Steep interest rate hikes are hard on commodities and the markets, but the move is necessary, said Liberty Gold CEO Cal Everett.
On Friday Everett recorded Kitco Roundtable with mining audiences manager Michael McCrae and Kitco correspondent Paul Harris.
The Federal Reserve's rate hikes have been hard on investors. In early September the Fed increased its benchmark rate by 75 basis points, and another 1.25 percentage points is in the cards before year end. This week gold hit a 2.5 year low. The S&P 500 has dropped nearly a quarter year to date.
"I think they're absolutely doing the right thing by raising rates. Yes, it's punitive, but I think they're doing the right thing," said Everett.
Everett said the problem with inflation is that it is hard to tamp down once it gets entrenched.
"Once a market is fixated on a margin, it will fight to keep those margins."
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Gold lifts off
20:54A less rosy jobs report helped gold end the week higher, noted mining audiences manager Michael McCrae. On Friday McCrae recorded Kitco Roundtable with correspondent Paul Harris and Aura Minerals CEO Rodrigo Barbosa. U.S. employment data from December showed a slight slowdown in hiring. The U.S. unemployment rate dropped to 3.5%, beating market consensus calls of 3.7% for December. As of noon Eastern time Friday, spot gold was trading at the $1,860 an ounce level, a range the metal hadn't seen in the last seven months. Barbosa's Aura Minerals is a mid-tier gold and copper production company focused on the development and operation of gold and base metal projects in the Americas.
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Battery metals sector closes the year with some large M&A deals
22:35The critical metal sector saw two big deals during the second last week of the year, noted Michael McCrae, mining audiences manager at Kitco On Friday McCrae recorded Kitco Roundtable with John Feneck, Portfolio Manager and Founder of Feneck Consulting. This week the world's largest miner, BHP, firmed up terms to acquire OZ Minerals. Deal has been upsized to $6.39 billion. For comparison, the Agnico-Pan American-Yamana deal was $4.8 billion. OZ Minerals has copper and nickel operations in Australia. Forbes reports that the acquisition could be BHP's biggest in over a decade. The deal follows the trend of big miners investing in the battery metal space: Sibanye-Stillwater buying ioneer and Keliber, Rio Tinto spending $2.4 billion on Serbian lithium project Jadar. Last year BHP Billiton lost the fight to acquire Noront Resources and its rich nickel project in Ontario. Keeping with the battery metal theme, Lithium Americas is set to acquire Arena Minerals for $227 million. CEO Jonathon Evans said the transaction will consolidate development projects in Argentina. Lithium Americas plans to cut itself in two in 2023 with one company focusing on Latin America and the other on North America with the goal of unlocking value. Roundtable also covered macro picture with Feneck predicting a hard landing due to the Federal Reserve's aggressive moves to fight inflation.
Never mind the bounce in metal prices, resource sector faces headwinds - Maple Gold Mines' Hornor
22:23After Agnico Eagle Mines and Pan American Silver announced that they would acquire Yamana Gold in November, the Quebec miner is not expected to slow its pace. On Friday Maple Gold Mines' Matthew Hornor made the remarks while recording Kitco Roundtable with mining audiences manager Michael McCrae and Kitco correspondent Paul Harris. Maple Gold Mines (TSX.V: MGM) is a Canadian advanced exploration company in a 50/50 joint venture with Agnico Eagle Mines to jointly advance the district-scale Douay and Joutel gold projects located in the Abitibi Greenstone Gold Belt of Quebec, Canada. With the $4.8 billion Yamana deal set to go through, Agnico Eagle Mines (AEM) is set to control all of Quebec-situated Canadian Malartic, Canada's largest gold mine. Hornor said Agnico is not going to slow. "They need to have projects in every stage of the pipeline, and we represent for them what could ultimately be a very large, important camp," said Hornor.
