April ended with a loss of -7.33%, in line with the HUI index, which fell 7.8%, partly as a result of a strong dollar. The weak precious metal prices are remarkable in view of the fact that the American central bank, after its 180-degree turn at the end of 2018, now clearly wants to pursue a very stimulating monetary policy. The call in politics to bet massively on Modern Monetary Theory (MMT), popularly known as throwing money out of helicopters, to strengthen the economy and purchasing power, is a good example of current monetary madness. The extremely poor market sentiment in the commodities sector reminds us of the situation at the start of 2009 and 2016. In both cases, the market suddenly turned following a period of huge price drops. In the first case, the Net Asset Value (NAV) of the Commodity Discovery Fund increased by 400% within 2.5 years. In the second case, the profit was more than 100% within six months. Our patience continues to be put to the test, until such a turn.
During our second successful Discovery Day, we gave a presentation in which we called attention to the inevitable metal shortages in the medium term (2020-2030). Our vision in this was recently confirmed when Tesla, at a closed congress, warned of the coming shortages in metals needed for EV batteries. With palladium we have seen these shortages arise in recent years. This precious metal is mainly used in automotive catalytic converters. That is why in recent months we have built a position in the only western palladium producer, with a price-earnings ratio (P/E) of just five. (In the world of tech companies, Apple with a P/E of 17 is called cheap, the Netflix P/E is 75). This indicates that valuations in our sector are still extremely low. In addition to palladium, we have also added a platinum ETF to our portfolio. The platinum price, which now appears to be completely bottomed out, can start to benefit from the renewed attention for the hydrogen car. More than 30 grams of platinum are used in each fuel cell.