtual Symposium

Friday, April 7
Stock Market Closed – Good Friday
March payrolls – 8:30am – a loss of 8,000 jobs expected

The $20-For-$1 Stocks

Say you put $2,000 into a stock that goes from 50¢ a share to $10. The $2,000 turns into $40,000. Then you put the $40,000 into another stock that goes from 50¢ to $10. That turns the $40,000 into $800,000. You did it with two stocks and never risked going negative more than $2,000. (Not that you won’t be mad at me if the first one works and then the second one doesn’t, taking your $40,000 to Money Heaven.)

If you can afford it – and it would not be too big a position in your portfolio – putting $2,000 into each of these speculative biotechs might be a good way to start. Buying these out-of-favor, fallen, or forgotten companies that can get important products through the FDA at very low market capitalizations seems like a good strategy to me.

Risks

Development-stage biotechs are subject to investor sentiment swings from wildly optimistic to excessively pessimistic – mostly the latter recently. After the Primary Risk for each company, I’ve added the clinical stage of their lead product, the probable time of their first FDA approval, and the probable time of their next financing.

As always, you need to think about an appropriate position size. You could buy a full position upfront and then just hold on, or buy some upfront and leave room to add more on the inevitable financings, transient clinical trial setbacks, and the like.

Medicenna (MDNA – $0.61) announced updated data from the Phase 1/2 trial of MDNA11, including the most recent anti-tumor activity data from the trial’s first four dose escalation cohorts. In the metastatic pancreatic cancer patient who had previously achieved a confirmed partial response, tumor reduction of both target lesions continued and there was a complete regression of the non-target lesion. Another patient with metastatic melanoma maintained stable disease for more than 70 weeks. Next: Readouts from the Phase 2 expansion cohorts, which will evaluate an optimal dose in less advanced cancer and in patients with tumor types that are most likely to benefit from MDNA11. Buy MDNA under $3 for a first target of $20, then maybe $40.
Primary Risk: Their drugs fail in the clinic.
   Clinical stage of lead product: Entering Phase 3
   Probable time of first FDA approval: 2024
   Probable time of next financing: March 2024

ScyNexis (SCYX – $2.94) jumped 76% today after they signed a deal with Glaxo SmithKline to market Brexafemme and future ibrexafungerp drugs. On the conference call (VIDEO HERE), management said they retained the rights to all other “fungerp” technology drugs.

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They get enough cash up front to repay all their debt and still have a cash runway of more than two years. In fact, I don’t think they’ll ever have to raise money again.

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So we own a company with a secure financial future that’s about to develop their next drug, SCY-247, for yeasts and molds. After some successful trials, GSK probably will buy them.

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This is the way.

I am raising the Buy Limit on SCYX to $2.50, still for a first target price of $20 after ibrexafungerp is approved for hospital use and a buyout at $50.
Primary Risk: Ibrexafungerp fails to sell.
   Clinical stage of lead product: Approved
   Probable time of next FDA approval: 2023/2024
   Probable time of next financing: second half of 2023 or never

Biotech MegaShift

Akebia Therapeutics (AKBA- $0.56) filed a revised proxy statement for the April 11 shareholders meeting to vote on the reverse split. If you already voted – hopefully against it – you need to vote again. Check out the instructions HERE.

The company said they met with Dr. Stein at the FDA about their appeal of the vadadustat Complete Response Letter and expect a response within 30 days. AKBA is a Hold for the results of the FDA meeting on vadadustat.
Primary Risk: Vadadustat not approved.
   Clinical stage of lead product: Vadadustat NDA filed; CRL
   Probable time of next FDA approval: Unknown
   Probable time of next financing: Unknown

Biotech & Digital Dominators MegaShift
There are at least four ways to make money in the stocks of these large, growing, dominant companies. You can:
* * Buy a stock and hold it
* * Buy a stock and write a call option against it
* * With a Level IV options account, write an out-of-the-money put option
* * With a Level IV options account, write an out-of-the-money put option and use part of the premium to buy an out-of-the-money call option

Apple (AAPL – $162.36) introduced a four-payment Buy Now Pay Later option with a $1,000 limit. It’s built right into Apple Pay and I assume Apple can brick a phone if the user defaults, so maybe they’ll have a better loss experience than some of the other BNPL companies.

