News - Prospector's Diary

If not for a series of significant fund raisings to back expansion moves by gold, nickel and lithium-exposed companies, the past five trading days were largely negative for investors.

If not for a series of significant fund raisings to back expansion moves by gold, nickel and lithium-exposed companies, the past five trading days were largely negative for investors. Saracen Mineral Holdings was the big one this week, attracting $796 million to help pay for a company-changing half-share in the Kalgoorlie Superpit gold mine. Mincor’s $35 million to accelerate nickel developments and ioneers’s $40 million to expand work on its Rhyolite Ridge lithium and boron project in the US. were two other well-supported deals.

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Waiting for a sea-change in financial markets can be frustrating, and it certainly was this week for investors who moved too quickly into industrial metals in the belief that gold has run its race. But that’s not quite how events played out.

Waiting for a sea-change in financial markets can be frustrating, and it certainly was this week for investors who moved too quickly into industrial metals in the belief that gold has run its race. But that’s not quite how events played out. Next year it could be a different story given the early signs of the global economy entering a recovery phase after a horrid year, though the core problem remains the same - the unpredictable moods of the US President, Donald Trump.

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Supply cuts and renewed optimism of a deal to end the China v US trade war triggered a modest realignment this week by investors

Supply cuts and renewed optimism of a deal to end the China v US trade war triggered a modest realignment this week by investors who shifted funds into industrial commodities and away from gold and other safe havens. How long that trend can continue will be very much influenced by political factors unfolding around the world, from Brexit in the UK to impeachment speculation in the US and civil unrest in Chile and other important South American copper-producing countries.

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Nickel won the gold medal at a major metals conference in London this week

Nickel won the gold medal at a major metals conference in London this week but not on the market where the price barely moved, an anomaly which should be corrected next year on the purest of fundamental measures - demand is rising and supply is falling. The muted reaction of nickel to the latest crack-down on exports of unprocessed metal by Indonesia was the biggest surprise on commodity markets, which continue to behave erratically thanks to the ongoing political and economic uncertainties in Europe, the UK and the US.

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Gold recovered a little lost ground this week but the more important development was a double-dose of “outage” events in South America

Gold recovered a little lost ground this week but the more important development was a double-dose of “outage” events in South America which reinforced the investment case for copper and iron ore. Industrial and civil unrest in Chile and Peru, two of the world’s major copper producing countries, lifted the copper price by US8 cents a pound to $US2.64/lb, its highest for six weeks – even as underlying demand remained flat thanks to the US v China trade war.

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First signs of lithium hitting the bottom after a torrid year of falling prices could be seen in market commentary this week with leading investment banks hinting that a lithium rebound could be on the way.

First signs of lithium hitting the bottom after a torrid year of falling prices could be seen in market commentary this week with leading investment banks hinting that a lithium rebound could be on the way. J.P. Morgan was first to suggest that it might be time to take a fresh look at lithium stocks, followed by Morgan Stanley, which said a tour of Chile’s lithium industry revealed some ongoing uncertainty but that “downside risk is becoming more limited”.

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Gold first. Daylight second. Those four words perfectly sum up the state-of-play on the Australian stock market as more investors join the flight to safety while the international geopolitical and trade backdrop worsens.

Gold first. Daylight second. Those four words perfectly sum up the state-of-play on the Australian stock market as more investors join the flight to safety while the international geopolitical and trade backdrop worsens. A measure of the gap between strongly performing gold (and goldminers) could be gleaned from a unique mid-week piece of research by Macquarie Bank which looked at the damage done by the China v US trade war and past crises.

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The risk-chickens came home to roost this week as the compounding effect of trade war jitters were magnified by the start of a debilitating US Presidential impeachment process

The risk-chickens came home to roost this week as the compounding effect of trade war jitters were magnified by the start of a debilitating US Presidential impeachment process, leaving gold as the only clear winner – but with another precious metal tailing along. Palladium, a sister of platinum but not a mainstream commodity, has emerged as the star of the year, though there are very few entry points for Australian investors unless they’re prepared to look to South Africa or Russia – where entirely new levels of risk abound.

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RRS Summer Series 2019 - Sydney Conference

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