Precious Metals Weekly Round-Up: Gold Up on Brexit Chaos

Gold and silver climbedon Friday (November 16) as investors turned to the safety of the precious metals on the heels of market uncertainty caused by Brexit turmoil.    

As of 9:03 a.m. EST, the yellow metal was up 0.87 percent and trading at US$1,223.50 per ounce — a one-week high for gold. As for the white metal, it was up 0.49 percent on Friday, sitting at US$14.34 per ounce as of 9:08 a.m. EST.

“The issues around Brexit have invigorated a little bit of safe-haven buying in the market. The focus of the market has turned slightly to geopolitical issues at the moment,” said ANZ (ASX:ANZ) analyst Daniel Hynes.

The draft of UK Prime Minister Theresa May’s Brexit plan is being largely disputed after it caused the resignation of 7 key ministers from her government and letters calling for her resignation have been pouring in to the powerful chairman of the Conservative Party’s 1922 Committee.

These reactions have provoked fears the country could crash out of the EU without a “divorce deal” and investors are looking for stability by turning to the precious metals.

“Gold should continue to find demand on dips, provided the US. dollar remains in check,” Stephen Innes, APAC trading head at OANDA in Singapore told Reuters.

A softer dollar and the US Federal Reserve triggering some early warning signals about global growth risk in 2019, paired with political tensions are creating a positive light for the gold market, Innes added.

For their part, platinum and palladium were both up for the week, with palladium causing market watchers to speculate that it is on track to rival gold prices. As of 9:40 a.m. EST, platinum was trading at US$845 per ounce, while palladium landed at US$1,167 per ounce.

Precious metals top news stories

Our top precious metals stories this week featured Pan American Silver ( TSX:PAAS, NASDAQ:PAAS) purchasing Tahoe Resources (TSX:THO, NYSE:TAHO), an interview with Doug Casey of Casey Research from the New Orleans Investment Conference which the Investing News Network (INN) attended last week and the Association of Mineworkers and Construction Union (AMCU) attempts to stop Sibanye-Stillwater (NYSE:SBGL,JSE:SGL) from purchasing platinum miner Lonmin (LSE:LMI).

1. Pan American Silver to Buy Tahoe Resources for US$1.07 Billion

Pan American Silver, the second-largest silver producer in the world, is about to significantly increase its white metal holdings following the purchase of Tahoe Resources for US$1.07-billion, which the companies announced in a joint statement on Wednesday (November 14).

Pan American Silver, which has found success with its six mines in Mexico, Peru, Argentina and Bolivia,will become a “world premier silver mining company” when it acquires Tahoe, which owns the recently-troubled Escobal mine in Guatemala, as well as gold mines in Peru and Canada.

“The combination of Pan American and Tahoe will establish the world’s premier silver mining company with an industry-leading portfolio of assets, superior growth opportunities and attractive operating margins,” stated Michael Steinmann, president and CEO of Pan American Silver.

2. Doug Casey: There’s an “Excellent” Chance of a Panic into Gold

Speaking with INN at the New Orleans Investment Conference at the start of this month, Doug Casey of Casey Research shared his thoughts on the coming years in the investment space, saying that for those with wealth, the challenge will be holding on to what they have rather than making more.

“We’re entering a bear market — it’s been a long and very steep bull market. These things are cyclical [and] the next step is down, and I think it’s going to be a very serious step down,” said Casey.

He added he wasn’t concerned about a bear market though, noting that he was more worried about the role of PC culture in the downfall of western civilization among others.

“My financial advice in light of the fact that stocks are very expensive and are floating on air like Wile E. Coyote after he walks off a cliff, and the bond market is already in a bear market, and real estate floats on a sea of debt and basically moves inversely to the bond market— is get out of these conventional things.

3. Union Seeks to Stop Sibanye’s Purchase of Lonmin

The AMCU went to the South African Competition Tribunal on Monday (November 12) to stop Sibanye-Stillwater’s purchase of platinum miner Lonmin, claiming drastic job cuts as the reason.

Lonmin has already cut 2,000 jobs thanks to a lag in platinum prices and if the acquisition goes through, there are another 12,459 job cuts on the line over the course of the next three years.

In a submission to the Tribunal, the AMCU addressed the ramifications of the planned cuts and stated that they, “warrant that the transaction be prohibited.”

Also in the news

Also making news this week is Detour Gold (TSX:DGC) as it moved to end a proxy fight with Paulson & Co on Thursday (November 15).

Paulson has called for the immediate resignation of Detour’s interim Chief Executive Officer Michael Kenyon and board member Alex Morrison. Additionally, Paulson had nominated eight directors to replace the entire Detour board and had called for a meeting of shareholders to elect its slate.

Detour responded to Paulson’s request by stating, “[w]e are not willing to allow an activist shareholder to usurp good governance practices by installing less qualified directors who lack industry knowledge and meaningful board experience, and who are handpicked by and beholden to Paulson.”

“Continuing to push for an elimination of the whole board and create chaos around the CEO role is further evidence Paulson is not aligned with shareholders,” the miner added.

Finally, IAMGOLD (TSX:IMG,NYSE:IAG)announced on Friday (November 16) that it has doubled its credit facility to US$500-million.

In order to fund its organic growth projects, the Canadian miner amended its revolving credit facility from US$250-million and extended the term to 2023.

“The doubling of our credit facility, together with the other financing options available, provide us with ample financial flexibility at a time when our organic growth projects have gained significant traction,” said Carol Banducci, executive VP and CFO.

Don’t forget to follow us @INN_Resource for real-time news updates!

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