They’ll open the Apple Gangnam store in South Korea tomorrow. Gangnam style!

AAPL is a Buy under $150 for new iPhone rollouts and augmented/virtual reality products.

Meta Platforms (META – $207.84) is seeing more stability in advertising demand compared to the final quarter of last year, according to analysts at Guggenheim. They raised their price target from $210 to $240. META is a Buy under $150 for a $400 target in 2024.

SoftBank (SFTBY – $19.55) formally retired 252,958,500 shares or 14.68% of the total number of shares issued prior to the retirement. Masa will keep buying stock at a 50% discount to net asset value until he owns the whole company – except we aren’t going to sell. SFTBY is a Buy under $25 for a first target of $50 in the next two years.

Other Tech

Fastly (FSLY – $16.95) introduced a new partner program that significantly expands and simplifies the ability to deliver high-value, complete solutions through its Global Partner Network, which was recently awarded a 5-star rating by CRN in its 2023 Partner Program Guide. The new program provides greater flexibility, support, and incentives to a range of partner types including Value-Added Resellers (VARs), System Integrators (SIs), Managed Service Providers (MSPs and MSSPs), agencies, and consultants. FSLY is a Buy up to $20 for a 2- to 5-year hold to $80+ as Compute@Edge drives customer acquisition and revenue growth.
Primary Risk:Content and applications delivery networks are a competitive area.

PagerDuty (PD – $32.77) announced a Process Automation release to addresses the sprawl of IT environments in data centers and with public cloud providers that serve different applications, regions, and customers. Most organizations today have automation operating across cloud, non-cloud, and distributed infrastructures which have some of the highest security and compliance requirements.

Isolated environments are often created to meet security and regulatory requirements, but then impose access burdens that are incompatible with conventional automation tooling. As a result, IT teams struggle to meet availability requirements and keep operations compliant while staying on budget when they must bridge access silos with manual effort. This release solves that problem. PD is a Buy up to $30 for a 2- to 5-year hold as their digital operations management Software-As-A-Service gains market share.
Primary Risk: Digital operations management is a competitive area.

Velo3D (VLD – $2.23) sold two Sapphire XC printers to ADDMAN, an additive-focused contract manufacturer. VLD is a Buy up to $6 for my $50 target as Velo3D’s high-tolerance metal parts printing business grows.
Primary Risk:A new 3D metal printing competitor emerges.

Inflation MegaShift

Gold ($1,998.90) wants to break over $2,000. China’s February net gold imports via Hong Kong nearly tripled from January to their highest level since August, on the back of a rebound in demand after the Lunar New Year celebrations and a drop in bullion prices.

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The fractal dimension is either teasing the heck out of us – gold is, after all, a notorious heartbreaker – or getting mighty close to identifying a new uptrend that starts from an all-time high. Wowza.

Miners & Related

First Majestic (AG – $7.21) closed the sale of the La Guitarra Silver Mine to Sierra Madre Gold & Silver for 69,063,076 shares of Sierra Madre at a deemed price of C$0.65 per share for an approximate value of C$44.9 million or US$35.0 million. AG is a Buy under $11 for a $23 next target price as production increases and the price of silver rises.
Primary Risk: Prices of precious metals fall due to US dollar strength.

Paramount Gold Nevada (PZG – $0.35) said that the Environmental Evaluation outline of their proposed Grassy Mountain Gold Mine has been approved by all the Oregon State agencies involved in the permitting process as sufficient for the preparation of permits. This means the state is progressing Grassy Mountain towards final permitting. PZG is a Buy under $1 for a $10 target as gold moves higher.
Primary Risk: Prices of precious metals fall due to US dollar strength.
   Probable time of next financing: 2023

Cryptocurrencies

Cryptocurrencies are a diversifying asset that offer a unique opportunity to make (or lose!) a lot of money quickly. You can easily buy Bitcoin and other cryptocurrencies at Coinbase, Block, or Robinhood.

