Barrick-Randgold Sets Bar for Future Gold Mergers

By Joe Foster via

Gold Consolidated, Gold Stocks Declined, But Positive Trends Emerge

The gold market spent the month consolidating around the $1,200 per ounce level. There wasn’t much news to move the metal, and the markets didn’t react to the widely expected September U.S. Federal Reserve rate increase. As a result, gold and gold stocks saw little change. In September, gold declined $8.90 (0.7%) to $1,192.50 per ounce, the NYSE Arca Gold Miners Index (GDMNTR)1 fell 0.3%, and the MVIS Global Junior Gold Miners Index (MVGDXJTR)2 fell 1.3%. As gold consolidates near its lows for the year, whether the next trend will be lower or higher is not yet clear. However, extremely light (short) positioning on Comex (the primary futures and options market for trading metals), seasonal buying, and possible geopolitical catalysts from Italy and the U.S. midterm elections suggest that the trend could be higher.

Recent Industry Conferences Provide Insight on Producers and Junior Developers

We attended both the Precious Metals Summit and Denver Gold Forum recently. Combined, these are the most significant gatherings of institutional investors and gold companies in the world. As usual, we found some interesting discoveries and developments to follow up on with the smaller companies that attended the Precious Metals Summit. This is a difficult environment in which to raise capital for the junior developers. Fortunately, there was a heavy presence of corporate development teams from gold producers globally at the event. Corporates have been a key source of junior funding in this cycle, and we expect this trend to continue.

The producers we saw at the Denver Gold Forum showed their companies to have solid foundations. Most spoke of opportunities to maintain production, and a few talked about growth. Except for a minor impact from oil prices, costs are being contained.

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