Top Stories This Week: Gold’s Path After Tapering News, Talking Uranium with Sprott
The US Federal Reserve was in focus in the gold space this past week as investors waited for comments from its latest meeting, held from Tuesday (November 2) to Wednesday (November 3).
The Fed was anticipated to announce plans to ease its bond-buying program, and that is in fact what happened.
The central bank is now buying US$120 billion worth of bonds a month, but said that in the coming weeks it will start cutting that amount by US$15 billion a month. If it keeps up that pace, bond buying would end in June 2022.
Speaking directly after the news, Gareth Soloway of InTheMoneyStocks.com told me that this flexibility from the Fed is something the market loves because it indicates that it can still receive support if needed. He also shared his thoughts on the path forward, noting that once tapering is done the Fed can start to increase interest rates again.
“(The US Federal Reserve is) leaving the door open for adjustments to the taper. They can stop, they can restart, they can change the amount. And the market loves that. Anything where the Fed is flexible in case the markets dip — that’s the way the market views it” — Gareth Soloway, InTheMoneyStocks.com
Going over gold’s reaction to the Fed’s news, Gareth said it was down quite sharply before the statement, but then lifted higher once the central bank actually spoke. He remains very bullish on gold over the long term, and said that’s partially because the yellow metal is starting to wake up to inflation.
“I think again you should look for a move higher into year end, but I’m still looking at the charts for a breakout. The breakout, once that occurs, will catapult gold up sharply. Until then, I think you just trail neutral to higher” — Gareth Soloway, InTheMoneyStocks.com
With the Fed in mind, we asked our Twitter followers this week if they think the central bank will be able to stay on track with its tapering plan. By the time the poll closed, the vast majority of respondents had voted “no.”
Although gold has been in the spotlight this week, I also want to check in on uranium, which continues to attract investor interest. I had the chance to speak with John Ciampaglia of Sprott Asset Management, who shared his thoughts on the market, as well as the role of the Sprott Physical Uranium Trust (TSX:U.UN).
One of my key takeaways was about utilities companies. It’s notoriously difficult to get a handle on what these entities are doing, and right now discussions are centered on when they may start contracting. That still remains to be seen, but John explained that they’re definitely paying attention.
“Everyone is looking for this new contract cycle — when is it going to pick up, where are these deals going to get done in terms of term and price? Everyone’s looking for these signals in terms of where the longer-term price of uranium is going to drift to” — John Ciampaglia, Sprott Asset Management
At the moment, utilities are trying to understand the Sprott trust and how it’s changed the uranium market, as well as how the landscape has been impacted given the recent increase in prices.
“After summer holidays the pickup in calls we received from utilities definitely amplified. And I think a lot of them are trying to figure out how exactly how the uranium market has changed, and not just because of the Sprott trust — but I think even prior to that it was building” — John Ciampaglia of Sprott Asset Management
The interview covers quite a bit of ground, and if you’re interested in uranium you should definitely check out when we publish it in full next week .
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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.
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