WEBVTT - Will Gold’s Rollercoaster Ride Hit African Investment? 

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio news.

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<v Speaker 2>Gold has found itself on a roller coaster ride, hitting

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<v Speaker 2>record highs followed by large drops.

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<v Speaker 1>It's been voltaile, it's been bumpy, and I think the

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<v Speaker 1>Year of the Horse, you're going to need a very

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<v Speaker 1>comfortable settle because it's gonna be very bumpy.

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<v Speaker 2>With investors uncertain about where the price might go next.

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<v Speaker 2>Could investments in Africa be at risk?

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<v Speaker 3>So in the case of gold, I don't see any

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<v Speaker 3>of these trends reversing themselves anytime soon. I think one

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<v Speaker 3>of the things that really has changed is just the

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<v Speaker 3>world is waking up to this awareness of how critical

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<v Speaker 3>all of these commodities and minerals and metals are to

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<v Speaker 3>everyday life.

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<v Speaker 2>On this week's Next Africa Podcast, we'll ask what exactly

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<v Speaker 2>is happening to the price of gold and whether historically

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<v Speaker 2>high prices will be enough to keep confidence in African

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<v Speaker 2>gold mines. I'm Jennifer's Abasajup and this is the Next

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<v Speaker 2>Africa Podcast, bringing you one story each week from the

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<v Speaker 2>continent driving the future of global growth with the context

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<v Speaker 2>only Bloomberg can provide. And joining me to discuss this

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<v Speaker 2>today is Bloomberg Medals and Mining reporter Jack Ryan, and

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<v Speaker 2>also Bloomberg Intelligence Metals and Mining analyst Emmanuel Munjeri. Thank

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<v Speaker 2>you both so much for being here. It's been quite

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<v Speaker 2>a few weeks and months for the precious metal.

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<v Speaker 1>Jack.

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<v Speaker 2>Maybe let's just start with you, because you've been watching

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<v Speaker 2>closely what's happened to gold over the past few weeks.

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<v Speaker 2>We've talked a lot on this podcast about the rising

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<v Speaker 2>of the prices over the past few weeks, but now

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<v Speaker 2>the narrative has changed quite a bit. Can you just

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<v Speaker 2>walk us through from where you sit what you've noticed.

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<v Speaker 1>I guess you could go back to twenty twenty two

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<v Speaker 1>twenty twenty three, when central bank buying really picked off

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<v Speaker 1>in earnest and that was kind of under the radar.

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<v Speaker 1>It led to this kind of long, slow build up

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<v Speaker 1>and gold prices where we didn't really see significant pullbacks

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<v Speaker 1>going through twenty twenty four twenty twenty three. Then coming

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<v Speaker 1>into last year, there was more speculators came into the

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<v Speaker 1>market towards the latter half of the year, retail investors,

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<v Speaker 1>other types of institutional investors. You could see ETFs, which

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<v Speaker 1>had been shedding gold over the previous couple of years.

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<v Speaker 1>That now started taking inflows of gold. Speculators and futures

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<v Speaker 1>markets were getting involved as well, and that just really

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<v Speaker 1>accelerated through the year, and then through the early weeks

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<v Speaker 1>of January, all of this background noise you had going

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<v Speaker 1>on crazy headlines about Greenland, about Jerome Powell, Venezuela, Iran.

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<v Speaker 3>But right now we are going to do something on Greenland,

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<v Speaker 3>whether they like it or not.

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<v Speaker 4>The US, as you said, has carried out a series

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<v Speaker 4>of air strikes in Venezuela, capturing President Nicholas Medoro and

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<v Speaker 4>his wife. It's an existential moment for the Iranian regime.

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<v Speaker 1>It was just kind of a cacophony in the background,

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<v Speaker 1>which I mean, all of that tends to be good

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<v Speaker 1>for gold, and all of that was good for gold,

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<v Speaker 1>kept setting all time, pies kept smashing through records, but

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<v Speaker 1>that level of speculative interest it does inevitably mean that

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<v Speaker 1>you get serious pullbacks. And last Friday was, you know,

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<v Speaker 1>maybe the most serious pullback we've seen for a long

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<v Speaker 1>time for gold. At least it was its biggest daily

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<v Speaker 1>drop in more than a decade, so I suppose that's

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<v Speaker 1>not surprising. And now we seem to have got past

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<v Speaker 1>that correction. And we're trying to figure out what might

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<v Speaker 1>be next for gold.

