News from the North
23rd June 2021
Hello, and welcome to the news from North America! We’ve so far been releasing Latin American news every Wednesday, but honestly there’s just too much going on in the rest of the world and we want to bring it all to you. So from now on the LATAM news will be monthly, and we’ll be cycling through other regions each month as well. So without further ado: News from the North!
It has been a wild ride for commodity markets in the last month, with moves at the end of last week driven at least partially by some flapping lips at the US Federal Reserve. The shake-up of commodity prices has affected everyone around the world, but much of the impetus can be found in the US, so we’ll look at what has been happening there in this North American newsletter. This is a good time to remind you that we here at Spotlight are not economic or investment advisors, so consider this interesting information rather than any kind of suggestion.
After months of surging commodity prices, things took a turn last week for several key metals, partially on the back of news that China was going to release reserves of copper, aluminium and zinc in a bid to curb factory gate prices. Nobody really knows how much metal China has squirreled away, but Citigroup estimates that it has two months’ supply of copper, or 2 million tons, according to this article. That meant that high copper prices were already under pressure, sitting at a two month low in response to that news, when, on Friday, St. Louis Federal Reserve President James Bullard got on the mic and said that he could see the Fed lifting interest rates by late 2022 in an effort to curb inflation, which would more or less end the monetary stimulus it has been applying in response to the massive downturn caused by the pandemic.
Commodity markets did not like that, and it capped off a week of falling prices with another blow. Suggestions of potential interest rate increases led immediately to an increase in the value of the greenback, which made commodities traded in US dollars much less appealing for holders of other currencies. Gold had its worst week in 15 months, dropping 6.0%, which looks spectacular on the plot below. The yellow metal is often seen as a wise hedge against inflation, and with the Fed announcing that it would not allow inflation to run amok, and could raise rates, non-interest-bearing gold suddenly seemed much less attractive.
But then, wouldn’t you know it, markets opened on Monday and gold shot back up, and it has been crawling slowly north this week so far, though not yet to its previous highs. It turns out that people saw the dip as a buying opportunity, and like many market-based self-fulfilling prophecies, that caused the price to rise again. This was helped along by Bullard’s colleague, New York Fed President John Williams, saying on Monday that he sees inflation as transitory and current Fed policy as appropriate, while Dallas Fed President Robert Kaplan said that he’s more focussed on reducing bond purchases (currently amounting to $120 billion per month) than interest rates for now. And the big gun, US Federal Reserve Chairman Jerome Powell, said earlier this month that speculation about raising interest rates was currently “highly premature.”
US monetary policy is crucial for commodity markets, due to the vast majority of commodities being traded in US dollars. There’s clearly a split in the Fed over interest rates and when they should move, or whether they should even be talking about them right now, and this has thrown some extra unpredictability into the market. But mini-crashes like this are part of the super-cycle for metals like copper, and if you believe the fundamentals are strong with the green energy revolution on the horizon, you’ll see this as a temporary setback. If you’re a commodity bear, you’ll see this as a correction the market needed. Either way, I’m in the market for a working crystal ball. Any leads appreciated.
Around the Traps
Two fabulous videos from Conquest Resouces (TSXV:CQR) this week! A fantastic and insightful interview available here by our very own Liam with Conquest’s President, CEO and Director Tom Obradovich, which I really suggest checking out if you’re interested in Canadian mining, junior mining, copper, gold, or good chats. And a beautiful piece focusing on Conquest’s Belfast project, which has just started drilling, which you can watch below.
News from Mountain Boy Minerals (TSXV:MTB) on their very cool multi-element Theia project, where they’ll be working to define drill targets by re-interpreting previous geophysics results and conducting ground work of the mapping and sampling variety.
Earlier this month, Goldplay (TSXV:AUC, FRA:9FY) announced that they had initial interpretations done for airbourne geophysics on their Scottie West project in British Columbia’s prolific Golden Triangle. This project is very interesting because it’s virgin exploration territory, only recently revealed by retreating glaciers. They’ll be ground-truthing those results in this year’s field season.
Granada Gold (TSXV:GGM) has struck a winner with their latest drilling results at the Granada Gold property in Quebec, with results of up to 12.61 g/t over 16.5 metres just announced here.
Loads happening for uranium explorer Baseload (TSXV:FIND, OTCQB:BSENF), with a packed news release on Monday. They have geophysics and ground results from their Catharsis project, permits granted for Hook, and a continuing dialogue with indigenous stakeholders at Shadow. As a bonus, they have some of the coolest project names in the business.
Renforth Resources (CSE:RFR, OTCQB:RFHRF, FSE:9RR) has announced updated drill results from their flagship Parbec gold deposit, including 0.35 m at a pretty remarkable 118.7 g/t. Have a look at the full results in their news release here.
That's all for this week, take care everyone!
- Jane Lockwood