Weekly Mining Commentary

Author: Sid Rajeev, Head Of Research

Five out of seven global equity indices we track retreated last week after the U.S. Fed moved up its timeline for rate hikes. The Fed is expecting two rate hikes next year.

Current Vs Pre COVID-19 (as of June 21, 2021)

Prices of mainstream metals pulled back as well. Copper was the biggest loser (down 7.5%), as it was also impacted by an increase in inventory levels on the LME. We are expecting additional corrections as China has started releasing inventories from its reserves to tame the rally in base metal prices.

Week-over-Week (June 21, 2021) and Year-over-Year (June 21, 2021)

Valuations of gold producers were down 10% WoW; base metal producers were down 8%.

Gold Producers

Source: S&P Capital IQ & FRC

Base Metal Producers

Source: S&P Capital IQ & FRC

Gold Producers and Base Metal Producers

Source: S&P Capital IQ & FRC

Most of the top 15 hardest hit nations continued to report flat or WoW declines in new COVID-19 cases. 66.5% of Canadians have received at lease one dose vs 64.7% at the same time last week. 19% of Canadians are fully vaccinated (previously 12%) vs 46% in the U.K. (44%), and 45% in the U.S. (43%).

Share of people who received at least one dose of COVID-19 vaccine, June 20, 2021

Source: Official data collated by Our World in Data

Share of people vaccinated against COVID-19, Jun 20, 2021

Source: Official data collated by Our World in Data

Since we are not expecting a supply deficit for any of the mainstream base metals, we are expecting downward pressure on prices. As for gold and silver, we believe inflation will drive prices higher this year. Inflation will be driven by the significantly higher money supply (see chart below), and stronger consumer and business spending as economies normalize amid the rollout of vaccines.

Annual rate of money supply growth versus inflation

In the following section, we review companies that announced key developments in the past week.

FRC Forecasts

Source: FRC

Weekly Mining Commentary

Author: Sid Rajeev, Head Of Research

Source: https://www.researchfrc.com/weekly-mining-commentary-72