Bitcoin (BTC-USD on Yahoo – $28,103.62) is leaving the $25,000 level behind. I expect an erratic, volatile run to new all-time highs over the next 12-18 months.

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SEC Chairman Gary Gensler will testify before the House Financial Services Committee for the first time on April 18 over his approach toward the crypto ecosystem. They’re going to roast him. BTC-USD, ETH-USD, GBTC, and ETHE are Strong Buys.
Primary Risk: Bitcoin falls due to over-regulation or is surpassed by another cryptocurrency.

Grayscale Bitcoin Trust (GBTC- $15.82) still is my favorite way to own bitcoin due to the large moat created by the now 38% discount to the value of the bitcoin you buy. GBTC is a Buy under net asset value.
Primary Risk: Bitcoin falls due to over-regulation or is surpassed by another cryptocurrency.

International & Other Recommendations
It is important to hold some non-US assets, especially in China.

Mongolia Growth Group (MNGGF – $1.07) renewed its 12-month stock buyback program to buy up to 1,900,000 common shares, representing up to approximately 6.9% of the 27,475,899 common shares currently issued and outstanding, or approximately 9.9% of the 19,030,149 common shares in the float. MNGGF is a buy under $1.30 for a long-term hold.
Primary Risk: Harris Kupperman makes bad investments.

Oil – $74.41

Oil is up 6.4% from last Thursday to a two-week high after another large total liquids draw. Inventories are starting to turn the corner. The Energy Information Administration’s weekly oil and products inventory report showed a large crude oil decline of 7.489 million barrels. Gasoline fell by 2.904 million barrels. The summer driving season hasn’t even started and gasoline storage is at the lowest level for this time of the year in recent years.

Click for larger graphic h/t @HFI_Research

Commodity Trading Advisers are short $30 billion and are about to start chasing.

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The July 2026 Crude Oil Futures (CLN26.NYM – $64.05) are a Buy under $65 – where they are now! – for a $200+ target. Only buy futures for all cash; do not use margin.

The iPath Pure Beta Crude Oil Exchange-Traded Note (OIL – $28.37) is a Buy under $36 for an $80+ target.

EQT (EQT – $31.29) is holding up remarkably well, considering that US natural gas futures fell below $2, the lowest level since September 2020. Some gas producers have to shut in soon. EQT is a buy under $35 for a first target of $70 and a long-term hold for much higher prices.
Primary Risk:Natural gas prices fall.

* * * * *

RIP Howie Kane

* * * * *

Your considering the necessity of the Iraq war Editor,

Michael Murphy CFA
Founding Editor
New World Investor

All Recommendations

Check out the complete Portfolio page HERE.

Buys
These are the stocks everyone needs to own because transformative events are happening over the next year or two, and I expect to hold them long-term.

$20-for-$1
  Aptose Biosciences (APTO – $0.63) – Buy under $2.50, ultimate target $30
  Bellerophon Therapeutics (BLPH – $7.46) – Buy under $5, first target $30, then $100
  Compass Pathways (CMPS – $10.38) – Buy under $20, hold a long time for a 10x return
  Inovio (INO – $0.79) – Buy under $7, hold a long time
  Invitae (NVTA – $1.23) – Buy under $10, first target $50, then $100+
  Medicenna (MDNA – $0.61) – Buy under $3, first target $20, then maybe $40
  ScyNexis (SCYX – $2.94) – Buy under $2.50, target price $20, then $50

Other Biotech
  TG Therapeutics (TGTX – $14.63) – Buy under $7, target price $25+

Tech Dominators
  Apple Computer (AAPL – $162.36 ) – Buy under $150 for new iPhones
  Corning (GLW – $34.82) – Buy under $33, target price $60
  Gilead Sciences (GILD – $81.45) – Buy under $80, target price $120
  Meta (META – $207.84) – Buy under $250, target price $400
  SoftBank (SFTBY – $19.55) – Buy under $25, target price $50

