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Last night, when observing the unprecedented “gold run” on precious metals dealers which has left all gold vendors with little to no physical gold, we said that “the price of physical gold has decoupled from paper gold” as a result of paper gold liquidations as leveraged funds scramble to cover margin calls using safe assets resulting in an arbitrage that physical gold buyers, i.e., those who don’t have faith in gold ETFs such as the GDX or simply prefer to have possession of the metal, find especially delightful as it allows them to buy physical gold at lower prices than they would ordinarily have access to.

However, we also noted that whereas in the past such conditions were self-correcting, this time it is not only a record surge in demand for physical gold but also a near shut down in supply as the most productive gold refiners, those located in the southern Swiss town of Ticina, namely Valcambi, Pamp and Argor-Heraeus, now appear to be offline indefinitely….CLICK for complete article

Gold price plummets again – down $172 for the week

Gold is headed for its worst two-day drop in history as pandemic panic grips global financial markets.

Gold for delivery in April come close to crashing through the $1,500 level on the Comex market in New York on Friday, down $86 an ounce, or 5.4% from yesterday’s closing price of $1,590.30 an ounce. By the close on Friday, gold pared some of those losses, closing at $1,520.

Contracts representing 52 million ounces of gold had exchanged hands by the close after a week of heavy selling. Gold is down more than…click for full article.

Tesla Plans To Ditch Cobalt In New Batteries

Reuters recently reported on Tesla’s announcement that it is in advanced talks to use batteries from China’s Contemporary Amperex Technology Co Ltd (CATL) that contain no cobalt specifically for use in cars made at Tesla’s Shanghai plant.

The statement went on to say as a result of using CATL’s lithium-iron-phosphate (LFP) batteries, Tesla would be able to substantially lower the cost of those cars using the alternative battery technology, as cobalt is the most expensive component in traditional nickel-cobalt-aluminum (NCA) and nickel-manganese-cobalt (NMC) batteries.

The statement, however, did not say what the impact of the alternative batteries would be on…click for full article.

Copper Mountain cuts targets amid market rout, virus fears

Canada’s Copper Mountain Mining (TSX: CMMC) (ASX: C6C) became on Tuesday the latest company to adjust plans due to ongoing markets collapse and near-term copper price uncertainty as a result of the rapidly spreading coronavirus panic.

The Vancouver-based miner has revised its mine plan and schedule for its flagship asset, the Copper Mountain project in British Columbia, deferring a $22 million capital spend by…click for full article.

Is gold the answer to Monday’s market troubles?

Analysts double down on metal’s safety allure

(Kitco News) Analysts are doubling down on their comments that gold’s safe-haven appeal is the winning asset amid growing coronavirus fears, an oil-price crash and an equity market correction.

Goldman Sachs kicked things off last week when it said that gold “is immune to the virus.”

“While so much about the current environment remains unclear, there’s one thing that isn’t: gold, which—unlike…Click for full article.

Palladium Price on Fire

Palladium (Pd) prices are up 75% in the past 12 months. Do you play it, or has the train already left the station?

The Market

The automobile sector, specifically for use in catalytic convertors, annually consumes about 80% of the available palladium. And stricter global emissions regulations are increasing the usage on a per vehicle basis in big consumer markets like China and India. The increased demand has pushed the palladium market into a deficit since 2012, and 2020 looks to be another year of shortage.

If you want to participate, you can buy physical palladium or you can buy the ETF PALL. But one look at the PALL chart may cause you to remember the Great Fool Theory.

A better way may be to buy shares in a few companies that either mine or explore for the precious metal, as they offer more leverage to the gains in Pd pricing. Of course, they also carry additional risks.

David and Goliath…but Goliath needs David

The top 5 mining companies deliver 85% of the global platinum and palladium production and have, in aggregate, over US$100 billion in market capitalization:

  • Nornickel – US$55B market cap – (GMKN: MSE)
  • Anglo Platinum – US$25B market cap – (AMS: JSE)
  • Impala – US$9B market cap – (IMP:JSE)
  • Sibayne Stillwater – US$8B market cap – (SSW: JSE & SBGL: NYSE)
  • Northam – US$4B market cap – (NHM:JSE)

There is a major issue, and potential opportunity, with these companies. Around 80% of that global palladium mine production comes from countries with pretty significant political risk, i.e. South Africa 39% and Russia 40%.

Neal Froneman, CEO of Sibanye Goldone, one of South Africa’s biggest Pd miner said last month: “We don’t see growth opportunities here, so we have to think outside of South Africa”.

The South Africans have already made acquisitions in USA and Canada in the past few years in a bid to diversify away from South Africa. Sibanye Gold paid US$2.2B for Stillwater’s USA assets in May 2017 and in December 2019 Impala paid $750 million for North American Palladium’s Canadian assets.

Which means there may be an opportunity to look farther down the mining and exploration development and risk scale for potential value. Here is a list of Toronto Venture Exchange listed Platinum Group Metals (which includes Platinum and Palladium) explorers which have projects in the Americas.

  • Generation Mining (GENM: CSE & GENMF:OTCPK) – US$38M market cap
  • ValOre Metals (VO: TSX-V & KVLQF:Grey Market) – US$21M market cap
  • Group Ten Metals (PGE: TSX-V & PGEZF: OTCQB) – US$20M market cap

The key driver for these early stage players? Palladium miners are cash rich and looking to grow their production in safe countries.

Happy hunting!