Strengths
- The best performing precious metal for the week was palladium, up 5.93%. ETFs increased gold holdings for the sixth straight day, while selling 2,340 troy ounces of platinum, but only selling two troy ounces of palladium.
- China has seen a surge in gold trading volumes on the Shanghai Futures Exchange as Sino-U.S. trade tensions rise, with investors seeking safety amid a potential new trade war. This buying frenzy has pushed prices to a premium over international prices.
- Gold hit a new record high on April 16, as the Trump administration pressed ahead with probes that could broaden the U.S.’s sweeping trade war. The precious metal has rallied by more than a fifth this year as the worsening trade war has damped prospects for global growth, eroded trust in usually safe U.S. assets and roiled financial markets.
Weaknesses
- The worst performing precious metal for the week was silver, but still up 1.93%. ETFs increased their silver holdings by 3 million ounces on April 16. A gold/silver cross at 100 on April 15 indicates potential global recessionary risks, as similar spikes have historically preceded U.S. recessions and Federal Reserve easing cycles.
- Allied Gold announced that it is not proceeding with the previously announced C$157 million private placement equity financing with the UAE-based investment fund Ambrosia Investment Holding as certain conditions were not secured. Allied, in turn, came to market to raise C$80 million to fund its optimization and growth initiatives. It is interesting to note that Allied Gold’s largest shareholder, Orion Mine Finance, with 38 million shares or 11.60% of the company, sold down 15 million shares concurrent with the offering.
- Kinross Gold announced the temporary suspension of Tasiast mill operations (23% of NAV / 26% of EBITDA), following a fire that occurred April 14. Kinross does not expect to change its guidance for Tasiast, given the fire was localized to the SAG discharge area and critical spare parts are available on site.
Opportunities
- Peter Schiff anticipates Newmont Corp. will surpass $100 per share amidst rising gold prices, criticizing UBS's upgrade as insufficient. Schiff views UBS's analysis as flawed, reflecting Wall Street's underestimation of precious metals' potential amid a favorable gold macro-outlook, while technical analysis indicates a bullish trend for Newmont's stock. Similarly, CIBC writes that they expect the current gold regime to push free cash flow yield up, especially for the senior group of gold producers, which CIBC believes will show strong free cash flow growth, calling an average free cash flow yield estimate for the senior group at 6.6% by year-end.
- Gold's recent rally, up over 60% since the start of 2024, is small compared to the rally in 1979-80, where it increased three to four-fold in a year. While similar factors are in play now, such as persistent inflation and a reordering of the global financial system, gold's potential isn't limited, Bloomberg reports.
- Goldman Sachs Group Inc. and UBS Group AG issued another round of bullish calls for gold, with stronger-than-expected central bank demand and the metal’s role as a hedge against recession and geopolitical risks underpinning expectations for even higher prices in 2025. Goldman analysts, including Lina Thomas, now see gold rallying to $3,700 an ounce by the end of this year, with prices set to hit $4,000 an ounce by mid-2026, while UBS strategist Joni Teves pointed to $3,500 an ounce by December 2025.
Threats
- The government of Ghana has instructed Gold Fields to cease operations and vacate the Damang lease area by April 18 on expiry of the lease. They had applied for an extension of the Damang lease in December, and the Minerals Commission of Ghana rejected the application, according to Bloomberg. In addition, the newly elected Ghana presidential administration issued comments last weekend outlining a significant shift in mining policy to prioritize national interests. The news has potential negative implications for foreign mining companies in the country, including Newmont (10% of NAV; 12% of EBITDA), and its pending Akyem asset sale, as well as AngloGold (23% of NAV; 20% of EBITDA), according to RBC. One big highlight is that they are giving foreign traders until May 1 to leave its gold trading market.
- Mali shut Barrick Gold’s office in its capital and threatened to take over its gold mine, the company said. Mali warned it would place Barrick’s shuttered Loulo-Gounkoto mine under provisional administration unless the mine was reopened and tax payments were made, Barrick said in a statement Tuesday.
- Niger has reinforced its military presence along the border with Burkina Faso to counter escalating attacks by jihadist groups, which have displaced local populations and heightened regional insecurity. This move is part of a broader effort by Niger, Burkina Faso and Mali to form a unified force against terrorism in the Sahel States. The increasing tensions, militarization and ongoing violence threaten Burkina Faso’s gold mining industry, potentially disrupting operations for mining operations such as IAMGOLD (~58% of gold production in Burkina Faso), Fortuna (Mana mine and other assets), and B2Gold (exposure to several gold projects in the country).
