Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2: Gold has found itself on a roller coaster ride, hitting
Speaker 2: record highs followed by large drops.
Speaker 1: It's been voltaile, it's been bumpy, and I think the
Speaker 1: Year of the Horse, you're going to need a very
Speaker 1: comfortable settle because it's gonna be very bumpy.
Speaker 2: With investors uncertain about where the price might go next.
Speaker 2: Could investments in Africa be at risk?
Speaker 3: So in the case of gold, I don't see any
Speaker 3: of these trends reversing themselves anytime soon. I think one
Speaker 3: of the things that really has changed is just the
Speaker 3: world is waking up to this awareness of how critical
Speaker 3: all of these commodities and minerals and metals are to
Speaker 3: everyday life.
Speaker 2: On this week's Next Africa Podcast, we'll ask what exactly
Speaker 2: is happening to the price of gold and whether historically
Speaker 2: high prices will be enough to keep confidence in African
Speaker 2: gold mines. I'm Jennifer's Abasajup and this is the Next
Speaker 2: Africa Podcast, bringing you one story each week from the
Speaker 2: continent driving the future of global growth with the context
Speaker 2: only Bloomberg can provide. And joining me to discuss this
Speaker 2: today is Bloomberg Medals and Mining reporter Jack Ryan, and
Speaker 2: also Bloomberg Intelligence Metals and Mining analyst Emmanuel Munjeri. Thank
Speaker 2: you both so much for being here. It's been quite
Speaker 2: a few weeks and months for the precious metal.
Speaker 1: Jack.
Speaker 2: Maybe let's just start with you, because you've been watching
Speaker 2: closely what's happened to gold over the past few weeks.
Speaker 2: We've talked a lot on this podcast about the rising
Speaker 2: of the prices over the past few weeks, but now
Speaker 2: the narrative has changed quite a bit. Can you just
Speaker 2: walk us through from where you sit what you've noticed.
Speaker 1: I guess you could go back to twenty twenty two
Speaker 1: twenty twenty three, when central bank buying really picked off
Speaker 1: in earnest and that was kind of under the radar.
Speaker 1: It led to this kind of long, slow build up
Speaker 1: and gold prices where we didn't really see significant pullbacks
Speaker 1: going through twenty twenty four twenty twenty three. Then coming
Speaker 1: into last year, there was more speculators came into the
Speaker 1: market towards the latter half of the year, retail investors,
Speaker 1: other types of institutional investors. You could see ETFs, which
Speaker 1: had been shedding gold over the previous couple of years.
Speaker 1: That now started taking inflows of gold. Speculators and futures
Speaker 1: markets were getting involved as well, and that just really
Speaker 1: accelerated through the year, and then through the early weeks
Speaker 1: of January, all of this background noise you had going
Speaker 1: on crazy headlines about Greenland, about Jerome Powell, Venezuela, Iran.
Speaker 3: But right now we are going to do something on Greenland,
Speaker 3: whether they like it or not.
Speaker 4: The US, as you said, has carried out a series
Speaker 4: of air strikes in Venezuela, capturing President Nicholas Medoro and
Speaker 4: his wife. It's an existential moment for the Iranian regime.
Speaker 1: It was just kind of a cacophony in the background,
Speaker 1: which I mean, all of that tends to be good
Speaker 1: for gold, and all of that was good for gold,
Speaker 1: kept setting all time, pies kept smashing through records, but
Speaker 1: that level of speculative interest it does inevitably mean that
Speaker 1: you get serious pullbacks. And last Friday was, you know,
Speaker 1: maybe the most serious pullback we've seen for a long
Speaker 1: time for gold. At least it was its biggest daily
Speaker 1: drop in more than a decade, so I suppose that's
Speaker 1: not surprising. And now we seem to have got past
Speaker 1: that correction. And we're trying to figure out what might
Speaker 1: be next for gold.
