Precious Metals Weekly Round-Up: Gold Rallies as Stocks Tumble

Gold andsilver made gains on Friday (October 26) on the back of a slide that could see global stocks post their worst weekly losing streak in more than five years.

As of 9:20 a.m. EST, the yellow metal was trading at US$1,234.60 per ounce, which is the precious metal’s highest price since mid-July. As for the white metal, it sat at US$14.65 per ounce as of 9:24 a.m. EST.

“The confusion in bond and stock markets is fuelling some interest in gold. If they continue to fall, that will give support to gold. You’ll then have trend buyers coming in and supporting the price,” commented Alasdair Macleod, head of research at GoldMoney.com.

“The outlook for gold prices in the current term remains dim as such in lieu of rising rates and yields amidst buoyant US economic conditions,” said Benjamin Lu, commodities analyst at Phillip Futures.

“The bears are frightened of being caught on the wrong side. The liquidation of short positions on COMEX has the potential in the short term to drive gold up to between US$1,260 and US$1,270,” he added. Gold’s rally this week is a 6-percent increase from its US$1,159.96 low in mid-August.

For their part, platinum and palladium were both flat for the week. As of 9:32 a.m. EST, platinum was trading at US$826 per ounce, while palladium landed at US$1,094 per ounce.

Precious metals top news stories

Our top precious metals stories this week include video interviews with Martin Murenbeeld and Peter Grosskopf from the Mines and Money conference in Toronto, as well as a Q&A with Alain Corbani.

1. Martin Murenbeeld: Now is Not the Time to Sell Gold

As mentioned, the Investing News Network had the chance to speak with Murenbeeld, president of Murenbeeld & Co., at Mines and Money. He discussed what happened to gold in Q3 and shared predictions on where he sees it going in both the short and long term.

The yellow metal has experienced two tough quarters this year, and Murenbeeld believes this happened due to a strong US dollar, rising equity markets and an increase in the real bond yield. “Those are three big strikes against gold,” he noted.

Despite the current conditions, Murenbeeld said that now is not the time to sell — instead, investors should hold gold as part of a diversified portfolio. “I’m inclined to think that you [would be] selling near the bottom,” he stated.

2. Peter Grosskopf: It’s Time for Gold to Appeal to a Wider Investor Base

The Investing News Network also caught up up with Grosskopf, CEO of Sprott (TSX:SII), who shared insight on the current state of the gold market and where he thinks it is headed.

As gold comes off of another tough quarter and prices continue to hover around the US$1,200 mark, Grosskopf believes the yellow metal will rise once again, particularly if it can garner appeal from a wider investor base than it has in the past.

“I think it’s time for gold to appeal to a wider investor base,” Grosskopf said. “I think digital gold is the way that will happen … that’s going to be one way.”

He added, “you have that gold sitting at the vault on your behalf, and the blockchain will allow it to trade very rapidly and will allow you to buy it very cost effectively. So that’s going to be a factor in the future.”

3. Alain Corbani Wants to Make Gold Great Again

At Mines and Money, Alain Corbani, head of commodities at Finance SA, covered what happened to gold and silver in Q3, and what to expect from the precious metals in 2019. He also spoke about Trumponomics and how it could potentially “make gold great again.”

Corbani noted that gold is currently in a cycle that started three years ago and will continue for the next few years. He believes that this cycle is affected by Trumponomics, which is the idea that US President Donald Trump’s aggressive fiscal policy will bring down the US dollar, leaving room for gold to rise.

“He has got into a very aggressive fiscal policy, and this fiscal policy is going to make higher deficits. And when you have some inflation, higher deficits and debt to GDP that is close to 100 percent, real interest rates are staying low and the dollar, the US currency, will weaken,” Corbani said.

In other precious metals news

Also making news this week was Barrick Gold’s (TSX:ABX,NYSE:ABX) push to have shareholders vote in favor of a US$6.1-billion transaction with Randgold Resources (LSE:RRS). 

The potential deal was discussed during a conference call for Barrick’s Q3 results. Barrick Chairperson John Thornton detailed how the merged company could add another four mines to its list of tier-one assets. The potential mines are Fourmile and Turquoise Ridge in Nevada, Veladero in Argentina and Acacia Mining’s (LSE:ACA) North Mara mine located in Tanzania.

Finally, Agnico-Eagle Mines (TSX:AEM,NYSE:AEM) released its Q3 results and became the third-largest gold miner in North America, knocking out Goldcorp (TSX:G,NYSE:GG). For its part, Goldcorp plummeted 18 percent this week following Q3 results that were less than favorable.

The three largest gold miners in North America by market cap are now Newmont Mining (NYSE:NEM) at US$15.7 billion, Barrick Gold at C$14.7 billion and Agnico-Eagle at C$8.3 billion. Goldcorp trails behind in fourth with a market cap of C$7.4 billion.

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