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<v Speaker 2>I wonder Jack, do you think the safe haven status

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<v Speaker 2>for gold is still at play in this current environment especially?

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<v Speaker 2>I mean, you mentioned a lot of the headlines that

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<v Speaker 2>we got earlier in the year that was, you know,

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<v Speaker 2>fueling the the rise in prices. Is it still a

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<v Speaker 2>safe haven hedge or are there other factors maybe at

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<v Speaker 2>play in this current environment.

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<v Speaker 1>I guess to an extent, you can see it serves

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<v Speaker 1>as a safe haven, you know, maybe in a tactical

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<v Speaker 1>short term sense, and that you can see that it

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<v Speaker 1>does often rise in the short term in response to

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<v Speaker 1>negative headlines or geopolitical tension. I think one problem for

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<v Speaker 1>gold is that the level of volatility that it's had,

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<v Speaker 1>and it's even more so for other precious metals like silver,

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<v Speaker 1>But for gold, the volatility, I think in itself can

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<v Speaker 1>make it less appealing to some of the really curvative investors,

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<v Speaker 1>who are the ones you really actually have to win

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<v Speaker 1>over if you want sustained price increases. You know, big

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<v Speaker 1>asset managers, pension funds, insurance funds, central banks, obviously, hedge

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<v Speaker 1>funds you know, like volatility, and they can play around

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<v Speaker 1>when prices jump up and down and try to profit

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<v Speaker 1>from that, but they don't really sustain the prices in

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<v Speaker 1>the long run. It's the larger investors, the more conservative ones,

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<v Speaker 1>who do that, and I think that is maybe something

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<v Speaker 1>that will become more difficult for gold to sell itself

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<v Speaker 1>on that basis. I think because of what's happened over

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<v Speaker 1>the last couple of weeks and over the last couple

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<v Speaker 1>of months generally.

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<v Speaker 2>Yeah, and that's been a continuing discussion, Emmanuel. I want

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<v Speaker 2>to bring you in here because you've been looking at

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<v Speaker 2>the impact of the rising gold price across the continent.

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<v Speaker 2>What kind of investment boost has there been? Have we

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<v Speaker 2>seen any material impact on the upswinging prices over the

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<v Speaker 2>past few weeks and months for the continent's producers.

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<v Speaker 4>I think it's been. I think it's been quite massive

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<v Speaker 4>to say that in terms of the basement boost. And

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<v Speaker 4>you know, if we look at it firstly from the

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<v Speaker 4>macro perspective and just a general economic perspective, high prices

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<v Speaker 4>translate into stronger export earnings and government revenues. So this

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<v Speaker 4>has been called to the government fiscal balances from the

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<v Speaker 4>big picture and strengthens these economies, particularly in West Africa

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<v Speaker 4>and Southern Africa where we see a lot of the

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<v Speaker 4>gold mines being located. Also in the past couple of weeks,

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<v Speaker 4>one of the other things to mention that we've recently

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<v Speaker 4>seen sigeand Gold and nilespred for Allied Gold, which has

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<v Speaker 4>a couple of producing acids in Africa and near term

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<v Speaker 4>development projects and these are located in places like Mali,

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<v Speaker 4>Ivory Coast An Ethiopia. So essentially what this has done

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<v Speaker 4>is enhanced Africa's profile in terms of its attractiveness as

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<v Speaker 4>a global player in the gold sector because Africa has

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<v Speaker 4>always carried what we call a risk premium in terms

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<v Speaker 4>of investors. But now what this is allowed is diversifies

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<v Speaker 4>the investor base beyond the traditional Western majors and it

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<v Speaker 4>can be a catalyst for more call it more captial

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<v Speaker 4>and flows into the African mining sector. Thirdly, another point

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<v Speaker 4>just to mention is what we've seen at higher gold

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<v Speaker 4>prices a lot more projects become more economically viable and

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<v Speaker 4>this can be brownfield expansions, this can be greenfield projects

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<v Speaker 4>and the approvals of these projects now look more likely

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<v Speaker 4>at high prices. This trend started happening towards the back

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<v Speaker 4>end of last year, and we're sort of expecting to

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<v Speaker 4>see a similar thing happen over the next couple of weeks.

