Gold price is good but risk profiles are increasing in the sector

The gold sector has been the source of strong news flow recently. The gold price has been much better with RJO Futures stating that there is more than a 70% chance of an interest rate cut in the USA, by July. Pundits are predicting that gold is finally about to convincingly break through the US$1,350/oz price, with US$1,400/oz being achievable by Christmas. We have been here a number of times previously but on each occasion the momentum has run out of steam. Maybe this time it will be different.

On the company front the biggest news has been the collapse of the share price in Dacian Gold and the appointment of an administrator to Gascoyne Resources. Commissioning risk has reared its ugly head again.

We are also seeing more corporate deals as our producers seek to grow by acquisition rather than discovery and development, exposing shareholders to transactional and corporate risks. History shows that it is often the shareholders in the target company that do best out of these deals. 

 WeeklyComm8June2019.pdf