Rule Of Law
This week the Post Office was the news headline of note in the UK, and what a mirror on our society it has been. Apart from reminding us who the “salt of the earth” are in this country, it also reminded as that even though we are in the 21st century, many of the institutions are stuck in Dickensian times, backed by and exploited by those who run the legal system. Tough on the parking tickets and soft on the axe murderers is a phrase that comes to mind. Indeed, the issue with the hundreds of prosecutions delivered during the period in question was not that these cases went to court. The real horror is that knowing what we now know that it was an IT problem, none of the defendants won their cases, presumably after giving their evidence. This of course shows that the legal system we have is totally rigged in favour of those with cash (nothing new), and institutions. For instance, putting the Post Office to one side. How many other lives have been blighted by the BBC, NHS, HMRC, FCA and all the other acronym organisations, where their legal power alone makes them judge and jury in the case of a dispute. This is now the greatest crusade we have: rule of law is one thing, tyranny of law another.
Death Of The Stock Market
With almost everyone both in the media and Government having had a hand in killing the UK stock market over the past 30 years, there is still macabre entertainment value in terms of watching the autopsy currently being played out. A key part of the autopsy is being played out in the papers. This week’s highlight was in The Telegraph “How Brexit Became Prime Target In The Death Of The Stock Market.” Of interest here was the tug of war between Remainers blaming leaving the EU, and everyone else knowing that we have been, and continue to be on a slippery slope for decades. The other point which was not in the article, is that it is also not so much the demise of the UK, but how well others have been doing, for instance, emerging markets, and the USA.
Much depends on Government action to make the stock market more attractive to investors. But given that the Government is skint, and cannot even remove Inheritance Tax, one would not be holding one’s breath. This is especially the case if the powers that be think that Labour are going to get elected, and all action is futile.
Now we have got over all the predictions for 2024 under our belt, the prediction that really needs to works is that liquidity will return to the stock market. So far this does not look to be the case, given how quiet things were last week. Ironically, even though the tube strike was cancelled, it was as if it actually went ahead. I would imagine some of the malaise was actually people counting the cost of Christmas, but it may be a little more than that. The stock market is affected by the cost of living crisis, in that the retail punter is going to be less likely to press the buy button. The other point to note is that look at the small cap brokers over the past months, there is a clear move by the FCA to remove the retail investor from the playing field altogether, via KYC and AML rules. And of course the ever more draconian rules discourage more and more from trading the markets. These days one is supposed to be a Professional Investor to get proper treatment. But of course, High Net Worths do not grow on trees.
The most notable aspect of the stocks in play this week, were how few there were on the positive side. There was Canadian Overseas Petroleum (COPL) rallying sharply at the end of the week, but with the fundamentals / debt position there so complicated as to leave Einstein scratching his head, this looks like the sharpest of falling knives. That said, I will be looking at potential reversal levels here during the week, especially after Friday’s 150% dead cat bounce.
Small cap mining players continue to fascinate at this time in the cycle. One the one hand, many commodities look set to go into supply deficit, especially with regard to the energy transition. On the other hand, any significant project requires significant cash, not something that small cap investors are necessarily are keen on. Therefore, the key is to look at companies in the space that have cracked this issue.
One company which stands out in this respect is Fulcrum Metals (FMET), a relatively recent arrival to the stock market. What the market looks to have missed out on here from a company which came to market in February last year. It was the option announced in November to acquire a 100% interest in the Teck Hughes Gold Tailings project, located in Kirkland Lake, Ontario, Canada. This is set to provide the production income to back the company’s exploration programme, especially with regard to its Saskatchewan uranium exploration assets, which were expanded by over 200% at the end of last year. Given that uranium is currently the hottest commodity around at the moment, this combination with gold, also on fire at the moment, all feeds well into FMET. One would expect a significant re-rate once the market lathes onto Fulcrum’s strong asset combo.