Trading in Kaili Resources rang alarm bells at the Australian Stock Exchange and the Australian Securities and Investments Commission after its share price rocketed from 1.8c to $3.18 over two trading days, a rise of 17,500%.

By the time trading in Kaili was suspended its price had retreated to $1.08 (up “just” 5900%) with management saying it needed time to work out what happened.

The answer could be a case of “fat finger” on the part of a single trader, or another ASX blunder, or the discovery by Chinese speculators of Kaili and its rare earth exploration project close to the Koppamurra project of Australian Rare Earths on the border of South Australia and Victoria.

Whatever the answer, rare earths are shaping as the sector for investors and market regulators to watch most closely as supply from China tightens and demand rises, creating perfect conditions for fabulous price spikes and unusual deals.

A common thread in the Kaili case is China where the government has weaponised rare earths in its trade war with the U.S., and the intense interest of investors in companies exposed to rare earths such as Kaili which has the added appeal of a Chinese management team.

In the opaque world of rare earth trading, where prices have been marching higher since the start of the year, a blend of neodymium and praseodymium rose midweek from US$81,795 a tonne to US$88,246/t, taking the increase since January to 59% and the rise over the past week to 18%.

Lynas, Australia’s rare earth leader, hit a 12-month high of $15.10 on Tuesday before easing to $14.43, up 54c over the week.

Octava, a rare earth newcomer, rose by 1.8c (50%) to 5.4c after reporting encouraging recoveries of metals from biological leaching of samples from the Byro project in WA.

Viridis Mining attracted attention with a maiden ore reserve at its Colossus project in Brazil but lost 3c to $1.17. Iluka, a mineral sands miner developing a rare earth division, slipped 12c lower to $6.08.

Boutique Sydney-based broker Barrenjoey maintained a buy tip on Iluka because of its rare earths exposure increasing its price target from $5.40 to $6 which is slightly down on the stock’s latest price of $6.06.

Most other rare earth stocks also disappointed. Arafura was down 2c at 20c and Australian Rare Earths slipped half-a-cent lower to 13c.

Magnetite Mines was an exception, rising by 2.1c to 9.2c after reporting rare earth indications at its Ironback Hill project in South Australia, and Lindian Resources added 1c to 23c after approving the development of its Kangankunde project in Malawi.

Gold stocks outperformed the broader market thanks to a US$20 an ounce upswing in the gold price to US$3342 an ounce, which sounds encouraging except when looked at over a longer time frame because gold today is exactly where it was four months ago.

Price tips for gold continue to emphasise the appeal of the metal as a hedge against inflation but the latest forecast from Swiss bank UBS is an unsurprising US$3600/oz by the end of the year.

A key test for gold will be the market reaction to the overnight (early today) speech by the chairman of the U.S. central bank Jerome Powell, a man under pressure from his boss, the U.S. President Donald Trump, to quickly make a deep cut into official U.S. interest rates.

Overall news flow this week was dominated by the prospect of peace in Ukraine, a talkfest in Canberra aimed at improving productivity in the flat Australian economy, and a warning from Perth billionaire Kerry Stokes that the re-unionisation of the Pilbara iron ore industry is a major negative for the economy.

Northern Star, the local gold leader, led the way up with a rise of 51c to $18.36, not so much because of the gold price but more thanks to a strong final dividend of 30c a share, taking the annual payout to a record 55c.

The dividend is the best sign yet that investors will be sharing in the profits flowing from the all-time high gold price which more than doubled Northern Star’s profit for the June 30 year to $1.4 billion.

Not everyone was impressed by the Northern Star result. Jarden, a stockbroking firm, sees the stock falling to $15.10 despite its high quality portfolio of assets.

Other gold and silver news this week included:

  • Ausgold, up 10c to 70c after settling a land acquisition deal which will clear the way for the development of its Katanning gold project in WA.
  • Genesis, down 5c to $4.25 despite a 127% increase in net profit to $221.2 million generated from a 59% increase in gold production to 214,311 ounces.
  • Gorilla Gold rose by 2c to 41c after reporting high grade intersections at its Comet Vale project near Kalgoorlie in WA including 5 metres at 66.3 grams of gold per tonne from 399m.
  • Sun Silver, down 5c to 81c in spite of high grade rock chip surface samples assaying up to 86.9g/t of silver equivalent at its Maverick Springs project in the U.S., and
  • Unico Silver lost 3c to 37c after reporting a $25 million placement for work on its Argentinean silver projects while WIA Gold was 3c weaker at 31c after raising $30 million for an expanded exploration effort at its Kokoseb gold project in Namibia.

Lithium stocks had a mixed week as views differed on the future direction of the battery metal which continues to enjoy strong demand in China where the price of spodumene (lithium ore) has moved back above US$1000 a tonne thanks to Chinese mine suspensions.

Citi, an investment bank, reckons the rally will be short lived with spodumene retreating to US$950/t over the next three months and then pulling back further to US$800/t over the next six to 12 months.

Liontown was the lithium newsmaker this week, closing its $316 million capital raising early after a strong investor response which flowed into the company’s share price which rose by 7c to 87c.

Antimony stocks continued to attract investor attention, led this week by iTech Minerals which rose by 3.7c (127%) to 6.6c after reporting exceptionally high grade rock chips collected at its Reynolds Range project in the Northern Territory, including samples assaying 30.6% antimony plus 2.5g/t of gold.

Lode Resources got a lift of 3c to 16c after reporting fresh drill results from the Montezuma project in NSW including 2m at 5.06% antimony and 2.68g/t of gold.

Iron ore stocks had a mixed week with Mineral Resources continuing its revival with a rise of 82c to $36.97, comfortably ahead of Fortescue which reports its annual result next week but slipped 3c lower this week to $19.68.

Strong demand from Chinese steel mills continues to underpin the iron ore market where the price remains just above US$101/t.

Other news and market moves this week included:

  • Hillgrove Resources added 0.2c to 3.7c after reporting a new high grade copper and gold structure at its historic Kanmantoo mine in South Australia.
  • AIC Mines rose by 1c to 32c thanks to it mimicking Hillgrove with the discovery of a new mineralised lens at the Jericho copper project in Queensland.
  • Mt Gibson Iron rose by 0.5c to 37c as it prepares to pivot away from iron ore to gold through a 50% share in the Central Tanami project with Northern Star.
  • Nimy Resources added 0.1c to 7.1c after reporting an encouraging geophysical signature from testing at is Masson copper/nickel project in WA, and
  • Boss Energy lost 9c to $1.62 despite reporting plans by enCore Energy to expand the jointly owned Alta Mesa project in the U.S.