Precious Metals

Precious Metals Investing

Precious metals are up for the week as concerns surrounding a global slowdown increased following lacklustre US economic data.

Goldprices remained steadyon Friday (February 22), as investors reacted to stagnant US economic data and awaited signals on US-China trade talks.

Gold remained on track for a second weekly gain.

“The market is expecting the dollar to weaken. We expect growth in the US to slow,” said Natixis analyst Bernard Dahdah.

Recent data showed that there was an unexpected decline in new orders for important US-made capital goods in December. This decrease only added to concerns of a possible slowdown in Europe and China, which analysts revealed bolstered the appeal and safe haven status of the yellow metal.

“The main target [for gold] is still the technically important area between US$1,350 and US$1,360 above which would be a one-year high,” said Ronan Manly, a precious metals analyst at BullionStar Singapore.

Investors will now turn their attention to the US-China trade talks, which have become more positive in the recent weeks.

As of 9:16 a.m. EST, gold was trading at US$1,320.40 per ounce.

Meanwhile, silverwas up slightly for the week but is on track for its second weekly loss.

As of 9:18 a.m. EST, the white metal was trading at US$15.84 per ounce — once again falling below the US$16 threshold.

As for the other precious metals, platinum found its highest level since the beginning of the year, climbing almost 1 percent and as of 9:23 a.m. EST, the metal was trading at US$830.00 per ounce.

For its part, palladium spent the week setting records when it reached just under US$1,500 per ounce on Tuesday (February 19) only to surpass that number on Wednesday (February 20), as it peaked at US$1,502 per ounce during that trading session. While the precious metal flattened out by the end of the week, a prolonged supply deficit is expected to keep prices up for quite some time.

“The palladium market is facing a substantially growing physical deficit … driven more from the demand side due to rising automotive demand,” said Philip Newman, director at Metals Focus.

“Also, there won’t be a substitution from palladium to platinum as it is very difficult to achieve and takes a very long time to make sure it is compliant,” he added.

As of 9:33 a.m. EST, palladium was trading at US$1,454 per ounce.

Precious metals top news stories

Our top precious metals stories this week include shares of Patagonia (LSE:PGD,OTC Pink:PATAF) plunging following an announcement that the miner will be closing two gold mines, shares of Acacia (LSE:ACA) climbing after Barrick Gold (TSX:ABX,NYSE:GOLD) and the Tanzanian government put together a proposal to end the ongoing dispute over taxes and palladium prices setting another record.

1. Patagonia Plummets Following Gold Mine Closures

Shares of Patagonia Gold sunk close to 50 percent on Tuesday (February 19) after the company reported that it would be closing its Lomada de Leiva mine and idling the Cap Oeste operation.

The gold and silver miner claimed that lower-than-expected production volumes during 2018 was the reason behind the decisions.

“Current production is below management expectations and is not sufficient to cover operating costs. Given the nature of the project there are no options for scaling production and therefore the company has decided to cease production,” Patagonia stated in a press release.

2. Acacia Climbs as Barrick Creates Proposal to End Dispute with Tanzania

Shares of Acacia Mining climbed over 12 percent on Wednesday (February 20), after Barrick Gold announced that it put forth a proposal with the Tanzanian government in order to settle the ongoing dispute between the country and Acacia.

The miner fleshed out a plan that involves a US$300-million payment to resolve tax claims from the East African country.

“Significant amounts of real value have been destroyed by this dispute and, in Barrick’s view, this proposal will allow the business to focus on rebuilding its mining operations in partnership with their respective stakeholders, and most importantly long suffering investors, including Barrick,” said Mark Bristow, president and CEO of Barrick.

3. Palladium Reaches a Record High — Is the Next Stop US$1,500?

Palladium set a record and pushed against the US$1,500 threshold early in Tuesday’s (February 19) session, on the back of a prolonged supply deficit.

Following chatter that the deficit will widen this year, thanks to stricter emissions standards and an increase in demand for catalytic converters, palladium shot up, briefly reaching US$1,491 per ounce at the beginning of the trading day.

“It’s very difficult to predict in a market which is very small, but we are nearing the US$1,500 level, and reaching it is very likely as tightness in the market along with the [recent] dollar weakness is providing some lift,” said Philip Newman, director at Metals Focus.

Also in the news

Also making news this week is Eldorado Gold (TSX:ELD, NYSE:EGO), whose shares rose over 6 percent after the miner announced on Friday (February 22), that it is well positioned to increase its yearly production to more than half-a-million ounces next year, thanks to support from the restart of mining and heap leaching at Kisladag and continuing the momentum of Lamaque.

The company managed to grow its production to 349,147 ounces of gold last year, including 35,350 ounces of pre-commercial production from Lamaque, which is located in Quebec. This compares with 2017 production of 292,971 ounces and the original 2018 guidance of 290,000 ounces to 330,000 ounces.

“Eldorado’s growth is also supported by the strong momentum at Lamaque. Less than two years after we acquired the asset, we are set to begin commercial gold production later this quarter,” stated Eldorado’s President and CEO, George Burns.

“We expect total output at Lamaque, including pre-commercial production, in excess of 100,000 ounces in 2019. We continue to focus on expansion possibilities through resource conversion, exploration drilling and increasing mill feed at this core asset,” he added.

Additionally, Bellevue Gold (ASX:BGL), is hoping to raise approximately AU$20-million through a share placement to “sophisticated and institutional investors” based in Australia.

The miner noted that it would be placing close to 37-million shares, at a price of AU$0.55 in order to raise the cash to fund the advancement of the company’s Bellevue gold project, in Western Australia.

“We are now fully funded to undertake drilling activities at Bellevue over the next 12 months,” said Steve Parsons, Bellevue managing director.

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.


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