News - Prospector's Diary

Northern Star, Orecorp, Silver Lake, Bellevue, Saracen and Red 5: A six-pack of the best from the sector

The old saying about gold loving a crisis has never been more true, and while that’s easy to see thanks to the turmoil triggered by fear of the China coronavirus, it is less easy to understand why gold has surged and retreated several times in recent weeks. No-one can claim to know the reason for each upward and downward move in the gold price; the metal is exposed to so many forces that any one of them could be the driver at a particular time.

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A heightened aversion to risk dominates the thinking of most investors as fear of the coronavirus and its impact on the global economy drives money into gold, but if there’s one base metal well placed to ride out this burst of uncertainty it’s Dr Copper.

A heightened aversion to risk dominates the thinking of most investors as fear of the coronavirus and its impact on the global economy drives money into gold, but if there’s one base metal well placed to ride out this burst of uncertainty it’s Dr Copper. That nickname for copper says a lot about the metal itself because it goes to the secret of its success as a commodity with a vast range of uses, from electronics to construction and transport – especially in electric vehicles, which use three-times the amount of copper as conventional vehicles.

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In the second of his special series on commodities, Prospector’s Diary looks at the Devil’s Metal

Fortunes to rival those from gold have been made in the Australian nickel mining industry, but it is also a metal that more than lives up to its nickname of “devil metal” or “devil’s copper”. Erratic price movements which have seen nickel soar to more than $US20 a pound before crashing back to $US4/lb are the modern reason for treating nickel with caution.

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A new special series from Prospector’s Diary looks at four commodities and their key players. This first edition focuses on lithium.

Lithium returned back as an investment favourite last week, riding on the back of a super-charged share-price performance from leading electric car maker Tesla, leaving many investors questioning what’s the best way for them to re-join the lithium race. Lithium 101: Volcanic eruptions often begin with preliminary tremors, but knowing exactly when the earth’s surface might burst open is an event geologists can’t predict, they just know something big is on the way – or, might be on the way.

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Can both news reports and the flow of money be correct?

If you only read media headlines over the past week you might believe that the world is facing a great economic crisis caused by the China coronavirus, but if you skipped the headlines and looked only at share prices you might believe that nothing happened. Can both news reports and the flow of money be correct? Yes, they can, because the great unknown in the China virus panic is where it’s heading and it is that uncertainty factor which can weigh heavily on investor confidence.

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The coronavirus roller-coaster which drove industrial metals down and gold up is showing signs of slowing...

The coronavirus roller-coaster which drove industrial metals down and gold up is showing signs of slowing, which could be a time for investors to consider a spot of bargain-basement shopping – but there’s no need to rush. Risks remain high and the fear generated by a mutant killer virus is having a real effect on some sections of financial and commodity markets. But if the last virus outbreak, Severe Acute Respiratory Syndrome (SARS) in 2003 is a guide, then a strong recovery is likely.

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Continued consolidation of the gold sector could be a theme for the rest of 2020...

Continued consolidation of the gold sector could be a theme for the rest of 2020, according to the investment arm of Bank of America, which believes there is a wave of mid-tier mergers on the way thanks largely what’s happened at the top end of gold. The bank’s argument revolves around last year’s big North American deals which saw Newmont merge with Goldcorp and Barrick acquire Randgold a double-barrelled process which has also seen a large number of non-core assets sold, including the Kalgoorlie Superpit.

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Welcome back to Prospector’s Diary after a Christmas break that saw a number of significant developments...

Welcome back to Prospector’s Diary after a Christmas break that saw a number of significant developments, and while a trade-war truce might seem to be most important, there are other contenders, including a fall in the value of the US dollar and the overdue return of inflation. Taken collectively, it’s hard to not see 2020 being a good year for resources with a glimpse of what’s to come to be found in a stronger-than-expected price for iron ore, a rising copper price, heavy-duty support for gold and a record high for leading indices which track the Australian stock market.

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