Other cryptocurrencies have also risen, but Bitcoin’s rush to US$92,167 (and counting) has dominated the artificial currency market with this week’s 23% rise taking the 12-month increase to 160%.
Gold, the world’s traditional alternative currency, fell 5% over the week to US$2562 an ounce, forced to play second fiddle to Bitcoin as it was elevated to mainstream investment status.
While cryptocurrencies are not widely followed by most investors, they are becoming hard to ignore with Bitcoin’s total market value topping US$1.7 trillion, and the collective value of all cryptos reaching US$3 trillion.
It’s a different picture in the commodity sector where copper, the bellwether metal, which is often a guide to future economic trends, weakened sharply, falling by US36 cents (7.7%) to last trade around US$4.02 a pound, down 20% on the May peak of US$5.10/lb.
The latest copper drop whacked mining leaders. BHP, the world’s top copper producer, fell this week by $3.08 (7% — almost in perfect sync with copper) to $40.09. Rio Tinto performed a similar trick, down $8.73 (7%) to $114.78.
Other copper stocks followed the downward trend. Sandfire lost 74c (6.8%) to $10.10 while 29Metals lost 4.5c (11.3%) to 36c. Lord Resources, which caught the eye of investors last week over a deal at the historic Ilgarari copper project in WA, edged a little higher to 3.2c (up 0.3c).
Citi, an investment bank and once a leading copper bull, this week pulled its horns in by downgrading its copper price forecast from US4.40/lb to US$3.86/lb.
“We see copper prices trading lower into the year end as likely U.S. tariff hikes and weaker than expected China stimulus have weighed on our conviction in a global manufacturing recovery through 2025,” Citi said.
“We think elevated net investor positioning in copper and other base metals is vulnerable to a further unwind by year end.”
That cautious view of the most important industrial metal is in sharp contrast to growing investor interest in alternative currencies with the crypto boom a pointer to an expected fall in the value of fiat (government) currencies, especially the U.S. dollar, which is being dragged down by unsustainably high levels of debt.
Overall, the Australian stock market had a mixed week, struggling keep pace with the U.S. since Trump’s win and while the all-ordinaries index was down 1% the U.S. market as measured by the S&P500 was up 5%.
Uncertainty about Australia’s role in Trump’s world is weighing on investor confidence, along with deepening concern about the domestic economy which is being slowed by high interest rates that are expected to stay high well into next year.
There are also doubts about whether the U.S. stock market can keep rising with a top former Goldman Sachs strategist, Abby Joseph Cohen, warning that a threatened trade war could slow global growth with Trump’s threat of higher tariffs backfiring on the U.S.
Adding to the confused picture of the changes underway in the U.S. is an equally confusing situation in China which is buckling-up for a trade war while also trying to kick-start its slowing domestic economy.
Apart from international gyrations, confidence in the Australian market was bruised this week by the latest round of closures in the shell-shocked lithium sector and ongoing doubts about the future of Mineral Resources.
Bald Hill, one of the marginal lithium mine run by Mineral Resources, is the latest lithium project to be mothballed, but the same could happen soon to the Wodgina mine which co-owner, Albemarle, wants scaled back.
Investment banks and brokers are split on Mineral Resources which is being dragged through a tortuous legal process largely because of the private dealings of its under-fire chief executive Chris Ellison who is scheduled to make a public appearance at next week’s annual meeting of the company he founded.
On the market this week Mineral Resources lost $3.20 (8.5%) to $35.17 with Bell Potter maintaining its confidence in a recovery as the Onslow iron ore mine cranks up, tipping the stock as a buy with a price target of $61.
Macquarie and Citi have a different view, seeing the current price of Mineral Resources being as good as it gets.
Vulcan, a company back by iron ore billionaire Gina Rinehart, was an outlier in the lithium sector rising by a sharp $1.28 (25%) to $6.24 after receiving the offer of a $162 million grant from the German government for its Zero Carbon Lithium development.
Liontown, another Rinehart backed lithium stock, also had a solid week as it rose by 5c to 89c even as it announced cost cutting measures and revised production guidance.
Bell Potter reckons Liontown can keep rising with a new target price of $1.40. Macquarie says not so fast, it’s Liontown price forecast is 60c.
Most gold stocks lost ground with Genesis swimming against the outgoing tide with a rise to 5c to $2.26 thanks to a fresh batch of high-grade gold assays, including 7.2 metres at 60 grams a tonne at the Gwalia mine.
Resolute was the biggest loser of the week, falling by 29c (42%) to 40c thanks to its chief executive being detained in Mali by that country’s military junta – another classic case of why Africa is too risky for many investors.
Other gold news and price moves included:
- De Grey down 7c to $1.35 despite announcing an increase in the mineral resource estimate for its Hemi project in WA to 11.2 million ounces.
- Delta Lithium was 2.5c weaker at 24c but released solid results from gold drilling at its Mt Ida project including 2m at 9.3g/t from a depth of 83m.
- Kingsgate fell by 14c to $1.25 after reporting continued production improvement at its Chatree mine in Thailand, and
- ANZ Bank said it remained bullish on gold with rising levels of global uncertainty, sticking with a gold price target for next year of US$2900/oz.
Paladin Energy was the big uranium mover this week, albeit the wrong way, with a spectacular fall of $2.51 (25%) to $7.45 after releasing downgraded production guidance for its Langer Heinrich mine and as doubts grew about its proposed merger with Canada’s Fission Uranium.
Brokers think the Paladin sell-off has gone too far. Citi sees a bounce back to $11.50. Morgan Stanley says $12.30, and Shaw is sticking with a whopping future price tip of $15.80.
Other news prices moves of interest this week, mainly down, included:
- Fortescue lost $2.13 to $17.99 over concerns about Chinese iron ore demand. Citi remains a Fortescue optimist with a price target of $19.40. Champion Iron was $1.03 weaker at $5.43.
- Morgan Stanley is optimistic about the iron ore outlook, tipping a strong price in the March quarter next year of US$105 a tonne.
- Imdex, a drilling technology specialist, slipped 6c lower to $2.61 with Citi seeing $1.95 as the target price thanks to an expected decline in exploration activity next year.
- Perenti, another drilling specialist, was down 3c this week to $1.18 but Bell Potter reckons it will bounce back to $1.47.
- Lynas Rare Earths led a weaker rare earth sector with a fall of 72c to $7.40 largely because of concern about a China v U.S. trade war.
- Iluka Resources was down 37c at $5.51 thanks to lower titanium dioxide and zircon prices, along with doubts about the company’s rare earth strategy.
- Caspin Resources slipped 0.5c lower to 5.3c despite reporting further high-grade tin assays from drilling at Bygoo in NSW, and
- Syrah added 4c to 24c after reporting receipt of US53 million from an arm of the U.S. Government for its graphite strategy.
