Interview Synopsis

Gold & silver market – Q3 2020 update – climbing prices & investor sentiment

  • Multi Asset
  • Materials
  • Europe

Economic and political uncertainty spurred by COVID-19 has boosted the price of gold by about 15% since June. Third Bridge Forum interviewed a former C-level executive at Newmont Corp for a Q3 2020 update on the gold and silver market.

COVID-19’s impact on gold prices, exploration and production

A range of issues were explored, such as supply-demand dynamics, pricing trends and forecasts, and how mining companies must respond to intensifying ESG-related concerns. 

The Interview started with an overview of why gold prices have rallied in recent months, and how these forces differ from those that influence other metal markets. After discussing the gold-silver ratio, the focus shifted to how gold producers’ CAPEX allocations could change as the precious metal surpassed USD 2,000 per ounce. Mining companies have become more disciplined after a heavy focus on top-line growth led to value destruction and excessive debt, notably in 2007-12, according to the Interview. “A focus on capital spending would [now] be a good thing,” the expert said. He expressed concern over the potential for further M&A in the industry, unless a particularly compelling fit is identified. 

The role of junior gold-mining companies, including whether they are primed for M&A activity, was also discussed. These players have benefited from recent high prices, the specialist said, but they would be more expensive to acquire.

In other observations, the Interview emphasised the importance of ESG issues being taken into account. “That will continue to be a focus for investors, as you see more and more funds that are ESG-focused funds,” the specialist said. “How can mining companies demonstrate and get a good ESG score, for example, on various indices? It is a priority and it will continue to be a priority for these companies.” 

Other areas covered in the Interview included what investors should monitor as earnings come out in H2 2020-21, whether the price of gold is a reliable barometer of economic health, and the likelihood of Barrick Gold making a bid for Freeport-McMoRan.

To access all the human insights in Third Bridge Forum’s Gold & silver market – Q3 2020 update – climbing prices & investor sentiment Interview, click here to view the full transcript. 

The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.

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