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Top Stories This Week: Gold M&A Heats Up, Inflation Falls, Cryptos Crash
Nov. 11, 2022 02:00PM PST
Major gold miners battled it out this week for Yamana Gold; meanwhile, the crypto world was rocked as Binance announced and then backed out of a deal to buy FTX Trading.
Editor's Picks: Gold M&A Heats Up, Inflation Falls, Cryptos Crashyoutu.be
The gold price was on the rise this week, breaking the US$1,700 per ounce mark on November 8 and continuing past US$1,750 on November 10. It was even higher, around US$1,764, at the time of this writing on November 11.
The yellow metal's increase came on the back of new US inflation data. The consumer price index rose 7.7 percent year-on-year in October, which is down from September's 8.2 percent number and below analysts' expectations of 7.9 percent.
Inflation is now at its lowest point since January, prompting questions about what the US Federal Reserve may decide to do with interest rates at its next meeting, which is scheduled to run from December 13 to 14.
Pan American, Agnico Eagle win battle for Yamana Gold
Gold market participants have also been watching a bidding war unfold over Yamana Gold (TSX:YRI,NYSE:AUY). All the way back in May, Gold Fields (NYSE:GFI,JSE:GFI) announced plans to acquire Yamana in a deal initially worth US$6.7 billion.
Shareholders were gearing up to vote on the transaction, but on November 4, Pan American Silver (TSX:PAAS,NASDAQ:PAAS) and Agnico Eagle Mines (TSX:AEM,NYSE:AEM) made their own joint proposal — they said they wanted Yamana to be acquired by Pan American, with Agnico Eagle taking the company's Canadian assets, which include a stake in the Canadian Malartic mine.
It wasn't long before Yamana got on board. On November 8, after Gold Fields said it would not change its initial offer, Yamana entered into an arrangement agreement with Agnico Eagle and Pan American, telling shareholders that it was now recommending the new acquisition strategy. The termination comes with a fee of US$300 million.
Will Yamana's new deal with Agnico Eagle and Pan American stick? Time will tell. But one thing is certain — gold producers are interested in building their pipelines. As the experts I've spoken with have said time and time again, these large companies have underinvested in exploration, and now need to amass ounces.
Binance announces FTX purchase, then backs out
The gold sector wasn't the only place to see interesting M&A activity this week. In the Bitcoin market, crypto exchange platform Binance revealed plans to buy its struggling rival FTX Trading, only to back out of the deal a day later.
INN's Bryan Mc Govern was on the floor at the Toronto-based Web3 & Blockchain World conference when the purchase was first announced on November 8, and he said attendees were visibly rocked by the news.
Binance's decision not to go through with the acquisition shook the crypto industry yet again. The company attributed its about-face to factors such as "corporate due diligence," saying the issues at FTX are beyond its ability to help. FTX has essentially been facing a bank run from customers concerned about its solvency.
What happens from here remains to be seen, but the issues FTX is facing highlight the volatility that is still inherent to the crypto space. Although it's certainly possible to make big gains, cryptocurrencies can also be extremely risky.
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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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