Speaker 2: I wonder Jack, do you think the safe haven status
Speaker 2: for gold is still at play in this current environment especially?
Speaker 2: I mean, you mentioned a lot of the headlines that
Speaker 2: we got earlier in the year that was, you know,
Speaker 2: fueling the the rise in prices. Is it still a
Speaker 2: safe haven hedge or are there other factors maybe at
Speaker 2: play in this current environment.
Speaker 1: I guess to an extent, you can see it serves
Speaker 1: as a safe haven, you know, maybe in a tactical
Speaker 1: short term sense, and that you can see that it
Speaker 1: does often rise in the short term in response to
Speaker 1: negative headlines or geopolitical tension. I think one problem for
Speaker 1: gold is that the level of volatility that it's had,
Speaker 1: and it's even more so for other precious metals like silver,
Speaker 1: But for gold, the volatility, I think in itself can
Speaker 1: make it less appealing to some of the really curvative investors,
Speaker 1: who are the ones you really actually have to win
Speaker 1: over if you want sustained price increases. You know, big
Speaker 1: asset managers, pension funds, insurance funds, central banks, obviously, hedge
Speaker 1: funds you know, like volatility, and they can play around
Speaker 1: when prices jump up and down and try to profit
Speaker 1: from that, but they don't really sustain the prices in
Speaker 1: the long run. It's the larger investors, the more conservative ones,
Speaker 1: who do that, and I think that is maybe something
Speaker 1: that will become more difficult for gold to sell itself
Speaker 1: on that basis. I think because of what's happened over
Speaker 1: the last couple of weeks and over the last couple
Speaker 1: of months generally.
Speaker 2: Yeah, and that's been a continuing discussion, Emmanuel. I want
Speaker 2: to bring you in here because you've been looking at
Speaker 2: the impact of the rising gold price across the continent.
Speaker 2: What kind of investment boost has there been? Have we
Speaker 2: seen any material impact on the upswinging prices over the
Speaker 2: past few weeks and months for the continent's producers.
Speaker 4: I think it's been. I think it's been quite massive
Speaker 4: to say that in terms of the basement boost. And
Speaker 4: you know, if we look at it firstly from the
Speaker 4: macro perspective and just a general economic perspective, high prices
Speaker 4: translate into stronger export earnings and government revenues. So this
Speaker 4: has been called to the government fiscal balances from the
Speaker 4: big picture and strengthens these economies, particularly in West Africa
Speaker 4: and Southern Africa where we see a lot of the
Speaker 4: gold mines being located. Also in the past couple of weeks,
Speaker 4: one of the other things to mention that we've recently
Speaker 4: seen sigeand Gold and nilespred for Allied Gold, which has
Speaker 4: a couple of producing acids in Africa and near term
Speaker 4: development projects and these are located in places like Mali,
Speaker 4: Ivory Coast An Ethiopia. So essentially what this has done
Speaker 4: is enhanced Africa's profile in terms of its attractiveness as
Speaker 4: a global player in the gold sector because Africa has
Speaker 4: always carried what we call a risk premium in terms
Speaker 4: of investors. But now what this is allowed is diversifies
Speaker 4: the investor base beyond the traditional Western majors and it
Speaker 4: can be a catalyst for more call it more captial
Speaker 4: and flows into the African mining sector. Thirdly, another point
Speaker 4: just to mention is what we've seen at higher gold
Speaker 4: prices a lot more projects become more economically viable and
Speaker 4: this can be brownfield expansions, this can be greenfield projects
Speaker 4: and the approvals of these projects now look more likely
Speaker 4: at high prices. This trend started happening towards the back
Speaker 4: end of last year, and we're sort of expecting to
Speaker 4: see a similar thing happen over the next couple of weeks.
Speaker 4: As a lot of the miners head into earning seasons,
Speaker 4: they provide these updates towards their reserves and resource statements
Speaker 4: and the life of mind plans going forward. So these
Speaker 4: are all some of the key factors towards, you know,
Speaker 4: some of the boost towards that investment boost we've seen.
