Top Stories This Week: Expert Calls for US$50 Silver, Paladin Offers C$1.14 Billion for Fission
Strength in the US dollar briefly pushed the gold price below US$2,300 per ounce midway through the week, but the yellow metal soon bounced back, finishing Friday (June 28) at the US$2,325 level.
The latest US Personal Consumption Expenditures (PCE) price index data came out that day, and it shows that in May core PCE was up 0.1 percent month-on-month and 2.6 percent year-on-year — in line with expectations.
PCE is the US Federal Reserve’s preferred measure of inflation, and can help shed light on its interest rate plans.
“The lack of surprise in today’s PCE number is a relief and will be welcomed by the Fed,” Seema Shah, chief global strategist at Principal Asset Management, told CNBC after the new numbers were released.
Even so, the Fed’s path forward isn’t yet clear. “A further deceleration in inflation, ideally coupled with additional evidence of labor market softening, will be necessary to pave the way for a first rate cut in September,” she added.
Currently CME Group’s (NASDAQ:CME) FedWatch tool shows about a 58 percent likelihood of a cut in September.
Silver continued to trade below US$30 per ounce this week, although some experts believe the white metal has much further to go. The Investing News Network recently heard from Chen Lin of Lin Asset Management, who explained that it could move quickly to US$50 once market participants realize how large the divide between supply and demand really is.
Here’s how he explained it:
“My point is once investors see the huge deficit, they see truly the huge deficit in silver, silver will go to US$50 just like that — just in a heartbeat. So I hope while you’re enjoying the summer you don’t miss one of the greatest runs of silver” — Chen Lin, Lin Asset Management
Bullet briefing — Victoria Gold shares drop, Paladin to buy Fission
Heap leach pad fails at Eagle gold mine
Shares of Victoria Gold (TSX:VGCX,OTC Pink:VITFF) fell over 80 percent this week after a heap leach pad failure and landslide at its Eagle gold mine in Canada’s Yukon. No injuries were reported at the site, but Trevor Ellis, mayor of the nearby Mayo community, described the situation as “catastrophic” in an interview with CBC.
The company has suspended operations at Eagle as it works to assess the situation, but questions are unsurprisingly being raised about the mine’s future, and about how the incident may impact Yukon’s mining sector.
Paladin Energy to acquire Fission Uranium
Australia’s Paladin Energy (ASX:PDN,OTCQX:PALAF) revealed plans to acquire Fission Uranium (TSX:FCU,OTCQX:FCUUF) in a deal valued at C$1.14 billion. Announced on Monday (June 24), the move will give Paladin ownership of Fission’s Patterson Lake South project in Saskatchewan’s Athabasca Basin, a well-known uranium hotspot.
Paladin’s main asset is its 75 percent owned Langer Heinrich uranium mine in Namibia, where it recently restarted production. The company also has a portfolio of exploration and development assets in Canada and Namibia.
The companies are aiming to complete the transaction in the September quarter, although it remains to be seen whether it will be voted through. Some analysts have suggested that shareholders may want to see a better offer.
Want more YouTube content? Check out our expert market commentary playlist, which features interviews with key figures in the resource space. If there’s someone you’d like to see us interview, please send an email to cmcleod@investingnews.com.
And don’t forget to follow us @INN_Resource for real-time updates!
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.