Copper crunch: two big production reports show why the metal is getting harder to come by
4:01Problems with the copper market were exemplified by two big production reports released this week, noted mining audiences manager Michael McCrae. On Friday McCrae recorded Kitco Roundtable. This week Goldman Sachs predicted prices could reach a record high of $11,000 a tonne within in a year. Copper is expected to be undersupplied in 2023 and "peak supply is now immovably fixed in mid-2024 ... generating deficits from that point." wrote the Goldman Sach analysts, according to reporting by Reuters. Two big miners announced downward revisions for copper the same week as the Goldman report. Glencore forecast copper production of 1.04 million tonnes in 2023, down from 1.06 million this year. And today Anglo American announced in its production report that copper in 2023 is now 840-930kt instead of 910-1,020kt. The company said that copper production in 2023 and 2024 is "...impacted by lower grades across all operations, as well as an increase in ore hardness at Los Bronces, impacting throughput."
Copper processing company gets backing from BMW
4:18German car maker BMW said on Thursday it had invested in Jetti Resources, which has the technology extract copper from low grade material. On Saturday mining audiences manager Michael McCrae recorded Kitco Roundtable. McCrae also covered gold's big run in November.
Pivoting from inflation fears to recession fears
10:17Worries about inflation appear to be supplanted by fears about a recession, noted mining audiences manager Michael McCrae. On Friday McCrae recorded Kitco Roundtable with correspondent Paul Harris. The Federal Reserve started raising interest rates in the summer to fight inflation. There are signs the medicine is taking hold. Consumer price inflation figure was lower than expected last month. Commodity prices have also been dropping, notably oil. Early this week oil hit its lowest level since January.With worries about inflation receding, McCrae noted that financial commentators are now switching their concern to recession due to the Fed's rapid interest rate hikes. Regrading mining news Harris discussed an investment by Jiangxi Copper, a Hong Kong-based investment company, into SolGold (LSE: SOLG; TSX: SOLG).
Junior gold miners are cautiously optimistic
20:41This month's jump in gold prices off the good inflation numbers along with woes in the crypto space provided a lift to junior gold miners, said mining audiences manager Michael McCrae. On Saturday McCrae recorded Kitco Roundtable with Exploration Insights' Joe Mazumdar and Soar Financial's Kai Hoffmann at Deutsche Goldmesse in Frankfurt. Podcast was sponsored by Snowline Gold.
M&A deal reshuffles the senior gold mining sector
16:16Yamana Gold is set to be acquired by Pan American Silver and Agnico Eagle Mines after Gold Fields dropped out of the bidding. Kitco correspondent Paul Harris, Soar Finanicial CEO Kai Hoffmann and guest Sam Ash, CEO of Bunker Hill Mining, discussed the week's mining and metal news on Kitco Roundtable. This week Yamana Gold said it preferred a deal offered by Pan American Silver and Agnico Eagle Mines over a Gold Fields deal, which was announced in the spring. The competing bid from Agnico Eagle-Pan American was announced last week.Gold Fields said it did not want to be drawn into a bidding war.
Big metal bounce, big M&A news
4:17The metals sector ended the week on a positive note with a big bounce for most metals and news that Yamana attracted a new suitor. On Saturday mining audiences manager Michael McCrae recorded Kitco Roundtable. Gold prices surged nearly $50 on Friday as the latest U.S. jobs report clarified some of the Federal Reserve's mixed messages, and China signaled a possible easing of its Covid-Zero policy, wrote Kitco reporter Anna Golubova.Gold has had a spectacular start to November after reporting the longest streak of monthly losses in more than five decades.In mining news Yamana, which agreed to a takeover by Gold Fields in the spring, received a new bid from Agnico Eagle Mines and Pan American Silver. Under the new offer Yamana would get $1 billion in cash and 153.5 million common shares of Pan American and approximately 36.1 million common shares of Agnico.The Yamana board said the bid from Agnico and Pan American is superior, and Yamana supports the new bid.