That target price is more than a number plucked out of a hat. It’s the upside gold forecast from Citi, one of the world’s top banks.

Good news as a higher gold price might be for investors with a taste for the metal (which doubles as a currency) the reality is that a record gold price is a signal that all is not well in the rest of the global economy.

The best and simplest test of that observation is that as gold was rising copper, the bellwether metal of economic activity, was falling, sliding back through the US$4 a pound mark.

A short pre-easter trading week, with another short week to come, might provide breathing space and allow volumes of economic data to be digested, especially what it means to have a slowing economy and rising inflationary pressures – pointers to a recession later this year.

Central banks are now in a tricky spot as they try to orchestrate a soft landing. Interest rate increases have not tamed inflation, as New Zealand demonstrated yesterday with an outsized 0.5% rate increase.

On the other hand, economic growth is undoubtedly easing, which means a fresh round of interest rate increases could turn a slowdown into a crash, especially with this week’s added burden of rising oil prices.

Gold was not the only newsmaker this week, with the top end of the mining sector stirred by a major takeover bid with Glencore offering US$22.7 billion for Canada’s Teck Resources, a move which could draw a response from BHP and Rio Tinto as competition intensifies for scarce resource assets, especially copper.

Overall, the Australian market managed a modest 1.7% rise this week, but the trend was down as commentators honed in on the weakening economy and rumblings from bank chiefs that tougher times are on the way as household spending slows.

The broad mining sector performed well with a rise of 2% but everything paled against the gold sector, which rose by 8.5% this week, taking its increase this year to 22.1%.

Gold and silver sector news and price moves included:

  • Genesis and St Barbara were forced back to the drawing board with their plan to create a dominant gold producer in the Leonora gold belt of WA after St Barbara reported more operational problems at its deep Gwalia mine. Trading in both stocks was suspended on Tuesday.
  • West African Resources reported an increase in its unhedged gold reserve to 6.4 million ounces, enough to support at least 10-years of mine life. On the market, the stock gained 6.7c to $1.03.
  • Silver Mines rose by 6c (33%) to 24c after reporting that it had received final development approval for its Bowdens silver project in NSW.
  • Red 5 added 2c to 17c after reporting that its King of the Hills project produced a record 17,550 ounces of gold in March.
  • Ausgold kicked off what is likely to be a fund raising rush with a $12 million placement of shares at 4.5c to fund ongoing work at its Katanning project in WA. On the market, the stock moved up 0.5c to 5c, and
  • Gold Road reported what some analysts saw as a weak three year outlook, led by RBC Capital Market which put a sell tag on the stock and a price target of $1.50, only to see the stock add 18c to $1.81. You can’t win them all!

Copper stocks had a mixed week, boosted by news of another big copper-focussed takeover which is what Glencore’s offer for Teck is all about, but weighed down by the slip in the price of the metal.

Minerals 260 was the best of the copper stocks with a rise of 10c to 45c after reporting significant assays from drilling at its Mynt project near the WA wheatbelt town of Moora with a best intersection of 36 metres at 1% copper, plus 0.4 grams of gold per tonne from a depth of 194m, with an enriched 18m at 1.6% copper and 0.8g/t of gold.

Other copper news included:

  • Develop Global adding 5c to $3.19 after reporting high grade copper and zinc assays from drilling outside the resource footprint at its Woodlawn project near Canberra, with a best hit of 20m at 5.5% copper and 2.1% zinc. An upgraded mine plan is expected by mid-year.
  • Anax Metals rose by 0.7c to 7.4c after releasing a feasibility study into its Whim Creek copper and zinc project in WA. The project is expected to have a capital cost $71 million and have an initial eight year mine life, and
  • Aeris Resources added 2c to 66c after releasing a maiden mineral resource estimate of 37,000 tonnes of copper metal in the Kurrajong deposit which is inside the company’s Tritton project in NSW.

Lithium stocks continued their slide even as the Australian Government tried to talk up the sector with a remarkable forecast that by 2028 the value of lithium exports will match thermal coal exports at $19 billion a year.

Easy as it is to see a lithium exports rising, it’s a stretch to see thermal coal diving from its current level of $65 billion to $19 billion, without assuming a degree of political interference in the forecasting process. India, China and Japan are not dumping coal any time soon, or at least not until a viable alternative is readily available.

Lithium company price moves included Pilbara, down 32c to $3.68. Allkem, down 94c to $11.30. Core, down 3.5c to 85c, and Rincon, down 5.5c to 41c despite announcing the production of 10 tonnes of battery quality lithium carbonate at its Rincon project in Argentina.

Azure swam against the outgoing lithium tide with a rise of 4c to 38c after reporting continued exploration success at its Andover project in WA’s Pilbara region with a best hit of 31.7m containing visible spodumene was a depth of 309.8m.

Western Mines was the star of the nickel sector after reporting the discovery of what appears to be a substantial mineral system at its Mulga Tank project in WA with some reports likening the find to the big, but low-grade, Mt Keith mine of BHP.

A thick cumulative intersection totalling 693.5m assaying 0.28% nickel, plus minor readings of cobalt, copper and platinum, helped Western Mines jump 25c higher (178%) to 39c, valuing the company at an ultra-modest $16.5 million.

Iron ore stocks held up well as questions continued to be asked about the global economy, but sector leaders such as Fortescue Metals and Champion Iron were weakening towards the close. Fortescue gained 9.5c to $21.56 and Champion added 11c to $6.96.

Other news and market moves this shortened week included:

  • WA1 rising by 20c to $1.56 after reporting encouraging news from drilling at its West Arunta rare earth and niobium project in central Australia. Assays are pending but the company said field observations indicated a continuity of the carbonatite system reported last year.
  • Mincor lost 5c to $1.40, the same price being offered by Andrew Forrest’s Wyloo Metals, after BHP refused to accept “off-specification” material and the Mincor board said accept the Wyloo offer.
  • Talga added 8c to $1.58 after reporting a significant expansion of its graphite resource in Sweden.
  • Pacific Nickel rose by 1c to 8.5c after reporting that it had received a letter of commitment from Glencore to assist with financing the Kolosori nickel project on Santa Isabel Island in the Solomon Islands, and
  • Widgie Nickel reported the discovery of broad, near-surface, nickel mineralisation at its Widgie project in WA with assays up to 51m at 0.74% nickel, with richer zones at depth. On the market, Widgie rose by 1.5c to 31c.