Precious Metals


Following a week of record setting volatility, shares of some gold majors rocketed higher today as the rush for liquidity finally eases.

Following a week of record-setting volatility, gold majors have rocketed higher today (March 17) on the back of news that the Federal Reserve will reinstate the Commercial Paper Funding Facility to spur the economy.

The funding structure was first introduced in 2008 as a response to the financial crisis.

The decision allows the Fed to bypass banks and deliver liquidity directly to businesses. The move also permits the central bank to purchase commercial paper directly from issuers.

US markets, which experienced their worst trading days over recent weeks, were able to register some gains after the Fed promise, while gold was able to climb back from a two year low, breaking the US$1,500 an ounce threshold.

“I am not sure that there is any specific reason, other than selling had been exhausted by the extreme sell off yesterday (March 16),” Adrian Day told the Investing News Network via email. “There has been a view that the gold stocks were the place to be in this turmoil, and in the last 24 hours a growing sense that the time was right.”

The president of Adrian Day Asset Management said he fielded multiple calls and emails from clients yesterday wanting to add or increase the gold stocks in their portfolio.

“As the stocks moved up, then this sense of urgency is heightened as investors don’t want to ‘miss the train’,” said Day. “I don’t think it’s anything other than market factors like that.”

Day also noted that the momentum ETFs and royalties experienced during the same period was likely driven by the similar catalysts. He advises investors look to the royalty companies as they offer the “best risk-reward.”

“Franco-Nevada (TSX:FNV,NYSE:FNV) was down over US$33 in one week — (a) very unusual decline for such a stock,” said Day.

Major gold miners, which have had their shares battered as the market uncertainty weighed on all sectors, also enjoyed the optimism brought on by the Fed announcement and sell-off reprieve.

After slipping well below their daily trading average, a handful of the world’s leading producers have had their share price soar in the last day.

Shares of Newmont (TSX:NGT,NYSE:NEM) shot up by 63 percent day-over-day to C$63.47. Newmont acquired Goldcorp, another sector major in early 2019 in a US$10 billion deal bolstering the former’s gold holdings. Later in the year a joint venture with Barrick Gold (TSX:ABX,NYSE:GOLD) created one of the largest precious metals projects in the world, Nevada Gold Mines.

Kinross Gold (TSX:K,NYSE:KGC), an international producer with projects in Brazil, Chile, Ghana, Mauritania and Russia, experienced the greatest one day price growth, rising 59 percent from March 16 to March 17 to trade for C$6.44.

Kirkland Lake Gold (TSX:KL,NYSE:KL,ASX:KLA) also registered a double-digit share growth session to session, ascending by 50 percent. Shares of the precious metals miner are now trading for C$40.85.

Barrick Gold also recorded a large jump in share price growth during the same period. Shares of the dual-listed producer climbed 25 percent to C$25.42.

The last company rounding out the top five is globally diversified producer Gold Fields (NYSE:GFI,JSE:GFI). Shares are up 23 percent, selling for US$5.13.

Aside from mining for gold, all the companies listed experienced a substantial share drop on March 16, marking a significant one day, year-to-date decline.

All prices were sourced from TradingView and are accurate as of 1:41 p.m. EDT.

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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.


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