For the month of December, we challenged ourselves to look back and post our most impactful charts of 2021. We've made many charts in 2021 which delivered insightful information that our clients love to see which we thought we would share with the rest of our audience. Below is our compilation of all the charts we posted throughout December.
Day 1: The lockdown restrictions due to Covid-19 had an effect on our everyday lives.
To gain a ‘real-time’ view of economic activity we created used high frequency data to create the Pandemic RESET Index. (Feb 2021, Economic Monitor.)
Day 2: In order to better understand silver equity price trends, we created the Top 20 Silver Producers and the Primary Silver Producer Index. Both of these indices are production weighted rebalanced each year. (Jan 2021, Silver Monitor.)
Day 3: Investor sentiment turned very negative towards gold in 2021- Q1 as other assets increased in value. Our model estimates that the surge in Bitcoin accounted for more than 2.5% of the gold price decline in 2021-Q1. (April 16, 2021 Gold monitor.)
Day 4: Using the application “Robinhood” which charges zero commission, young investors purchased money call options on GameStop Corp. to spark a short squeeze. GameStop ran from $5.00 to $450 in a matter of a week. (Jan 2021, Economic Monitor.)
Day 5: The Seniority Spread measures the
difference between the tax equivalent yield of
perpetual preferred shares and long-term corporate bond yields. The seniority spread is at its lowest level since 2015 and is part of the reason why there have been more perpetual than rate reset preferred shares issued for the first time in 2021 since the creation of rate reset preferred shares in 2008. (Nov 2021 Preferred Allocation.)
Day 6: Our Canadian House Price Model placed house prices in the very overvalued range at the end of 2020; This model is based on household income, inflation-adjusted longer-term rates and the unemployment rate.
House prices have soared this year. One reason could be the continued relative affordability to foreign buyers. This chart shows the Teranet House Price Composite Index which is reported in Canadian dollars (gold line) compared to the indices converted to US dollars (blue line). The gap between the two lines highlights the difference between purchasing power between domestic and foreign buyers. We update our house price outlook in the February Economic Monitor. (Feb 2021 Economic Monitor.)
Day 7: Our analysis shows that in general as the market prices in higher inflation levels, average silver price returns over the subsequent 12-month increase. (April 2021 Silver Monitor.)
Day 8: The Illiquidity Spread measures the difference in yield between Limited Recourse Capital Notes (LRCN) and preferred shares both issued from banks and insurance companies. LRCN are institutional level preferred shares, the spread captures the additional yield that retail investors can pick up in the preferred share market since it is not liquid enough for institutional investors to invest in. (Nov 2021 Preferred Allocation.)
Day 9: Earlier this year, Copper hit a new record of US$4.88/lbs surpassing the previous record of US$4.60/lbs on February 14, 2011. The surge in copper prices is due to green energy initiatives such as electric vehicles and tight supplies. (June 2021 Critical Metals.)
Day 10: Gold remains below its all-time inflation adjusted high; the $850 pm fix in January 1980, translates into $3016 in today’s dollars. Our view is that the $3000 level will be breached before this bull market ends! (Nov 12, 2021 Gold Monitor.)
Day 11: This chart is regularly featured in our Gold Monitor. The gold price is generally negatively correlated with the gold
price, meaning when the dollar is rising the gold price generally declines. This inverse relationship can, on occasion, breakdown for short periods of time. One of the main reasons for a breakdown is during times of extreme financial or geopolitical crisis, when both the dollar and gold generally rise due to safe-haven demand. (Dec 10, 2021 Gold Monitor.)
Day 12: The Cost of Insurance Rate Reset is the difference in yield between rate resets without a floor and with a floor. We call it insurance because the floor feature reduces the interest rate volatility. In the image investors can see that rate resets with a floor are earning 0.5%, while also benefiting from the floor protection. (Nov 2021, Preferred Allocation.)
Day 13: This chart displays global silver mine supply since 1900 and the various drivers that buoyed growth including technology advancements, economies of scale and relatively new sources of supply (namely from China). (Sept 2021 Silver Monitor.)
Day 14: Global sales of electric passenger vehicles climbed by a robust 40.6% in 2020 to 3 million units. The gain in EV sales was led by Europe, where purchases surpassed sales in China for the first time. (Oct 2021 Critical Metals.)
Day 15: In August, we launched our Economic and Financial data dashboards (link to our dashboards: ESG | Capitalightresearch) which are designed to aid investors in their investment decisions. Our dashboards include ESG scores for all companies in the S&P 500 and TSX index. We update our dashboards regularly to ensure that the most recent data is available to our users. (Published in Aug 2021, Economic Monitor.)
Day 16: We featured high frequency data such as Open Table State of the Industry data to gage the effects of the Covid-lockdowns on the economy and the pace of reopening (Oct 2021, Economic Monitor).
Day 17: The short-term technical chart in September appeared to be breaking down, but we couldn’t be definite until the $1684 barrier was violated. The $1684 barrier is important as it was the high for gold just prior to the Covid-Induced sell off in March 2020. (Sept 17, 2021 Gold Monitor.)
