July Fund Performance & Market Commentary

On the back of significant geopolitical headwinds for the global commodity complex, the Delbrook Resource Opportunities posted a negative 2.7% return for the month of July.

Metals prices declined across the board, led by base metals (-8.0% zinc, -5.8% nickel, and -5.5% copper) and precious (-3.7% silver and -2.3% gold). The U.S. dollar, as measured by the DXY, continued its march upwards and has now gained +6.1% since January, proving to be a significant factor in lower metals prices over the past few months. With the dollar roughly back to levels last seen in late 2017, we believe calls for its ‘upside breakout’ are unwarranted given the US fiscal situation as well as monetary policy considerations (specifically later in the tightening than most G20 members). Dollar strength based on global trade stress appears to be more than adequately priced in and we believe that the current administration has significant motivation to ease policy well in advance of the November mid-term elections.    

Turning to the portfolio, our favored long ideas (base metals) has not changed and we believe the recent decline in copper (stretching into August) represents a significant long opportunity. With deficits forecast into mid 2020’s, we believe prices will rebound to $3.20 - $3.50/lb in the next 6 – 12 months. Pure play producers and late stage development companies will benefit most from a return to normalcy. In the copper complex we like names like First Quantum Minerals and Trilogy Metals, both of which are prime acquisition targets by majors looking to backfill production declines.

As always, please contact our office at 604.229.1450 with questions or comments.


Matthew Zabloski
Portfolio Manager/Founder