Speaker 4: And you know, we've got to realize that a lot
Speaker 4: of these miners are going to be setting on large
Speaker 4: cash paths of cash. So the investor pressure that they're
Speaker 4: going to face in terms of okay, what are you
Speaker 4: doing with this cash is going to start to rise.
Speaker 4: And it's a big thing. Usually is some of this
Speaker 4: has to get returned back to shaholders, but a lot
Speaker 4: of this gets put back into future projects. So from
Speaker 4: our perspective, we're definitely expecting to see a lot more
Speaker 4: investment into future projects, a lot more inflows and M
Speaker 4: M and A.
Speaker 2: Well, and just on that, Emmanuel, I mean, it sounds like,
Speaker 2: you know, the Bloomberg intelligence team is bullish on more
Speaker 2: M and A and projects. But just to Jack's point
Speaker 2: that we are seeing more volatility. Does that affect your
Speaker 2: sentiment towards you know, the projects that we potentially see
Speaker 2: coming out of the continent.
Speaker 4: It's a good question. Mining is a long term sector
Speaker 4: and what we sort of look at and what I
Speaker 4: think the miners in terms of their investment decisions or
Speaker 4: capital allocation decisions, or are the investors look at it.
Speaker 4: They're looking for not necessarily avoiding the day to day volatility,
Speaker 4: but looking more into what's the long term outlook on
Speaker 4: the prices. These are decisions, and these investment decisions are
Speaker 4: made today, but these projects are five years down the line,
Speaker 4: ten years down the line in terms of when they
Speaker 4: might come into production. Some of them were near term,
Speaker 4: but some can be more longer term. So you've got
Speaker 4: to look at what the long term outlok is and
Speaker 4: our view we are still quite positive when not look
Speaker 4: for gold and consensus, as you can see on the
Speaker 4: streets also carries a similar view. So we are trying
Speaker 4: to avoid a lot of the day to day noise
Speaker 4: when you look at it in terms of the miners,
Speaker 4: and I think they are probably doing the same and
Speaker 4: I think you know a lot of them are sitting
Speaker 4: in quite a good position, like I mentioned earlier, in
Speaker 4: terms of sitting on a good, good, steady pile of cash,
Speaker 4: which is not usually the case for four miners, and
Speaker 4: they're going to allocate a bit of this capital into
Speaker 4: future projects. I'm sure we're going to see a lot
Speaker 4: of that going forward.
Speaker 2: Now, Yeah, that's a good place to be in not
Speaker 2: paying attention to the near term noise. Emmanuel, Jack, stick
Speaker 2: with us. When we come back, we'll talk more about
Speaker 2: precious metal prices and where things might now be headed.
Speaker 2: We'll be right back. Welcome back.
Speaker 1: Today.
Speaker 2: We're talking about the roller coaster across the gold markets.
Speaker 2: Jack Ryan and Emanuel mcjerry are still with me. So Jack,
Speaker 2: it's not just been gold where we've seen big movements.
Speaker 2: You're taking a look at some of the other metals
Speaker 2: where we've seen some wild wing silver to mention, can
Speaker 2: you talk about what else stands out to you from
Speaker 2: some of the other precious metals that have been really
Speaker 2: going through quite a volatile period, but for different reasons
Speaker 2: than gold.
Speaker 1: Silver is a really interesting one. And if you look
Speaker 1: at the price chart of silver over the last fifty
Speaker 1: sixty years, you know it's so spiky that if you
Speaker 1: stood on it you'd impel your foot because there's constantly
Speaker 1: these rapid price hikes and then they collapse very quickly
Speaker 1: as well.
Speaker 2: Metals melt down. Gold and silver continue to plunge, adding
Speaker 2: to steak losses seen on Friday.
