The gold price continued to spend time above the US$2,000 per ounce mark this week, while silver made it past US$26 per ounce. The metals appear to be getting more comfortable at these elevated levels as economic uncertainty continues.
In focus this week was the latest US inflation data. It shows the consumer price index (CPI) rose 0.1 percent month-on-month in March, and 5 percent year-on-year. Meanwhile, core CPI, which excludes food and energy and is closely watched by the US Federal Reserve, increased 0.4 percent from February to March and 5.6 percent from last year.
US producer price index (PPI) numbers also came out this week. In an unexpected development, PPI sank by 0.5 percent month-on-month in March and increased 2.7 percent year-on-year. The year-on-year number was the smallest rise since January 2021.
The Fed has been raising rates for over a year now in a bid to tame inflation, and this week’s CPI and PPI readings have sparked questions about what the central bank’s next move may be. Although inflation looks cooler, many market participants still anticipate another hike when the Fed meets in May. The minutes for the Fed’s March meeting, which also came out this week, also support expectations for another hike — even though officials now anticipate a recession later this year.
What does all of this mean for gold? I had a great conversation with well-known resource sector speculator Doug Casey, and he said he sees the yellow metal potentially reaching US$3,000 in the next year or so. Here’s how he explained it:
“Right now, relative to everything else in the world … gold is reasonably priced, I’d say. But my guess is that as the world descends into chaos — and I think that’s true, we are going to see chaos later this year and throughout this decade — there’s going to be a panic into gold, because it’s the only financial asset that’s not simultaneously someone else’s liability” — Doug Casey, InternationalMan.com
Doug is bullish on gold, but he was also very open about where else he’s putting his money. Check out the full interview here.
Teck shuts down Glencore offer again
As we wrap up, let’s take a brief look at diversified miner Glencore’s (LSE:GLEN,OTC Pink:GLCNF) hostile takeover bid for Canada’s Teck Resources (TSX:TECK.A,TSX:TECK.B,NYSE:TECK). News first hit on April 3 that Glencore had made an unsolicited proposal to acquire Teck and create two standalone businesses, one focused on base metals, as well as critical minerals needed for the energy transition, and the other centered on coal and carbon steel materials.
Teck’s board was quick to reject the move from Glencore, saying it is not looking to sell the company at this time. Instead, Teck is committed to moving forward with its own plan to split into a metals company and a steelmaking coal business.
“The Board is not contemplating a sale of the company at this time. We believe that our planned separation creates a greater spectrum of opportunities to maximize value for Teck shareholders” — Sheila Murray, Teck Resources
The plot thickened on Tuesday (April 11), when Glencore sent Teck a revised proposal. The original deal amounted to US$22.5 billion, and the new plan would add up to US$8.2 billion in cash. According to Glencore, this element was introduced to “effectively buy Teck shareholders out of their coal exposure.”
Again Teck’s board quickly rejected the offer, saying on Thursday (April 13) that it is “unrealistic” and has “fundamental flaws.” Teck also made changes to its own separation plan, on which shareholders will vote on April 26.
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 email@example.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.