- The best performing precious metal for the week was palladium, up 19.2%. According to Bank of America, assets under management in physically backed ETFs have bottomed out, suggesting a more broad-based increase in exposure to the yellow metal from Western investors, which have been somewhat absent from the market earlier this year.
- Probe Gold overall resources in the Val d’Or East have nearly doubled (+92%) from 5.2 Moz to 10.0 Moz, reports Canaccord. This is impressive growth which the company achieved through successful expansion and conversion drilling; acquisitions made since its last resource update in 2023.
- Andean Silver announced an +80% increase in the Cerro Bayo resources to 91M ounces (previous: 50M ounces), which is above Canaccord’s expectations of 70-80Moz.
Weaknesses
- The worst performing precious metal for the week was gold, down 3.36%. Ascot owns the Premier Gold Project in northwestern British Columbia. Management announced it was suspending operations as the mill cannot be filled and funding is required to complete an estimated three to six months of development.
- According to Bank of America, Kinross Gold released the results of a Preliminary Economic Assessment on its Great Bear gold mining project located in northwestern Ontario, Canada. From a production point of view, the results are below the bank’s forecasts and what it believes to be consensus expectations, both in terms of total production and average annual production.
- Royalty stocks underperformed the traditional gold miners, reports Scotia, albeit the large-cap royalty companies outperformed the broad U.S. equity market indices over the past three months. Scotia’s top picks in this space are Wheaton Precious Metals and Triple Flag.
Opportunities
- The current gold/silver ratio at 89 is above the long-term trendline, reports Bank of America, which indicates the gold/silver price ratio should currently be around 83. With gold now at $2,497 per ounce, this long-term trendline implies that the price of silver is undervalued versus gold and should be around $30 per ounce, suggesting 7% from the current level.
- According to UBS, AngloGold made a firm offer to buy Centamin for $2.5 billion in a predominantly script transaction that included $145 million in cash. The offer represented a premium of 37% to Monday's closing price of 120 pence for Centamin. This implies a $2,700 per ounce gold price environment over the medium term.
- Positioning on silver has been more bullish by Bank of America due to its link to green technologies. The bank sees upside for both precious metals in the next 18 months but believes silver should outperform gold because it is more sensitive to manufacturing activity.
Threats
- According to UBS, for Bellevue Gold, the A$146m equity raise will pay down A$120 million debt and lift liquidity from A$76 million to A$102 million. By restructuring the debt profile, Bellevue will be able to self-fund its growth targets. However, the requirement for further significant capex was a key surprise in the update.
- Bloomberg covered ETFs have reduced their silver holdings by 19,769 troy ounces in the latest trading session, adding to concerns that increased selling could put downward pressure on silver prices. This reduction in demand poses a threat to silver investors, as continued sales could lead to further price declines in the market.
- According to Bank of America, Pan American Silver announced its annual reserve and resource estimate update. Adjusting for asset sales, total contained silver and gold reserves declined 4% and 11% year-over-year to 468 million ounces and 6.9 million ounces, respectively.