Day 18: Our Generalist Index calculates equity share ownership of gold seniors by investors that are not specifically resource specialists. The index indicates that generalist involvement in the sector has been on a declining trend. (Oct 22, 2021 Gold Monitor.)
Day 19: The preferred share index spread measures the relative value of the index to the Canadian Government 5-Year Yield. Over the last two years, we see a faster bounce back in value relative to the 2016 sell-off from the introduction of Limited Recourse Capital Notes (LRCN) and interest rates rising faster. (Nov 2021, Preferred Allocations.)
Day 20: Our propriety equity market models are based on the principles of Benjamin Graham “the father of value-investing”. We model the S&P 500 index and TSX Composite index along with the ten GICS sectors for both indices. (Nov 2021, Economic Monitor)
Day 21: Silver implied volatilities increase across the curve as the time to contract expiration increases; the market price of the option also increases with time to expiry as the contract has more time to become in-the-money. (Nov 2021, Silver Monitor.)
Day 22: Rare Earths are key for the transition into electric vehicles. Lithium prices are at record highs due to tight supplies and strong global demand, which is reflected in today’s chart. (Oct 2021, Critical Metals.)
Day 23: A leading indicator for the PCE (Personal Consumption Expenditures, orange line) inflation rate is the price increases reported by the ISM’s surveys (grey line), which leads PCE by 3 to 6 months. (Nov 2021, Economic Monitor.)
Day 24: Gold and global liquidity are closely linked, and Covid has led to a sharp expansion in global liquidity. The expansion in global liquidity should moderate over time, but monetary policy makers are fearful of tightening policy too rapidly. Accordingly, policy makers will err on the side of too much policy ease. The fact that employment is now also an important monetary policy target makes such an error all the more plausible. (Nov 12, 2021 Gold Monitor.)
Day 25: Today’s chart was inspired by a meme. It shows the long-term purchasing power of gold! The charts compare the price of gold in US dollars and in ounces of gold in 1971, the year that the gold price was taken off the $35 per ounce fix in the US. The cost of a new Corvette in 1971 was $5,496, and the cost has increased to over $67,000 in 2020 – an increase of 1235%. However, ‘price’ the Corvette in terms of ounces of gold, the Corvette in 1971 would cost 135 ounces of gold compared to the cost of a Corvette in 2020 being only 38 ounces of gold. In other words, the ‘cost’ of a Corvette in ounces of gold has declined! The cost of a Corvette in US dollar terms has risen somewhat steady over the last 50 years. The number of ounces of gold it takes to purchase a Corvette has gone through cycles over the last 50 years. The purchasing power can be disrupted in the short and even medium term, but the long-term (50 year) value of gold to purchase goods and services has remained impressively constant.
Day 26: Preferred share investors can see that based on the October MPR data, had there been no revision in Q2 GDP, the BoC would have been on track for a potential April interest rate increase. The revision puts the BoC in a situation where if the October MPR GDP growth forecasts are correct, then the BoC will not raise interest rates until Q1 2023. (Dec 2021, Preferred Allocation.)
Day 27: Silver ETF demand has been strong since the onset of Covid-19, holdings rapidly climbed to a peak of 1.0Bozs in February 2021 buoyed by speculation after a social media silver price squeeze campaign (Oct 2021, Silver Monitor.)
Day 28: The price of Spodumene Concentrate (Li2O) soars to a new record high of US$1525/tonne in November 2021 as the demand to produce battery-grade lithium hydroxide products increases. Lithium will likely represent a growth market for the Canadian mining industry in the coming years. (Dec 2021, Critical Metals.)
Day 29: There is no doubt that inflation is in an uptrend; most measures haven’t been this high in many years. Everything from strong consumer demand, monetary and fiscal policy, and surging asset prices point to higher inflation for the time being (and the “time being” is stretching well into 2023). (Oct 2021, Economic Monitor.)
Day 30: For past and current mining operations associated with the Primary Silver Producers, today’s chart displays tonnage and grades for reserve silver ounces. As shown on the chart, silver reserve ore tonnage (green bars) has climbed from ~280M in 2007 to nearly 870M tonnes in 2020. On average, cumulative reserve tonnage has grown by 9% annually over the period. In contrast, the silver grade associated with this reserve tonnage has declined from ~92 grams/tonne in 2007 to ~43 grams/tonne last year (or on average, a grade decline of ~6% annually over the period). In summary, while reported reserve tonnages have climbed significantly since 2007 (even with using lower silver price assumptions), the associated silver grades have markedly declined. This translates into the Primary Silver Producers having to mine and process more ore (and thus generate more costs) to attain the same levels of production. (Dec 2021, Silver Monitor.)
Day 31: Happy New Year! Gold seasonality is discussed in the August 6 monitor which is a great topic to review heading in the New Year as January and February are generally seasonally strong months for gold! (Aug 6, 2021 Gold Monitor.)