Top Stories This Week: David Morgan Talks Silver’s Potential, Lithium Miners Merge

Gold continues to perform well in the second quarter. After starting this week around the US$1,780 per ounce mark, the yellow metal nearly reached US$1,800 mid-week.

Experts have pointed to lower US 10 Year Treasury yields as at least part of the reason for gold’s uptick during the period. Yields sank below 1.6 percent, and some market watchers have suggested that a fall below 1.5 percent could push gold over the key price of US$1,800.

“What’s obviously underpinning the upswing (in gold) is the dynamic in US Treasuries … which is sort of pushing lower in the very short term,” analyst Kyle Rodda of IG Market told Reuters.

Silver has also been tracking upward so far in Q2, and David Morgan of the Morgan Report recently told me about his expectations for the white metal in 2021.

Although he admitted that the current US$25 to US$27 per ounce level is a little discouraging, he sees potential for silver to reach the US$33 to US$34 range in 2021.

“Until silver gets above US$27.50 (per ounce), maybe the US$28 level, and stays there on volume, then we’re stuck — we’re stuck in this trading range.

Will this trading range go until the end of the year? We’re only in mid-April, I’d say no … I think higher, I think substantially higher” — David Morgan, the Morgan Report

The interview with David also has an interesting discussion on commercial silver users like Tesla (NASDAQ:TSLA), and I highly recommend checking out the full video.

Taking a step away from precious metals, there was a big announcement in the lithium space this week. INN’s Priscila Barrera covered the news that Galaxy Resources (ASX:GXY,OTC Pink:GALXF) and Orocobre (TSX:ORL,ASX:ORE) plan to merge in a AU$4 billion deal. According to the companies, the new entity will be one of the world’s five top lithium chemicals companies. 

Mergers and acquisitions (M&A) have been going strong in the lithium space lately, and some experts believe it’s likely to continue. Paola Rojas of Synergy Resource Capital and Reg Spencer of Canaccord Genuity both think other moves could be in the cards.

Paola expects to see at least a couple more deals this year, likely at or below the $100 million mark, while Reg said he expects M&A activity to center on higher-quality assets. He also suggested that we could see non-lithium companies come into the industry via acquisitions.

“Given the outlook for the sector, I expect more (M&A activity), but mainly for higher-quality assets. I won’t rule out the potential for non-lithium companies to enter the industry via acquisition” — Reg Spencer, Canaccord Genuity 

With lithium in mind, we asked our Twitter followers if they think the industry will see more M&A this year. Almost 80 percent of respondents said they think there will be more tie ups, with more than half saying they expect large transactions and the rest saying they anticipate small deals.

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.

Finally, in the cannabis space this week, INN’s Bryan Mc Govern spoke with Dan Ahrens of AdvisorShares about what happened in the market during Q1. Dan has favored US cannabis companies for a long time now, and in the first quarter of the year he was surprised to see American stocks lag behind those in Canada in terms of share price performance.

“We’ve seen the Canadian licensed producers be really hot (in terms of) stock performance, outpacing the US multi-state operators, and I’ll say it’s rather nonsensical to me” — Dan Ahrens, AdvisorShares

Dan said that US cannabis stocks have put out “rather spectacular” quarterly earnings reports, but that hasn’t been reflected in their share prices. Meanwhile, Canadian marijuana companies have done well in the stock market with less impressive results.

He hopes to see a change in the tides as more investors realize that the success of US multi-state operators doesn’t depend on federal legalization.

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.