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Top Stories This Week: Gold in Summer Doldrums, Niger Uranium Companies Report Business as Usual
Aug. 11, 2023 10:00AM PST
The gold price trended lower this past week, finishing the period around US$1,913. Meanwhile, uranium companies in Niger said they continue to operate normally despite the country's ongoing coup.
Our update last week covered highlights from the Rule Symposium, which meant it didn't include a couple of significant pieces of news. One of those was the US government's credit rating downgrade from Fitch Ratings — the agency cut the country's ranking by one notch, reducing it to AA+ from the top level of AAA.
Explaining the decision, Fitch pointed to "expected fiscal deterioration over the next three years," as well as the nation's "high and growing" debt burden. The firm also looked to the past, mentioning the "erosion of governance" in America over the last two decades compared to other countries that have AA and AAA credit ratings.
Fitch's downgrade has drawn criticism from officials, including US Treasury Secretary Janet Yellen, who said it was "arbitrary" and based on outdated data from 2018 to 2020. But many of the people I speak with regularly are very concerned about the debt situation in the US. Brien Lundin of Gold Newsletter has consistently warned about this ever-expanding problem, especially in light of rising interest rates. Here's how he explained it in our most recent interview:
"The debt load is accelerating at a very quick rate. The problem again is that interest rates are 400 or 500 basis points from where they were a year ago, and as debt resets to those new rates it's going to precipitate another crisis — it's almost unavoidable" — Brien Lundin, Gold Newsletter
How has gold been performing during this time? It's spent the last couple of weeks trending down — although it was as high as US$1,970 per ounce at the start of last week, it was at about US$1,913 by the end of Friday (August 11).
Among other factors, the yellow metal has faced headwinds as confidence in the US Federal Reserve's ability to engineer a soft landing increases. The latest consumer price index data hasn't helped — it shows that in July the index rose 0.2 percent month-on-month and 3.2 percent year-on-year. The Fed's next meeting is in September.
Uranium companies comment on Niger military coup
Another topic that's been making headlines recently is the military coup in Niger, and in the resource space discussions have focused on how it could impact the uranium sector. With two major mines that produce about 5 percent of the world's uranium, Niger was the seventh largest uranium-mining country in 2022, reaching output of 2,020 metric tons.
The coup has raised questions about uranium supply out of Niger, which accounts for 15 percent of France's uranium needs and one-fifth of EU imports. French state-controlled uranium miner Orano said on August 3 that its sites in the country remain secure, although it continues to monitor developments closely.
"The security of all the employees in Niger as well as that of our operational sites continues to be ensured with reinforced vigilance. Orano’s management continues to monitor the events with the utmost attention, in liaison with the local teams" — Orano
Smaller players in the country have also commented. Global Atomic (TSX:GLO,OTCQX:GLATF) said on July 31 that it continues to prepare the plant site at its Dasa project for construction, while GoviEx Uranium (TSXV:GXU,OTCQB:GVXXF) said the same day that its operations were moving forward as usual, with stability expected to continue.
For now no new developments have been reported, but uranium market participants are definitely keeping an eye on the situation — especially given concerns that Russia may use the instability in Niger to its advantage.
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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.
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