Weekly Mining Commentary

Global equity markets were up 0.6% last week.

Source: FRC / Various

Gold and silver prices gained 2.3% WoW as inflation surged to record highs in October. Manufacturing activities declined last month, implying that the U.S. Fed is unlikely to raise rates any time soon.

Source: Trading Economics

Last week, Newcrest Mining (ASX: NCM) announced its plans to acquire Pretium Resources (TSXV: PVG) for $3.5B. As we have a positive outlook on both gold and silver prices, we expect M&A activities to ramp up. Check out our list of top picks, as we believe juniors with attractive projects in stable jurisdictions will be prime targets.

Prices of base metals were up 1.2% WoW. Inventory levels remain volatile both on the LME and the SHFE (Shanghai). As mentioned in our previous reports, we believe that supply chain disruptions and inflation will support base metal prices in the near-term.


Source: FRC/Various

Source: FRC/SHFE

Valuations of gold producers were up 8% WoW; base metal producers were up 1%.

Source: S&P Capital IQ & FRC

Source: S&P Capital IQ & FRC

Source: S&P Capital IQ & FRC

Vaccination rates remain slow in developed economies. Last week, three (previously four) out of the 15 hardest hit nations experienced higher daily new COVID-19 cases. Two countries (previously three) experienced WoW increases in deaths. Globally, 52.11% have received at least one dose, up 1.1 ppt WoW vs 1.5 ppt at the same time last week. 75.31% of Canadians are fully vaccinated (0.5 ppt vs 0.5 ppt) vs 67.46% in the U.K. (0.3 ppt vs 0.2 ppt), and 57.58% in the U.S. (0.4 ppt vs 0.01 ppt).

Source: Our World in Data

Source: Our World in Data / FRC

We are raising our forecast for gold prices, from US$1,800 to US$1,825/oz, in H2-2021. This implies an average price of US$1,875/oz in Q4 (previously US$1,825). We have not made any changes to our other forecasts.

Source: FRC

 

Source: https://www.researchfrc.com/weekly-mining-commentary-92