A simple measure of the gap opening between energy and other sectors can be seen in ASX indices with the XEJ (energy index) up 5.6% this week while the gold index (XGD), the favorite until a few months ago, fell by 8%.

On a year-to-date basis, the energy index, which incorporates oil and coal companies, has risen by 30% whereas gold is down 10% and the all ordinaries is down 3%.

Black is the new gold.

Oil, quite simply, is driving everything because it is used in everything. Oil is even forcing staunch opponents of coal, its close relation, to recognise that a modern economy can’t work without an abundant supply of dependable energy.

The challenge for investors is trying judge when oil supplies might return to normal with well-credentialled commentators, such as Edward Luce in the Financial Times, warning that the world should “get used to the long Iran war”.

There is also the test of further increases in interest rates which are expected to rise again next week, followed by the uncertainties of the Australian Government’s budget in the following week, a document unlikely to be investor friendly.

It’s that outlook which should continue to drive energy-exposed stocks, even those in the deeply unloved coal sector, something this column has been banging on about all year.

Coal leader Whitehaven, a company which has suffered several near-death moments in the past, rose by 42c (5%) this week to $8.45, taking its 12-month increase to $3.42 (68%). Five years ago, Whitehaven was trading at a lowly 90c.

Stockbrokers, who ducked for cover as environmentalists hounded coal companies and their banks, are dusting off their coal coverage as an energy-deficient future emerges. Macquarie sees Whitehaven rising to $9.75. Morgans sees $9.20.

The handful of listed coal stocks which survived government-led pogroms are also rising with the rush to find non-oil sources of energy.

Stanmore added 9c this week to $2.26 with Morgans tipping future price of $2.80. New Hope rose by 10c to $5.48 (up 50% on 12-months ago) and Yancoal put on 55c to $7.76, up 55% on this time last year.

The other listed energy sectors, lithium and uranium, went in different directions. Lithium up. Uranium down.

Best of the lithium stocks was Vulcan which reported solid progress at its German project, news which lifted the stocks by 31c to $3.83.

Other lithium moves included, PLS up 10c to $6.01, close to Macquarie’s target price of $6.20. Liontown, up 12c to $2.37. Global, down 2c to 59c well short of Macquarie’s target of 80c and European Lithium, down 6c to 39c despite a blizzard of publicity about a merger with U.S. listed Critical Metals.

IGO had a rough week, rattled by an accounting dispute over how to value a loss making refinery in WA which is co-owned with China’s Tianqi, and the abrupt departure of its chief financial officer after one month in the job. IGO closed yesterday at $7.42, down 17c over the week and 42c over the month with Morgan Stanley sticking with a price target of $8.54.

Uranium falls were quite substantial despite the spot market price appearing to be stuck at US$87 a pound, which added to speculation that Iran’s highly enriched material could hit the global market in a deal with Russia, a potentially negative event which has alarmed investors.

U-falls included Bannerman, down 53c to $4.08 even as CG Capital Markets said the stock might rise to $5.80. Paladin lost $1.22 to $11.68. Deep Yellow fell by 18c to $1.85 and Boss was 16c weaker at $1.48.

Gold is feeling the pressure of a slowdown in central bank purchases and oil-caused interest rate rises designed to stamp out inflation but which also have the effect of competing with zero-interest bullion.

Two trends emerged in the ASX gold sector this week, a surprising number of share price rises in a week when the gold price fell by 4%, and the start of investment downgrades, including a sharply-worded sell tip on one of the market’s darlings, Greatland Resources.

Moelis Australia was the stockbroker unimpressed with Greatland, telling clients that investors might have seen the “best” of reworking the old Telfer mine in WA with tougher conditions ahead. It sees the stock falling from its current $13.57 to $11.90. Macquarie is kinder. It sees a future Greatland share price of $15.

Other interesting gold moves included:

  • Bellevue, down 16c to $1.50 but with Macquarie sticking with a buy tip and target price of $2.10 whereas UBS trimmed its target price by 5c to $2.05, while also keeping a buy recommendation.
  • Westgold and Catalyst fell steeply. Westgold was down 65c to $5.47 and Catalyst lost $1.31 to $5.27 – but both retained UBS buy tips at slightly reduced target prices. Westgold’s new target from UBS is $8.50 (down from $9.50) and Catalyst is $9.75 (down from $10).
  • Falls were also incurred by Ramelius, down 36c at $3.46. Capricorn, down 6c at $11.53. Ballard, down 2.5c at 67c, and Pantoro, down 54c at $3.32.

On the plus side of the ledger was one significant winner, Patriot Resources, and a long list of stocks registering modest gains.

Patriot added 3.6c this week to close at 12c, a rise of 42%, taking its gain over the past month to 8c (200%) thanks to what appears to be a significant silver and gold discovery at the Tassa project in Ecuador.

Other gold stocks to rise were Aurelia, up 3c to 29c, possibly on its way to the 42c target of Moelis. Altair, up 0.4c to 4.2c after announcing a $28.2 million placement with London-listed Endeavour Mining, and Gorilla Gold, up 1c to 35c after announcing two new shallow, high-grade, discoveries at its Comet Vale project in WA.

Copper stocks performed well late in the week after reports of Chinese buyers adding to their inventories which could lift the metal’s price back over the US$6 per pound mark.

Best copper performer was Solstice which rose by 41c to $1.54 after reporting highly encouraging assays from diamond drilling at its Nanadie project in WA with a best result of 62 metres at 1.55% copper and 0.66 grams per tonne of gold from a depth of 317.5m.

Other copper moves, either way, included: Sandfire, down 79c at $16.54. Phosco, up 1.5c at 14c. Aeris, up 2c at 38c with Bell Potter tipping a future price of 90c, and 29Metals, up 2c at 25c after releasing a steady March quarter report.

Rare earth stocks were mixed. Lynas rose by 21c to $19.18 but Meteoric slipped 1c lower to 19c and Victory Metals fell by 18c to $1.65.

Other news and share price moves of interest included:

  • Nickel Industries, up 8c to $1.05 thanks to a new long-term project development loan and an increase in the nickel price to US$19,490 a tonne, up 12% over the past month.
  • Chalice, down 5c to $1.50 despite releasing an upbeat March quarter report on its Gonneville polymetallic project in WA.
  • Fortescue, down 43c to $19.79 but with RBC Capital Markets tipping a rise to $22, offset by Bell Potter’s downgrade from a price forecast of $20.30 to $18.15, plus a sell tip.
  • Australian Mines rose by 0.7c to 2.6c after releasing a positive scoping study for its Flemington scandium project in NSW, and
  • Stella Resources crept 0.1c higher to 3.3c after reporting high grade tungsten and silver from drilling at its Scamander project in Tasmania.