- The best performing precious metal for the week was gold, but still down 1.61 percent. Gold rose on Thursday, breaking a two-day loss streak, as the U.S. dollar fell and halted stimulus negotiations sent equities lower. Bloomberg notes that spot gold rose to $1,903 after falling 2 percent on Tuesday and Wednesday. Silver and palladium also rose with gold.
- In the first nine months of 2020, inflows into silver-backed ETFs nearly tripled the amount from the same period a year ago. Silver holdings rose by 297 million ounces, up from 103 million ounces in the first three quarters of 2019. Silver bullion coin demand is also strong – up 65 percent from the same period last year.
- De Beers said it sold $467 million worth of diamonds in September – the most since January before the pandemic hit. Bloomberg notes that De Beers lowered prices of smaller diamonds that coincided with an uptick in demand from trader buyers to restock low inventories and returning jewelry customers in China.
Weaknesses
- The worst performing precious metal for the week was palladium, down 4.33 percent leading hedge funds to push their net-long position to a 7-month high. Gold fell on Monday as investors weighed the uncertainty around a fiscal stimulus package in the U.S. Although the metal recovered slightly later in the week, it still saw a weekly decline – the first in three weeks.
- India, which polishes nearly 90 percent of the world’s rough diamonds, says exports will fall by as much as a quarter in 2020. The Gem & Jewellery Export Promotion Council says supply disruptions and lower demand from the coronavirus could push exports down as much as 25 percent and that the current slump is worse than that in 2008-2009.
- Reuters reports that at least 16 artisanal miners drowned in a flooded gold mining field in Mozambique. The miners drowned after heavy rain waters surged down a normally dry riverbed.
Opportunities
- B2Gold reported third-quarter figures and announced quarterly revenue hit a record high of $487 million. The company is on track to meet its yearly guidance of 1 million ounces. Equinox Gold announced the company has poured first gold from its Castle Mountain Gold Mine in California. Argonaut Gold said it is moving forward with the development of its Magino project in Ontario and expects construction to begin in January 2021.
- Should a “blue wave” sweep the U.S. election – where Democrats win the presidency and both chambers of Congress – it could be a boost for gold. Bloomberg’s Jake Lloyd-Smith says that a blue wave would likely lead to a massive stimulus package, which would hurt the dollar and could trigger a rally in bullion and stocks. Gold has been bouncing between its 50-day moving average and 100-day moving average for the past several weeks and the election results could be a catalyst for its next move.
- TD Securities commodity strategists say gold could move to a new record high after the new U.S. administration is established, reports Kitco News. Strategists wrote in a note on Wednesday: “Pre-election mayhem notwithstanding, it should be remembered that this instability is unlikely to prevail after a new administration is eventually established and the policies of the winners are implemented. With investors overweight cash, there is plenty of room to tilt portfolios toward commodities, other risk assets and gold.”
Threats
- Barrick Gold ended its battle with Papua New Guinea and will give the nation a “major share” of its Progera mine. In exchange, Barrick can re-open and continue operating the facility that had been suspended since April after the government failed to extend the mining lease. Barrick suffered another blow after agreeing to pay Tanzania $40 million to settle a tax dispute. The miner paid the first installment of $100 million in May. Lastly, Barrick reported an 11 percent drop in gold production in the third quarter from a year ago.
- The World Gold Council (WGC) found that 48 percent of potential buyers don’t trust the gold industry. Goldex CEO Sylvia Carrasco told Kitco News that this is a significant impediment when it comes to expanding gold’s customer base. The WGC introduced the Retail Gold Investment Principles (RGIP) to try and build trust.
- Rick Rule, president of Sprott U.S., says the days of “easy money” for junior miners may be over. In a Kitco News interview, Rule said “the space itself, I think it is substantially overbought.” 2020 says miners access capital with enormous ease, a trend that might “dampen” the sector. Rule added that “out of 1,500 junior listings worldwide, probably only 200 or 300 are viable.”
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