Silver emerged as the top-performing precious metal this week, gaining 3.52%, largely driven by expectations of stronger demand. This surge comes as India nearly doubled its solar imports this year, according to Bloomberg. Meanwhile, gold prices climbed above $2,500 per ounce after Federal Reserve Chair Jerome Powell hinted at the possibility of interest-rate cuts. TD Securities’ Bart Melek, Global Head of Commodity Strategy, anticipates gold prices will continue their ascent, potentially surpassing $2,700 per ounce in the coming quarters.
In a historic moment for precious metals, a single gold bar is now worth over $1 million for the first time. This milestone was reached when gold’s spot price exceeded $2,500 per troy ounce, an all-time high. Given that gold bars typically weigh around 400 ounces, each bar’s value now exceeds $1 million, as reported by Bloomberg.
In other news, Lucara Diamond, as cited by BMO, announced the recovery of a massive 2,492-carat diamond from its Karowe mine in Botswana. While it is too early to determine the diamond’s value, the potential sale could significantly enhance Lucara’s financial flexibility, supporting its ongoing underground expansion project.
Weaknesses
Palladium, despite a slight increase of 0.52%, was the weakest performer among precious metals this week. Meanwhile, SSR Mining’s Anagold Madencilik disclosed a significant reduction in its workforce due to the long-term effects of the February 2024 landslide at their Copler gold mine, according to Bloomberg. The company terminated 187 out of 610 employees as a result.
Gold Fields experienced its steepest decline in 10 weeks after cutting its production guidance for the second time in three months. Operational challenges, including severe weather at its open-pit mine in Chile and ongoing difficulties at the South Deep Mine in South Africa, have hindered production. The company reported that all-in costs surged by nearly 50% to $2,060 per ounce in the first half of the year, according to Bloomberg.
Regis Resources announced that the Australian Federal Minister for Environment and Water has issued a declaration under the Aboriginal and Torres Strait Islander Heritage Protection Act 1984. This decision impacts a critical area of the McPhillamys Gold Project, rendering the project unviable, as reported by Canaccord.
Opportunities
BMO reported that the People’s Bank of China (PBOC) has issued new gold import quotas to several Chinese banks after a prolonged pause. The PBOC’s decision to resume issuing quotas, after months of low demand from the Chinese banking sector, could signal stronger anticipated buying interest following the typically quiet August period.
Allied Gold has signed a power purchase agreement with Ethiopian Electric Power, marking a significant de-risking milestone. The agreement, set to last for 20 years with power rates at 4 cents per kWh, is expected to support all-in sustaining costs of less than $950 per ounce, according to Stifel.
RBC highlighted the potential inclusion of G Mining Ventures, Abra Silver, and FireFly Metals in the VanEck Vectors Junior Gold Mines ETF (GDXJ) this quarter. Additionally, Northern Star might join the top of the GDXJ index, as it now falls within the junior investable universe.
Threats
According to BMO, Endeavour Silver has resumed processing at its Guanacevi mine following a mill failure last week. The mill is currently operating at 400 tons per day (tpd), with potential to increase to 500 tpd. However, the repair of the primary ball mill is expected to take 16 weeks and cost approximately $0.5 million. As a result, Endeavour has lowered its production guidance by 1 million ounces of silver and suspended cost guidance, which might present a buying opportunity as expectations reset.
The number of new gold deposit discoveries has sharply declined over the past few decades. During the 1990s, there were an average of 18 discoveries annually, but this number dropped to 12 in the 2000s and further decreased to just four in the 2010s. From 2020 to 2023, only five major discoveries have been made, despite increased exploration spending, according to Bank of America.
Chinese consumers reduced their gold purchases last month, with record prices and a prolonged economic slowdown dampening demand in the world’s largest bullion-buying nation. Gold imports in July dropped 24% to 44.6 tons, the lowest level in more than two years, according to customs data released on Tuesday.
