Top Stories This Week: Gold’s “Ball and Chain,” Advice for Uranium Investors

Gold spent much of September and early October trending down, but this week was different.

The yellow metal was on the rise, and was trading near the US$1,800 per ounce mark midway through the week. At the time of this writing on Friday (October 15) afternoon, it had sunk to around US$1,770.

Market watchers have attributed gold’s mid-week climb to a number of factors, including inflation concerns, a weaker US dollar and lower 10 year Treasury yields. 

It’s also worth noting that the US Federal Reserve’s latest meeting minutes were released this week; the minutes, which are from the central bank’s September 21 to 22 meeting, indicate that officials believe tapering of bond purchases should start in mid-November or mid-December. 

That could mean better gold price activity is in store. In a recent conversation, Adrian Day of Adrian Day Asset Management explained to me that discussions around tapering and rate hikes tend to hurt the precious metal more than the actual action of tapering or hiking rates.

“Gold investors should not be worried about tapering — we should be worried about the Fed talking about doing it” — Adrian Day, Adrian Day Asset Management

He described the current talk around those elements as a “big ball and chain” on gold, and said once the Fed makes a move gold should see some upward momentum. 

With gold in mind, we asked our Twitter followers this week if they think it will go up when tapering begins. Voters were split by the time the poll closed, with “yes” responses winning by a narrow margin. 

We’ll be asking another question on Twitter next week, so make sure to follow us @INN_Resource or follow me @Charlotte_McL to share your thoughts.

We’re also going to take a brief foray into uranium, which continues to attract investor attention. I heard from Nick Hodge of Daily Profit Cycle, who said that right now his best advice for those with money in the space is to stay in long enough to maximize their gains.

He noted that today things tend to move faster than they did during the last uranium bull cycle because it’s so easy for information to spread — that could mean gains happen more explosively.

“(Prices) can go higher than you think they can go, and the hardest part is staying in long enough to maximize your gains — not selling too early” — Nick Hodge, Daily Profit Cycle

Nick said market participants should consider selling a tiny bit when appropriate, but they need to maintain enough of a portfolio to participate in future gains. We’ll be publishing the interview next week, so stay tuned for more of his thoughts on what’s happening with uranium.

We’re going to end this week with the lithium sector. During a panel discussion at Fastmarkets’ recent Lithium Supply & Markets event, held online and in person in Las Vegas, industry experts from iLi Markets and Traxys shared their thoughts on how to manage risks in the sector. 

One of the key issues discussed by the panelists was the lithium supply and demand situation.

Right now, the electric vehicle sector is the main driver of lithium demand, and sales forecasts are constantly being revised to the upside. But supply to fill that growing demand is not so certain. 

“On the demand side, I think the risks appear to be very limited. Probably the main risk comes from the supply side and the ability of the industry to supply the lithium units, to mine the lithium in order to supply the needs of the industry” — Daniel Jimenez, iLi Markets

One speaker noted that by 2025, most incremental supply needed will come from greenfield expansions, which have risks related to resources, technologies and people. Companies that are able to execute may have bright prospects, but investors will have to work hard to identify them. 

Want more YouTube content? Check out our YouTube playlist At Home With INN, which features interviews with experts in the resource space. If there’s someone you’d like to see us interview, please send an email to cmcleod@investingnews.com.

And don’t forget to follow us @INN_Resource for real-time updates! 

Securities Disclosure: I, Charlotte McLeod, 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.