Speaker 1: Gold and silver prices continued to fall after in the
Speaker 1: star crash that happened in nineteen eighty, in early nineteen eighty,
Speaker 1: that happened in twenty eleven, to a lesser extent in
Speaker 1: twenty twenty one. And now I suppose the question would be,
Speaker 1: has that just happened? Have we just had our peak
Speaker 1: at just above one hundred and twenty dollars before this,
Speaker 1: you know, really dramatic pullback on Friday where at one
Speaker 1: point it was down by more than a third and
Speaker 1: one day, which is the biggest you know, inter day
Speaker 1: drop in the history of the metal, going back a
Speaker 1: long long way. I think one of the issues for
Speaker 1: silver is that you have sometimes spikes in investment demand,
Speaker 1: so the demand for ETF for the ETF or demand
Speaker 1: for physical bars and coins. In this case, there wasn't
Speaker 1: that much available supply in bar form to trade, and
Speaker 1: so the market became quite tight, and prices obviously have
Speaker 1: increased very rapidly, you know, tripled in the space of
Speaker 1: less than a year. But then the other side of
Speaker 1: that is that there are across the world, you know,
Speaker 1: many people with silverware in their kit. There's lots of
Speaker 1: silver in private vaults and just held in different forms
Speaker 1: that can, if there's enough demand, be converted into bar
Speaker 1: form and put out into the market to meet that
Speaker 1: investment demand. And I mean that's been happening. The refiners
Speaker 1: have been telling us they're you know, completely slammed back
Speaker 1: loud for weeks because there's on the one hand, lots
Speaker 1: and lots of people bringing in you know, grandmother's forks
Speaker 1: or whatever out of silver to turn it into investment bars.
Speaker 1: And on the other side there's lots of people showing
Speaker 1: up wanting to buy investment bars. But then the question
Speaker 1: is how long can that massive flow of investment demand
Speaker 1: be maintained until the refiners, which is the kind of
Speaker 1: key bottleneck, managed to convert lots of that silver into
Speaker 1: investment silver and put it out into the market.
Speaker 2: That's fascinating. I didn't know people were taking in their
Speaker 2: mother's forks. Jack, you mentioned silver and copper, Emanuel, I
Speaker 2: just want to bring you back in here are we
Speaker 2: seeing some of these other metals having any impact across
Speaker 2: African producers as well. We know coppers and Zambia silver
Speaker 2: not as much across the content, But I wonder what
Speaker 2: else outside of gold sticks out to you.
Speaker 4: I think the key one is copper, and we just
Speaker 4: have to look at the energy transition story and how
Speaker 4: critical copper is to that. At the point in time,
Speaker 4: everyone's trying to get their hands on copper. You know,
Speaker 4: it's considered a critical mineral governments, industrial players. It's a
Speaker 4: big story of recial security for the future and a
Speaker 4: lot of those decisions are being made now. So Africa,
Speaker 4: like you mentioned, is blessed to have quite a mineral
Speaker 4: rich region in terms of the cop about across from
Speaker 4: Zambia on the DC. Some of these regions are yet
Speaker 4: to be fully explored, and I think there's projects in
Speaker 4: the future we can expect to see getting improved, which
Speaker 4: again boosts investment into the region, boost out look for
Speaker 4: these African economies can also help Africa be at the
Speaker 4: forefront of helping fill the copper supply gap that we're
Speaker 4: seeing in a lot of the forecasts and even our
Speaker 4: fore costs into the future and the need for copper
Speaker 4: and the future. You know, these near term price arises
Speaker 4: have to be supported by the long term fundamental outlook.
