Gold primed to soar in 2016, and here’s why
The light at the end of the tunnel continues to stay lit for gold. Prices for the precious metal posted the biggest one-day gain in more than 14 months on Monday, rising 3.5 percent--and briefly above $1,200 an ounce--to close at $1,197.90. As global financial markets continue to tumble the trend for gold could easily skyrocket in 2016.
“A strong risk-off sentiment is feeding into the gold market,” said James Steel, chief precious-metal analyst at HSBC Securities (USA) Inc.
According to The Wall Street Journal, "a fall in the dollar against other major currencies, sharp losses in equity markets across the board and a continuous slide in oil prices have contributed to investor jitters about the unsteady economic conditions and weakening corporate earnings, pushing investors to plow money into gold."
George Gero, a precious-metal strategist at RBC Capital Markets, said “it’s the fear of the unknowns” that is driving the demand for gold.
"The drive for gold today is purely tied to the risk type of trade," said Eli Tesfaye, senior market strategist for brokerage RJO Futures in Chicago. "People have to move their equities out of there, have to put (money) into safer assets."
The yellow metal, which has logged losses for three consecutive years, also has investors feeling bullish. Sushil Kedia, President of the Association of Technical Market Analysts (ATMA), believes gold prices will eventually double past $2,000 an ounce.
Other precious metals such as platinum, silver and palladium were also up. Prices for platinum rose 2.2 percent to $926.98, silver jumped 2.8 percent to $15.39 an ounce, and palladium reached $515.20 an ounce, up 2.9 percent.
Vale invests $150mn to extend life of Manitoba operations
Vale has announced a $150mn CAD investment to extend current mining activities in Thompson, Manitoba by 10 years while aggressive exploration drilling of known orebodies holds the promise of mining well past 2040.
Global energy transition is boosting the market for nickel
The Thompson Mine Expansion is a two-phase project. The announcement represents Phase 1 and includes critical infrastructure such as new ventilation raises and fans, increased backfill capacity and additional power distribution. The changes are forecast to improve current production by 30%.
“This is the largest single investment we have made in our Thompson operations in the past two decades,” said Mark Travers, Executive Vice-President for Base Metals with Vale. “It is significant news for our employees, for the Thompson community and for the Province of Manitoba.
“The global movement to electric vehicles, renewable energies and carbon reduction has shone a welcome spotlight on nickel – positioning the metal we mine as a key contributor to a greener future and boosting world demand. We are proud that Thompson can be part of that future and part of the low carbon solution.”
Vale continues drilling program at Manitoba
Coupled with today’s announcement, Vale is continuing an extensive drilling program to further define known orebodies and search for new mineralization.
“This $150mn investment is just one part of our ambitious Thompson turnaround story. It is an indicator of our confidence in a long future for the Thompson operations,” added Dino Otranto, Chief Operating Officer for Vale’s North Atlantic Base Metals operations.
“Active collaboration between our design team, technical services, USW Local 6166, and our entire Thompson workforce has delivered a safe, efficient and fit-for-purpose plan that will enable us to extract the Thompson nickel resources for many years to come.”
The Thompson orebody was first discovered in 1956 by Vale (then known as Inco) following the adoption of new exploration technology and the largest exploration program to-date in the company’s history. Mining of the Thompson orebody began in 1961.
“We see the lighting of a path forward to a sustainable and prosperous future for Vale Base Metals in Manitoba,” said Gary Annett, General Manager of Vale’s Manitoba Operations.