Investors caught a glimpse of the elephant in the room this week as inflation in the U.S. bolted to a 13-year high in June, triggering a predictable response from gold which rose to a six-week high and looked poised to keep going.
The return of gold to a price above $US1825 an ounce followed news on Tuesday that inflation in the U.S. hit an annualised 5.4% last month, triggering a debate about whether the increase was temporary or the start of a significant upward trend.
The only answer to the inflation question, at this stage, is that the jury of professional opinion is out. Jay Powell, head of the U.S. central bank, reckons the June number was a blip, but if he’s wrong then gold could take off, as it does whenever there’s an inflation scare and fear of a collapse in the value of money.
Plus, Macquarie backs up bullish lithium call with initiation note and ‘outperform’ on Liontown and newly-listed Ozz to hit the exploration ground running.
It’s a bit hard to know what’s more interesting – Bellevue (BGL) cranking up the resource estimate at its namesake gold project to 3 million ounces or heavyweight BlackRock taking on the 6% short position in the stock through steady purchases.
The resource upgrade is in the here and now and has an immediate valuation implications, while BlackRock versus the shorts could end up anywhere, although there are signs the shorts are already beating a retreat.
Gold reclaimed the high ground this week as U.S. interest rates slipped on fears that the global economy is not recovering as quickly as hoped, or that a significant correction is brewing – or both.
Look anywhere in markets today and there are warnings flashing and value disconnections caused by the inflationary effect of cheap money which has created a hothouse economic effect and asset bubbles.
A good example of contradictory pricing is that while lower interest rates and slower growth might have helped gold move back above $US1800 an ounce (before easing) it is a lot harder to explain copper, nickel and iron ore rising at the same time.
Australia's big miners are cheap on a global basis and may drive the S&P/ASX 200 index as high as 8,000 points in the second half of 2021, according to Mike Aked, Director of Research for Australia at Research Affiliates (reports The Australian).
While banks have surged this year because of very low interest rates and the resulting rise in property prices Australia-wide, he says they are expensive on a global basis.
"Because our financial companies are expensive on a global basis and our miners are cheap, we would expect that Australian resource companies are much more likely to drive our local market higher over the second half of 2021, to fresh all-time highs over 7,400, possibly rising to as high as 8,000 given the momentum in commodity prices," he says.
Former Orica boss Alberto Calderon has predicted a bright future for gold as a store of value in a world where central banks keep “printing money like there is no tomorrow” (reports The Australian Financial Review).
Mr Calderon is taking the reins as chief executive at AngloGold Ashanti just a month after quitting as boss of Orica.
Johannesburg-based AngloGold Ashanti said Mr Calderon would bring two decades of executive leadership experience in the global mining sector to its operations in Africa, the Americas and Australia.
The world’s third-biggest gold miner had been on the hunt for a new chief executive since the departure of Kelvin Dushnisky last year.
One of the great unknowns about Chalice Mining’s exciting Julimar project is whether its proximity to Perth is a blessing or a curse (reports The Australian Financial Review).
The PGE (platinum group element) discovery – which includes nickel, copper, cobalt, gold and palladium –- sits a little more than 70 kilometres north-east of the city in farmland and state forest.
Chalice is waiting for permission to drill in the state forest as it tries to establish just how big a deal it has on its hands with Julimar, and if it is of a size that supports one or more mines.
There are times when Chalice Mining managing director Alex Dorsch looks out of the window of his West Perth office and shakes his head in wonder (reports The Australian Financial Review).
Less than 80 kilometres from the suburb, which is home to Australia’s greatest concentration of junior mining and exploration companies, sits the company’s Julimar discovery.
Julimar is a rare beast: a shallow nickel-copper-cobalt-palladium-gold deposit in a nation where there have been few platinum group element (PGE) discoveries, let alone many of size.
Activity at Calidus Resources’ Warrawoona gold project is ramping up ahead of first production next year (reports MiningNews).
The A$106 million project, outside Marble Bar in the Pilbara, is only 15 weeks into construction, which is going "seamlessly" according to workers on site during an analyst and media visit this week.
"We're pretty proud of what's happening here - the guys on site are doing a sensational job," Calidus managing director Dave Reeves said.
Construction kicked off in late March and remains on time and on budget for first gold in the June quarter of 2022.
Earlier this month, Calidus drew down on the first $25 million of a $110 million Macquarie debt facility.