Speaker 4: In order to get these brown field and these green
Speaker 4: field projects accelerated. We should start seeing, similar to the
Speaker 4: gold sector pick up in a lot more investments, a
Speaker 4: lot more m and a activity within the region. But
Speaker 4: also what we're seeing is governments are wanting to beneficiate
Speaker 4: a lot more of the projects or the product and
Speaker 4: copper products locally. You know, it can't just be a
Speaker 4: case of shipping out the copper concentrate at the bottom
Speaker 4: end of the value chamber trying to move further up
Speaker 4: the valley chain. So a lot more of that investment
Speaker 4: to build those refinery, to build those processing capacities has
Speaker 4: to come into Africa. One thing to mention is that
Speaker 4: the regulation and the policy framework has to be favorable
Speaker 4: for these investment decisions to happen.
Speaker 2: There's quite a lot to pay attention to for both
Speaker 2: of you from a near term perspective and longer term.
Speaker 2: So it seems like an exciting time to be in
Speaker 2: metals and mining, but I'm sure it always is. Before
Speaker 2: I let both of you go, I just wanted to
Speaker 2: get your take on what excites you most over the
Speaker 2: next few weeks and maybe days, what you're paying attention to.
Speaker 1: For me, it's kind of going back to what I
Speaker 1: was talking about with silver and just actually watching the
Speaker 1: silver price and looking at what is going to happen.
Speaker 1: Is this going to be the classic scenario where you
Speaker 1: get this sudden price collapse from the dramatic run up
Speaker 1: or is this something different? Is this a new period
Speaker 1: in time where you know, investors are talking about demand
Speaker 1: related to AI and in particular silver panels, or do
Speaker 1: you get the quite rapid substitution of silver in some
Speaker 1: of these industrial applications because of the high prices.
Speaker 4: Amnuel, Yeah, I agree with Jack Omselve. Is going to
Speaker 4: be a very interesting story we're watching as we're heading
Speaker 4: into earning season. What a lot of these miners capture
Speaker 4: allocation strategies are going to be investment both into brownfield
Speaker 4: and green field projects. That's going to be a key
Speaker 4: thing heading into this reporting season. But from a metals perspective, fundamentally,
Speaker 4: I think we are still We're still quite positive gold. Yes,
Speaker 4: one of the anchors instead of the in terms of
Speaker 4: the FED independence has fallen away. You know, the geopolitical
Speaker 4: uncertainty that I think we touched on and Jack mentioned
Speaker 4: earlier to what's being driving gold, the Central Bank buying
Speaker 4: a lot of that is still in play, and this
Speaker 4: anchors are the metals in terms of silver and the
Speaker 4: precious metals complex. It's an interesting time, but be worry,
Speaker 4: like Jack said of the Devil's metal silver in terms
Speaker 4: of volatility, but I think there's still some positive, positive
Speaker 4: anchors and positive support factors for gold and the precious
Speaker 4: metals complex as a whole.
Speaker 2: And you can read all of our coverage on metals
Speaker 2: and mining across Bloomberg platform. Now here's some of the
Speaker 2: other stories from the region we've been following. This week,
Speaker 2: the US renewed a trade preference program with African nations
Speaker 2: for one year, though the step has little immediate impact
Speaker 2: because of global tariff's. President Donald Trump imposed renewal of
Speaker 2: the African Growth and Opportunity Act or a go UP,
Speaker 2: originally enacted in two thousand. Demonstrates continued by partisan support
Speaker 2: for trade with the region in a politically divided Congress,
Speaker 2: and the head of Kenya's Independent Electoral and Boundaries Commission
Speaker 2: resigned eighteen months before elections scheduled for August of next year.
Speaker 2: Kenya has a painful history of disputed elections that have
Speaker 2: resulted in violence, eroding public trust in the electoral authority,
Speaker 2: and you can follow these stories across Bloomberg, including the
Speaker 2: Next African Newsletter. Will put a link to that in
Speaker 2: the show notes. This program was produced by Adrian Bradley
Speaker 2: and tiwa Adebayo. Don't forget to follow and review the
Speaker 2: show wherever you usually get your podcasts, But for now
Speaker 2: I'm Jennifer's Appasaja. Thanks as always for listening.