It's Not Just Gold Prices; Trade Wars Present Another Major Threat To Junior Explorers - Mining CEO
(Kitco News) - While the lackluster gold price in an environment of growing uncertainty weighs on sentiment in the mining space, one junior CEO said that there is a more significant issue the sector faces in a global trade war.
In a recent telephone interview with Kitco News, Thomas Smeenk, CEO of Broadway Gold Mining (TSX.V: BRD) said that there is some anxiety that financing for junior miners could dry up as investors sit out this period of uncertainty.
“For junior explorers, we have very tight windows for financing and the greatest threat to a global trade war is stability in financial markets and a junior’s ability to find capital,” he said.
Smeenk is just the latest CEO to comment on a growing trend of investors and fund managers holding more cash in their portfolios to protect against market uncertainty and further losses in equity markets.
While Smeenk said that the mining sector could face another tough year of capital inflows, he is confident that money will be available for companies with a substantial resource and diverse mineralization. Broadway gold is currently developing its Madison copper-gold project in central Montana.
He added that a rise in the gold prices could also help boost investor sentiment in the sector. While gold has struggled recently, Smeenk said that chaos and volatility coming out of Washington D.C. on a daily basis should eventually drive gold prices higher as a safe-haven monetary asset.
Smeenk’s comments come as President Donald Trump threatened to escalate a trade war with China, proposing more tariffs on $200 billion in goods. The threat has not been favorable for equity markets with the Dow Jones Industrial Average turning negative on the year again Tuesday.
Although equity markets have dropped sharply in the facing of escalating trade tensions, the gold market has seen little interest as prices remain below critical support, hovering near a six-month low. August gold futures last traded at $1,276.10 an ounce.