Out-of-Favor Gold Has Reason to Give (Small) Thanks

Gold had nothing to gobble about this week, with the precious metal mired in the $1,240 range amid low volumes due to the approaching US Thanksgiving holiday.

However with US markets closed on Thursday for the annual turkey stuff, gold managed to snap a two-day losing streak, with the spot price ticking up about $6 to close at $1,243.60, and gold futures closing the day up half a percentage point to $1,243.50. The latter fell on Monday to a four and a half-month low of $1,227.34, as per Reuters, before recovering to close at $1,242.30.

The week began with some ground-breaking news on the geopolitical front, after a historic deal was reached on the weekend between the United States and Iran over Iran’s nuclear ambitions. The BBC reported that the 6-month interim deal, struck Sunday in Geneva, saw Iran agree to curb some of its nuclear activities in return for sanctions relief.

While the news caused global stock markets to rally, due to the prospect of decreased tensions in the Middle East, oil and gold both saw steep declines, as the market digested the likelihood of Iranian oil pushing up global supplies and investors flocked to riskier assets than gold.

Tuesday and Wednesday weren’t much better for bullion prices. Kitco reported that better US housing data pushed gold down on Tuesday, although losses were limited by a weaker dollar. That had market participants thinking that the US Federal Reserve will taper its monthly stimulus program, which would be bearish for gold and other precious metals.

More US data on Wednesday, this time a jobs report showing a 10,000 drop in weekly jobless claims, pushed gold futures under the $1,240 mark, to $1,239.60. In a sign of waning gold demand, holdings in the world’s largest gold exchange-traded fund, the SPDR Gold Trust (NYSE:GLD), fell by 5.7 tonnes on Wednesday, to their lowest level since 2009, Reuters reported.

However, one country that hasn’t lost its appetite for gold is China. Mineweb reported this week that the Asian nation imported a whopping 131 tonnes of gold in October through Hong Kong — the sixth month in a row that China has brought in greater than 100 tonnes of the yellow metal.

Company news

Goldcorp (TSX:G,NYSE:GG) was dealt a setback regarding its El Morro copper-gold mine in Chile, after an appeals court froze development of the mine while it considers an appeal by indigenous communities. The mine had been green-lighted last month but the local Diaguita community says it was not properly consulted. The freeze follows a decision last month by rival Barrick Gold (TSX:ABX,NYSE:ABX) to shelve its Pascua-Lama gold project straddling the border of Chile and Argentina. Opponents used the courts to try and block the massive mine to be built high in the Andes mountains.

Australian Mining reported that more jobs will be lost at Newcrest’s (ASX:NCM,TSX:NM) Telfer gold mine in Western Australia. The company is scaling back production in an effort to rein in costs, as it struggles to deal with a lower gold price and high operating costs. Telfer’s gold output fell nearly 25 percent in October, according to the publication.

A hundred and eighty-two workers at Waterton Global Mining were also given pink slips this week, as the company starts “the next phase of its value creation plan for two of its Nevada-based assets, the Hollister Gold Mine and Esmeralda Mill,” Waterton said in a press release.

Detour Gold (TSX:DGC) announced that its president and CEO, Gerald Panneton, has resigned, and that its chief financial officer, Paul Martin, will fill in until a replacement can be found. In a press release, the company did not offer any clues as to why Panneton quit, saying only that its board of directors wished to thank him for heading up the company since 2006. Stock in the company plunged 30 percent on Monday following the announcement, before recovering to $3.77 a share. Detour Gold started commercial production at its Detour Lake gold mine in Ontario, on Sept. 1.

Junior company news

Resources Appalaches (TSXV:APP), a Quebec company developing the Dufferin gold mine in Nova Scotia, said on Wednesday it is fully permitted to proceed with gold production, after the final industrial permit was issued by provincial authorities. Dufferin, which “has a history of short-lived mining attempts,” according to Mineweb, would the see the mill restart at 300 tonnes per day and begin producing at between 20,000 and 25,000 ounces a year, starting in 2014.

MINING.com reported this week on developments at two gold companies, a junior in Mexico and a royalty company in Idaho. The website said that GoGold Resources (TSXV:GGD) has signed a letter of intent with Animas Resources (TSXV:ANI) to acquire the past-producing Santa Gertrudis mine. Under the agreement, GoGold will pay Animus $3 million over 3 years plus a net smelter royalty of between 2 and 3 percent. From Idaho, Americas Bullion Royalty Corp (TSX:AMB) said that it settled a debt and royalty option deal entered into more than a year ago. The net effect of the agreement is a cash injection of $22.8 million due to the offloading of 18 royalty streams mostly from mines in Nevada. The news caused AMB to rocket 21 percent on Tuesday, reported MINING.com.

Brazil Resources Inc. (TSXV:BRI) completed its acquisition of Brazilian Gold Corporation (TSXV:BGC). The total consideration under the transaction was approximately $13.5 million and the acquisition significantly expands Brazil Resources’ footprint in Brazil by the addition of Brazilian Gold Corporation’s flagship São Jorge project, BRI stated.

Corvus Gold Inc. (TSX:KOR) closed a $5.23 million non-brokered private placement of 5.23 million common shares at a price of $1.00 per share. Corvus said that as a result of the financing, it will be able to “continue with an aggressive drill program at Yellowjacket and other high-grade targets as well as proceed towards initial permitting work next year.” Corvus Gold is advancing its North Bulldog project in Nevada.

Securities Disclosure: I, Andrew Topf, hold an equity position in Goldcorp. 

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