Guanajuato Silver Company Ltd GSVRF

What’s Going On?

[ErinBrockovich]

Money is moving towards gold. 

 

• Precious Metals M&A Heats Up: A heightened level of M&A in the precious metals sector is starting to take shape. Last week, rumors swirled that Canada’s Agnico Eagle submitted an AUD $3.2 billion proposal to acquire Australia’s De Grey Mining. Just two weeks ago, AngloGold Ashanti agreed to buy Egypt-focused Centamin in a USD $2.5 billion stock and cash deal. With gold prices still at record highs, will we see more consolidation? The World Gold Council chart below shows monthly global gold ETF holdings.¹

• Commodities Sentiment Shifting: Is the sentiment towards commodities changing? Three recent drivers suggest a shift, and overall, these moves are seen as bullish for commodities and their related equities:

  • The U.S. Federal Reserve and other central banks are cutting rates.

  • China’s policymakers rolled out stimulus measures, including RMB 1 trillion in liquidity from the PBOC. Off the back of this, iron ore futures jumped 8% today to ~USD $110/t, after rising 11% last week.

  • OPEC+ is gearing up to boost oil production, with Saudi Arabia seemingly ready to abandon its USD $100/barrel target.

     

• Global Short Squeeze in Play: The Big Global Short Squeeze is happening, driven by positive stock momentum. It began with strong corporate earnings, followed by U.S. interest rate cuts and China's stimulus push. Don't forget that there's still USD $6 trillion parked in money markets, and it is shrinking as interest rates fall. If you're not buying the dips now, you could miss out on the market dynamics in play.

   

• The 4th Quarter Rally: Tomorrow kicks off the 4th quarter, and fun fact—it's typically the best-performing quarter of the year. On average, the S&P 500 gains 3.7% in Q4. And what's even more interesting is that in election years, when the market hits new highs in September (as it did this year), the S&P 500 averages an even bigger boost of 6%. It's time to get bullish!

   

• China Stimulus Boosts Metals: Beijing's stimulus measures have finally stirred the metals market from a four-month slump. The PBOC's recent monetary moves were bold, but specifics on significant deficit spending remain vague. Nevertheless, pre-holiday markets in China were flooded with buy orders, briefly crashing the system. Copper broke through USD $10,000/t, and critical minerals had their best week in over two years. But how long will this rally last?

   

• Challenges for the Circular Economy: The mantra of the circular economy is soothing, but recycling is struggling to keep pace in metals. Established supply loops for steel, copper, and aluminum are shrinking, and copper scrap generation is expected to continue declining as a share of stock-in-use for the rest of the decade. Despite ambitious global policies, lithium recycling faces three major obstacles: limited feedstock, technological challenges, and low profitability due to falling commodity prices. The markets have yet to figure out how to make the circular economy truly work.