October 2024 Market Update:
As an investor, it can be overwhelming and even intimidating trying to navigate through market noise and the uncertainty of today’s financial landscape. History has shown, when economic uncertainty takes hold, and chaos ensues, the resource sectors thrive. Fortunately for Pavilion Flow Through investors, this environment provides a unique opportunity as the fund is strategically positioned to seize these emerging opportunities. It is truly something to be excited about. Back to the market noise, here are some current news events that have primed the resource sector for a long overdue bull run:
BoC’s Rate Cuts :
On Wed Oct 23rd 2024, the Bank of Canada slashed their interest rate by 50 basis points, bringing the benchmark rate to 3.75%. This rate cut has positive implications for Canadian commodities specifically precious metals such as gold. Gold typically benefits from lower interest rates because it reduces the opportunity cost of holding non-yielding assets like precious metals. As real interest rates fall, investors may seek safety in gold, particularly as a hedge against inflation or currency devaluation. On the other hand, rate cuts also have the tendency to lead to a weaker Canadian dollar which can also be seen as beneficial to Canadian Gold Miners. A weaker domestic currency could make Canadian gold exports more attractive to foreign buyers boosting the profitability of Canadian Gold Mines.
Big Tech and AI’s Emerging Interest in Nuclear Energy:
Recently big tech companies have been increasingly turning to nuclear energy to support their growing power needs created by artificial intelligence. There have been two big deals over the past month which includes Microsoft’s 20 year power deal with Constellation Energy to resurrect their Three Mile Island nuclear plant, and most recently Googles deal with Kairos Power, to purchase 500 megawatts of power through a fleet of six or seven small modular reactors (SMR’s). Considering uranium’s instrumental role in nuclear energy these two large scale deals can be seen as early catalysts for the uranium sector as it further signals the resurgence of nuclear energy. Turning the investing spotlight of AI towards nuclear energy allows for greater investment attention on the uranium sector which has faced neglect and capital deprivation for the past few decades. Lastly, these last two deals with Microsoft and Google are believed to be the beginning of a trend as we can expect to see other tech giants follow lead, securing their needs for stable, carbon free energy sources to power their future AI initiatives.
US Presidential Election:
With the US presidential election happing this fall, there is a heightened level of uncertainty it brings to the markets. In situations like this, investors flock to safe-haven investments like Gold and Silver. The demand surges as these precious metals become more attractive as a hedge against volatility. In combination with the election and previously mentioned 50bps rate cut, gold has hit an all-time high of USD $2,750 per ounce (CAD $3,820). We can expect to see price of gold trending upwards as we get closer to the Nov 5th election and investors continue to hedge against potential market disruptions.
What This Means for Pavilion Flow-Through Investors
These market developments align with our winning long-term investment strategy, setting the stage for what we believe will lead to rising share prices in our fund portfolios, and hopefully a strong launch for Pavilion’s 2025 fund.
View From Pavilion CEO Dan Pembleton
“It looks to be shaping up to be a decent fall and winter in terms of market performance, but that takes time to get through to investors. The rise in stock prices is being led by a few names. Right now, they are just grinding higher which tells me Q1 2025 is the likely time horizon.”
—Dan Pembleton
Our current Pavilion FTLP 2024-1 is still open to investment. Contact your advisor for details or email us at service@accilentcapital.com.
Pavilion Resource Fund aims to provide investors with significant tax benefits and capital appreciation by investing in a portfolio of Flow-Through Shares issued by Canadian resource companies. Pavilion is managed by Accilent Capital Management Inc.
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#gowiththeflowthrough #pavilionfund
DISCLAIMER: The information provided is general in nature and is provided with the understanding that it may not be relied upon as, nor considered to be, the rendering of tax, legal, accounting or professional advice. Readers should consult with their own accountants and/or lawyers for advice on the specific circumstances before taking any action. Accilent Capital Management Inc. (“Accilent”) is the investment manager to the Pavilion Flow-Through L.P.s (collectively, the “Funds”). This document is for information purposes only and should not be relied upon as investment advice. We strongly recommend that you consult your investment professional for a comprehensive review of your personal financial situation on before undertaking any investment strategy. Information on herein is subject to change without notice and Accilent is not responsible for any inaccuracies or to update this information. The information contained herein does not constitute an offer or solicitation by anyone in the United States or in any other jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation. Prospective investors who are not resident in Canada should contact their financial advisor to determine whether securities of the Funds may be lawfully sold in their jurisdiction.