Other Tech
  First Trust NASDAQ Cybersecurity ETF (CIBR – $41.84) – Buy under $40; 3- to 5-year hold
  Fastly (FSLY – $16.95) – Buy under $20; 2- to 5-year hold to $80+
  PagerDuty (PD – $32.77) – Buy under $30; 2- to 5-year hold
  QuickLogic (QUIK – $5.88) – Buy under $10, target price $40
  Rocket Lab (RKLB – $3.95) – Buy under $13, target price $30+
  Velo3D (VLD – $2.23) – Buy under $6, target price $50

Inflation
  A Short-Sale or REO House – ($447,000) – Hold
  Bag of Junk Silver – ($24.04) – hold through silver bull market
  Sprott Gold Miners ETF (SGDM – $28.51) – Buy under $28, target price $50
  Sprott Junior Gold Miners ETF (SGDJ – $33.76) – Buy under $39, target price $100
  Sprott Physical Gold and Silver Trust (CEF – $18.91) – Buy under $18, target price $30
  Global X Silver Miners ETF (SIL – $30.79) – Buy under $30, target price $50
  Coeur Mining (CDE – $4.03) – Buy under $5, target price $20
  First Majestic Mining (AG – $7.21) – Buy under $11, next target price $23
  Paramount Gold Nevada (PZG – $0.35) – Buy under $1, first target price $10
  Sandstorm Gold (SAND – $5.86) – Buy under $10, target price $25
  Sprott Inc. (SII – $36.04) – Buy under $40, target price $70

Cryptocurrencies
  Bitcoin (BTC-USD – $28,103.62) – Buy
  Grayscale Bitcoin Trust (GBTC – $15.82) – Buy
  Ethereum (ETH-USD – $1,790.20) – Buy
  Grayscale Ethereum Trust (ETHE – $8.15) – Buy

International & Other Recommendations
  EMQQ Emerging Markets Internet & Ecommerce ETF (EMQQ – $32.18) – Buy under $38 for a $66 target in 12 to 18 months
  KraneShares Bosera MSCI China A Share Fund (KBA – $26.17) – Buy under $40 for a three- to five-year hold
  Morgan Stanley China A-Shares Fund (CAF – $14.19) – Buy under $18 for a three- to five-year hold
  KraneShares CSI China Internet ETF (KWEB – $31.73) – Buy under $40 for a double over the next three years
  Acreage Holdings (ACRDF – $0.70) – Buy under $2 for the Canopy Growth merger
  Mongolia Growth Group (MNGGF – $1.07) – Buy under $1.30; long-term hold

Energy
  Crude Oil Futures – July 2026 (CLN26.NYM – $64.05) – Buy under $65; $200+ target
  iPath Pure Beta Crude Oil Exchange-Traded Note (OIL – $28.37) – Buy under $36; $80+ target
  EQT (EQT – $31.29) – Buy under $35; $70 first target
  Energy Fuels (UUUU – $5.55) – Buy under $8; $30 target

Holds
These are holds but not sells – yet. They could get moved back to one of the buy categories if their prices drop or outlook improves, or they could become sell recommendations in the future.
  Akebia Biotherapeutics (AKBA – $0.56) – Hold for FDA decision
  Arch Therapeutics (ARTH – $3.20) – Hold for buyout
  Graphite Bio (GRPH – $2.41) – Hold until they resolve the clinical hold

Publisher: GwynRose LLC, 5348 Vegas Drive, Suite 868, Las Vegas, NV 89108

New World Investor does not act as a personal investment adviser or advocate the purchase or sale of any security or investment for any specific individual. The recommendations and analysis presented to members are for the exclusive use of members. Members should be aware that investment markets have inherent risks and there can be no guarantee of future profits. Likewise, past performance does not assure future results. Recommendations are subject to change at any time. Nothing in this presentation should be considered personalized investment advice. No communication to you by Michael Murphy or any of our employees or contractors should be deemed as personalized investment advice.

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