Gold Digger: US$3,000/oz gold price could be on the cards for 2023, mining boss says
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Our Gold Digger column wraps all the news driving ASX stocks with exposure to precious metals.
Is a wave of merger and acquisition activity coming in the ASX gold space?
The gold sector is about to receive a big boost from a surging price, if Evolution (ASX:EVN) boss Jake Klein’s prediction of between US$2,000-US$3,000/oz by mid-2023 is correct.
“If Klein’s view is shared by others in the industry, standby for a wave of merger and acquisition activity where the bigger companies move on the developers and explorers with 1m-plus ounce gold resources with upside,” Fitzgerald says.
“The developers and developers are looking vulnerable to low-ball bids as they have to enjoy much of a recovery from their smashed levels from the March gold price fall, notwithstanding the gold price rally since.”
Three to seven grams of platinum group metals (PGMs) — mostly platinum, palladium and rhodium – go in every catalytic converter, which sit in your car exhaust to reduce polluting emissions.
Catalytic convertors account for as much as 80% of annual platinum and palladium production, respectively.
Metals Focus has now revised global light vehicle production numbers upwards for the first time this year as semiconductors become more readily available and China’s domestic production rebounds.
China has also slashed purchase tax for new cars by 50%, which Metals Focus says “not only benefits new energy vehicle sales, but also sales of hybrids and internal combustion engine (ICE) vehicles”.
This bounce back in Chinese automotive sales and production translated into improved regional demand for PGMs, Metals Focus says.
“In June, combined net palladium imports into China and Hong Kong surpassed 100koz, more than double the monthly average taken in during January to May far this year,” it says.
“Platinum, too, managed to outpace its elevated levels of demand with almost 1.4Moz imported so far this year.
Together, this has lent support to both metals’ prices, Metals Focus says.
“On 22nd July, when the trade data for June was published, the palladium price jumped US$150, its fifth best day so far this year,” it says.
“The price then posted further gains, climbing almost another US$150 in the last week of July to temporarily eclipse US$2,200.
“Similarly, platinum regained the US$900 handle for the first time since the start of the month.”
A pretty good week for the gold price, which continues to rally as geopolitical tensions escalate and central bankers worldwide brace for recessions.
“Gold is rallying as Wall Street becomes fixated with a global economic slowdown that will get much worse by year end,” says Ed Moya, senior market analyst at OANDA.
The price was on the cusp of US$1,800/oz early Friday, NY time.
“Gold’s technical picture suggests it will continue grinding towards the $1900.00 region in the coming weeks,” says analyst Jeffrey Halley in his last note for OANDA (we’ll miss you Jeff).
“The first test of that will come in the form of the US Non-Farm Payrolls this evening. A soft US payroll number will likely support gold’s upward momentum, as it is likely to result in another bout of US Dollar weakness as yields fall.”
Here’s how ASX-listed precious metals stocks are performing:
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Creasy-backed Peregrine Gold (ASX:PGD) flew out of the blocks Friday on news of ‘spectacular’ gold mineralisation found in shallow drill core at its Peninsula prospect, 30km west of the town of Newman in WA.
And speccy it was:
In fact, there’s gold all over the joint, they say, just sitting at surface:
“’It is very rare for a greenfield exploration program in WA to encounter mineralisation of this nature sitting undisturbed at surface,” PGD technical director George Merhi says.
“In addition to being a very impressive demonstration of the high-grade potential of this system it also highlights just how underexplored the area is.
“Peninsula and the other Newman prospects due to be drilled have been uncovered as a result of systematic exploration over a small portion of our overall project area.
“In 2022 we have expanded this effort and look forward to updating the market on potentially new discoveries in this exciting district.”