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Top Stories This Week: Gold Price Hits New Record of US$2,500, Mining M&A Continues
The gold price hit yet another record of US$2,500 per ounce this week. Meanwhile, Gold Fields plans to buy Osisko Mining for C$2.16 billion, and copper prices got a boost from a strike at BHP's Escondida mine.
The gold price began the week on a strong note, rising to just over US$2,475 per ounce ahead of the latest US consumer price index (CPI) data, which was released on Wednesday (August 14).
The CPI was up 2.9 percent year-on-year in July, and 0.2 percent from the previous month. Core CPI, which excludes food and energy, was up 3.2 percent on an annual basis and 0.2 percent month-on-month.
The numbers, along with Tuesday's (August 13) producer price index data, shifted market watchers' expectations for next month's US Federal Reserve meeting. While an interest rate cut is still all but guaranteed, CME Group's (NASDAQ:CME) FedWatch tool now shows more experts anticipate a 25 basis point cut instead of a 50 basis point decrease.
Gold dipped down to the US$2,441 level on Thursday (August 15), but moved substantially higher on Friday (August 16), breaking the US$2,500 mark for the first time ever and closing above that level. US Department of Commerce data showing a fifth monthly decrease in a row for homebuilding reportedly helped push the precious metal upward.
Gold was also in focus this week as investor Michael Burry of "The Big Short" fame reportedly sold the Sprott Physical Gold Trust (ARCA:PHYS) shares that he bought in the first quarter of this year.
Among other activities, Burry added to his position Alibaba Group Holdings (NYSE:BABA) and initiated a stake in Shift4 Payments (NYSE:FOUR); however, overall he shrank his equity portfolio by half. There's no official word on why Burry sold his Sprott Physical Gold Trust shares, but some have speculated that he could have traded them for physical metal.
Bullet briefing — Gold Fields to buy Osisko, Escondida workers on strike
Gold Fields to buy Osisko Mining
M&A was in the air again this week, with major South African miner Gold Fields (NYSE:GFI,JSE:GFI) announcing plans to acquire Osisko Mining (TSX:OSK,OTC Pink:OBNNF) for C$2.16 billion.
Through the all-cash deal, Gold Fields will gain full control of the Quebec-based Windfall gold project, which it currently jointly and equally owns and manages with Osisko. The companies have been working together on the asset since 2023, and Gold Fields said it sees the property as the next cornerstone in its portfolio.
"Throughout our joint ownership of the project since May 2023, and the due diligence that preceded it, we have developed a strong understanding of Windfall and its potential and view it as the next long-life cornerstone asset in our portfolio" — Mike Fraser, Gold Fields
If approved, the companies expect to close the transaction in Q4 of this year.
Victoria Gold placed into receivership
Beleaguered Victoria Gold (TSXV:VGCX,OTC Pink:VITFF) was placed into receivership by the Ontario Superior Court of Justice on August 14 after it reviewed an application from the Yukon government.
The company has been engaged in cleanup efforts at its Eagle gold mine since late June, when the collapse of the heap leach pad at the site unleashed cyanide-laced rocks into the environment. While Victoria Gold maintains that it has "essentially achieved" all the directives issued by the Yukon government, legislators aren't satisfied with its efforts. The local First Nation is also disappointed with Victoria Gold's work so far.
"We have essentially achieved all of the directives that they have issued. We’ve just, in some cases, done it in a different way" — John McConnell, Victoria Gold
With the receivership in place, PwC is now managing Victoria Gold. Shares of the company have been halted from trading on the TSX after falling more than 90 percent.
Copper gets boost from Escondida strike
Copper prices got a boost this week as workers at BHP's (ASX:BHP,NYSE:BHP,LSE:BHP) Escondida mine in Chile went on strike. The strike began on August 13 as contract negotiations between the company and a union fell apart.
The union is looking for a larger share of profits, and has accused BHP of engaging in anti-union practices by replacing striking workers who have walked out. BHP has said this was necessary to maintain basic operations at the Escondida site. As of Thursday (August 15), the parties hadn't been able to return to the table to restart negotiations.
Escondida is the world's largest copper mine, responsible for close to 5 percent of global supply in 2023. Strikes in previous years have impacted BHP's ability to supply the metal.
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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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With an eye for detail and over a decade of experience covering the mining and metals sector, Charlotte is passionate about bringing investors accurate and insightful information that can help them make informed decisions.
She leads the Investing News Network's video and event coverage, and guides a team of writers reporting on niche investment markets.
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With an eye for detail and over a decade of experience covering the mining and metals sector, Charlotte is passionate about bringing investors accurate and insightful information that can help them make informed decisions.
She leads the Investing News Network's video and event coverage, and guides a team of writers reporting on niche investment markets.
Learn about our editorial policies.