Gold, volatility and a silver lining for metals 📝

Hey hey! Gold has been hovering at the $2,300/oz level for 3 months now as markets are in rollercoaster mode with rising volatility fueled by geopolitics. Goldman Sachs’ Christina Mannis pointed out during an interview how the bank is paying close attention to risk coming from unexpected sources, such as France.

In this environment, it’s always funny to remember, how gold remains such a small market. Compared with big tech and Apple, the usual leader, it remains tiny yet still props everything up when fear is widespread. Perspective should keep us humble, perhaps?

Copper prices remain strong but this is becoming clear: the EV theme has lost momentum with weaker-than-expected car sales globally. Perhaps the energy transition will take longer… and timeframes will become more realistic. We don’t see this as a bad thing as this is a herculean task from every angle. Probably too soon to tell for sure, though.

But just when you thought headwinds were coming in, here’s something else to consider: AI. I’ll get back to that in a second.

As lithium prices remain subdued, Serbia is now giving the green light for Rio Tinto’s mine. Europe keeps reversing decades of anti-mining sentiment. A slow move but a welcome one. The catalyst? Critical metals, of course.

Well well well, Serbia.

So you do want a lithium mine after all.

Let's see if you really MEAN it. pic.twitter.com/ZiVvO1ruug

— Paola Rojas 🐝 (@paola_rojas) June 18, 2024

Nevada Copper, a TSX-V listed, US-focused developer, filed for bankruptcy after technical difficulties and costs overruns. They seek a buyer, and took a $60m loan from Elliot Management, the main shareholder of Triple Flag, and Nevada shareholders (fun fact, it’s the hedge fund that seized a bloody naval vessel from Argentina due to missed bond payments). Transitioning to production is never a straight line and sometimes it kills even the best intentions.

And here’s the silver lining.

The insane growth in the use of artificial intelligence is causing a spike in semiconductors (Nvidia, what a wild ride) but that’s not all. AI systems need massive amounts of energy. A recent study proposed this scenario: if all searches on Google became chatbot interactions, the company would need as much power as Ireland to run their servers. While this can’t realistically happen, it does shed light into the situation.

In the end, all of this means, in our view, two things: on the one hand, we’ll likely see more nuclear energy generation globally, as fears subside and more countries embrace it after decades of fearful avoidance, and on the other hand, the king copper will remain crucial to help an expanding grid cope with demand.

The future is still electric,and we can’t build it without metals and minerals.

Meanwhile…

Here’s what you may have missed from us:

• On the podcast: we caught up with Dave Kelley of Chakana Copper to review the failed BHP-Anglo deal; and Lucho and I pondered whether $40k/t copper prices are on the horizon
• Morgan Stanley and their view of gold and copper
• What’s changing in Australian mining
• What juniors can do when investors remain inclined to stay in cash
• Unit guides and conversion cheat sheet you can use in due diligence (subscriber-only)

You can view expanded commentary on this topic in the video below.

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And that’s it for today.

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*corporates and sophisticated investors