Precious Metals Weekly Round-Up: Gold Boosted by Trump

Gold made gains on Friday (May 31) as US President Donald Trump heightened his threat of tariffs on Mexico, causing fears of a global economic downturn and prompting investors to seek out the safe haven nature of the precious metal. 

The move from Washington caused the yellow metal to climb to a more than two week peak on Friday, putting it on track for its first monthly gain in four months.

“The extension of trade tariffs from being (only a) Sino-US issue caught people by surprise,” said Ross Norman, chief executive at Sharps Pixley.

“Suspect this new development with Mexico indicates that this is not just an issue across the Pacific but could extend to the extent that global economic growth could be dented even further,” he added.

On Thursday (May 30), Trump announced that as of June 10, Washington will be imposing a 5 percent tariff on all goods coming from Mexico until illegal immigrants stop trying to enter the US.

Looking ahead, investors are turning their attention to a possible interest rate cut, which has added to concerns stemming from the ongoing US-China trade dispute.

“The market is now factoring in three Fed rate cuts totalling 75 basis points by the end of 2020,” Commerzbank (OTC Pink:CRZBF,ETR:CBK) analysts noted.

Lower interest rates tend to support gold because they reduce the opportunity cost of holding non-yielding bullion.

As of 10:05 a.m. EDT on Friday, gold was up 1.2 percent, trading at US$1,296.10 per ounce.

Meanwhile, silver followed gold’s lead on Friday, adding gains on the back of geopolitical concerns.

Despite the white metal’s relatively lackluster year, industry experts still believe in the metal’s potential. In fact, firms polled recently by FocusEconomics stated that silver could reach as high as US$17.80 per ounce before the end of this year.

As of 10:15 a.m. EDT on Friday, the white metal was trading at US$14.56.

As for the other precious metals, platinum was relatively flat on Friday, but is down about 10.5 percent for the month, on track for its biggest monthly loss since November 2015. As of 10:17 a.m. EDT, the metal was trading at US$791 per ounce.

Palladium also took hits this week, falling over 2 percent. The metal continues to be the highest priced precious metal despite the decline, but the gap between palladium and gold is becoming increasingly smaller. As of 10:26 a.m. EDT, palladium was down 2.52 percent, trading at US$1,329.

Precious metals top news stories

Our top precious metals stories this week include the Victorian government proposing a 2.75 percent royalty on gold miners, Great Bear Resources (TSXV:GBR,OTCQB:GTBDF) climbing close to 20 percent after discovering a new high-grade gold zone at its Dixie project and Barrick Gold (TSX:ABX,NYSE:GOLD) and another top gold producer planning to invest another US$1 billion into the Pueblo Viejo mine.

1. Gold Miners in Victoria to be Hit with New Royalty

The Victorian government says it plans to slap a 2.75 percent royalty on gold producers, a move that the Minerals Council of Australia (MCA) believes will drive away investment in the area.

The 2.75 percent royalty rate currently applies to all minerals other than lignite and gold. Under the new changes the tax will not apply to small miners.

“The Victorian Government’s gold tax threatens hundreds of jobs in regional Victoria and would undermine confidence just when new opportunities are emerging to support regional communities with increased mining investment,” stated James Sorahan, executive director for Victoria’s MCA.

2. Great Bear Surges on New High-grade Gold Discovery

Great Bear Resources rose close to 20 percent on Tuesday (May 28) after discovering a new high-grade gold zone at its Dixie project in the Red Lake District of Ontario.

Highlights from the new discovery, called the Bear-Rimini zone, are 12.33 grams per tonne (g/t) gold over 14 meters, including 30.9 g/t gold over 4.6 meters, and 194.21 g/t gold over 2 meters, including 759.38 g/t gold over 0.5 meters. Bear-Rimini is part of a new exploration target called the LP fault.

“After recognizing a significant hydrothermal alteration zone in our previous round of regional drilling, we tested and discovered, in our first hole, a new zone of shallow high-grade gold associated with silicification of host rocks related to a crustal-scale structure we call the LP Fault,” said Chris Taylor, president and CEO of Great Bear.

3. Barrick Proposes Billion Dollar Investment in Pueblo Viejo

Barrick Gold and another top gold producer want to show their commitment to the Dominican Republic (DR) by contributing a further US$1 billion to the expansion of the Pueblo Viejo mine.

Barrick CEO Mark Bristow stated on Monday (May 27) that the miner and its joint venture partner in the DR asset, Newmont Goldcorp (TSX:NGT,NYSE:NEM), hope to complete a feasibility study by next year that looks at expanding the operation’s processing plant and tailings capacity, as well as potentially extending the mine’s life to 2030 and beyond.

“We look forward to continue making a significant and growing contribution to our communities and other stakeholders and to unlocking the enormous value of its mineral potential while addressing the historical third-party environmental issues,” Bristow said.

Also in the news

Also this week, shares of Patagonia Gold (LSE:PDG) surged over 15 percent when the miner agreed to be acquired by Canadian company Hunt Mining (TSXV:HMX).

As per the reverse takeover agreement, Patagonia shareholders will receive approximately 10.76 common shares of Hunt in exchange for each ordinary share of Patagonia. There are currently 63,588,798 common shares of Hunt issued and outstanding and 23,634,749 Patagonia shares issued and outstanding. The deal assumes that, at close, Hunt will own around 317,943,990 common shares issued and outstanding, of which 80 percent will be held by Patagonia shareholders.

Additionally, Reuters reported that Bravura Consortium plans to spend over US$50 million more in order to explore and mine for platinum in Zimbabwe. This comes on the heels of news that Zimbabwe seeking to exploit its reserves of platinum.

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

Editorial Disclosure: Great Bear Resources is a client of the Investing News Network. This article is not paid-for content.