Categories: Precious Metals
Topics: General Precious Metals

Junior Mining Weekly Recap: Buying Season Begins

Gold prices hit a two-month low last week, and have been down for eight straight sessions.

Speculation that interest rate hikes may be closer than most analysts expected have led gold down nearly 6% for the month of May.

The dollar index has pushed higher and is up approximately 2.4% in May.

I expect dollar strength and lower gold prices to continue throughout the summer months and will be looking to add to the Resource Stock Digest Premium portfolio.

Reuters reported that in India, the world's second-largest consumer, gold prices fell over 5% in the past three weeks. Dealers were offering a discount of up to $19 an ounce to the global spot benchmark this week, the highest since April 16. Discounts in India were at $17 the week before.

We also need to keep all of this in perspective. Despite the recent drop, gold is still up approximately 15% this year.

Further downside? Yes, in the short- to mid-term.

Incredible shopping opportunities? Absolutely, and I’m starting to nibble at companies that I think will do well, regardless of the price direction of gold in the next few quarters.

It’s an exciting time to begin deploying capital. The buying is disciplined, as those of you who have already received the first issue of Resource Stock Digest Premium have seen, but the time is right and the price action that is setting up is exactly what I’ve been expecting and hoping for.

Elsewhere, silver reached a six-week low of $16.12, and platinum had its weakest price action in over a month, dropping to $979.

Bucking the trend is oil, which pushed through the $50 level for the first time since October and is up approximately 90% from a 13-year low in February. We’ll see if that’s sustainable.

Copper had some solid price action, reaching a two-week high of $4,712 per metric ton on the London Mercantile Exchange. It’s flirted with dropping below the $2.00/lb. level but held at $2.13/lb. to close the week.

I continue to believe that global growth is not supportive of higher prices yet, and that dollar strength over the summer will put downward pressure on copper. We may see some shopping opportunities in the second half of the year.

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