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<v Speaker 4>As a lot of the miners head into earning seasons,

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<v Speaker 4>they provide these updates towards their reserves and resource statements

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<v Speaker 4>and the life of mind plans going forward. So these

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<v Speaker 4>are all some of the key factors towards, you know,

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<v Speaker 4>some of the boost towards that investment boost we've seen.

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<v Speaker 4>And you know, we've got to realize that a lot

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<v Speaker 4>of these miners are going to be setting on large

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<v Speaker 4>cash paths of cash. So the investor pressure that they're

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<v Speaker 4>going to face in terms of okay, what are you

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<v Speaker 4>doing with this cash is going to start to rise.

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<v Speaker 4>And it's a big thing. Usually is some of this

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<v Speaker 4>has to get returned back to shaholders, but a lot

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<v Speaker 4>of this gets put back into future projects. So from

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<v Speaker 4>our perspective, we're definitely expecting to see a lot more

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<v Speaker 4>investment into future projects, a lot more inflows and M

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<v Speaker 4>M and A.

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<v Speaker 2>Well, and just on that, Emmanuel, I mean, it sounds like,

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<v Speaker 2>you know, the Bloomberg intelligence team is bullish on more

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<v Speaker 2>M and A and projects. But just to Jack's point

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<v Speaker 2>that we are seeing more volatility. Does that affect your

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<v Speaker 2>sentiment towards you know, the projects that we potentially see

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<v Speaker 2>coming out of the continent.

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<v Speaker 4>It's a good question. Mining is a long term sector

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<v Speaker 4>and what we sort of look at and what I

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<v Speaker 4>think the miners in terms of their investment decisions or

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<v Speaker 4>capital allocation decisions, or are the investors look at it.

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<v Speaker 4>They're looking for not necessarily avoiding the day to day volatility,

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<v Speaker 4>but looking more into what's the long term outlook on

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<v Speaker 4>the prices. These are decisions, and these investment decisions are

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<v Speaker 4>made today, but these projects are five years down the line,

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<v Speaker 4>ten years down the line in terms of when they

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<v Speaker 4>might come into production. Some of them were near term,

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<v Speaker 4>but some can be more longer term. So you've got

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<v Speaker 4>to look at what the long term outlok is and

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<v Speaker 4>our view we are still quite positive when not look

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<v Speaker 4>for gold and consensus, as you can see on the

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<v Speaker 4>streets also carries a similar view. So we are trying

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<v Speaker 4>to avoid a lot of the day to day noise

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<v Speaker 4>when you look at it in terms of the miners,

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<v Speaker 4>and I think they are probably doing the same and

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<v Speaker 4>I think you know a lot of them are sitting

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<v Speaker 4>in quite a good position, like I mentioned earlier, in

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<v Speaker 4>terms of sitting on a good, good, steady pile of cash,

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<v Speaker 4>which is not usually the case for four miners, and

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<v Speaker 4>they're going to allocate a bit of this capital into

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<v Speaker 4>future projects. I'm sure we're going to see a lot

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<v Speaker 4>of that going forward.

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<v Speaker 2>Now, Yeah, that's a good place to be in not

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<v Speaker 2>paying attention to the near term noise. Emmanuel, Jack, stick

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<v Speaker 2>with us. When we come back, we'll talk more about

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<v Speaker 2>precious metal prices and where things might now be headed.

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<v Speaker 2>We'll be right back. Welcome back.

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<v Speaker 1>Today.

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<v Speaker 2>We're talking about the roller coaster across the gold markets.

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<v Speaker 2>Jack Ryan and Emanuel mcjerry are still with me. So Jack,

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<v Speaker 2>it's not just been gold where we've seen big movements.

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<v Speaker 2>You're taking a look at some of the other metals

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<v Speaker 2>where we've seen some wild wing silver to mention, can

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<v Speaker 2>you talk about what else stands out to you from

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<v Speaker 2>some of the other precious metals that have been really

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<v Speaker 2>going through quite a volatile period, but for different reasons

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<v Speaker 2>than gold.

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<v Speaker 1>Silver is a really interesting one. And if you look

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<v Speaker 1>at the price chart of silver over the last fifty

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<v Speaker 1>sixty years, you know it's so spiky that if you

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<v Speaker 1>stood on it you'd impel your foot because there's constantly

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<v Speaker 1>these rapid price hikes and then they collapse very quickly

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<v Speaker 1>as well.

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<v Speaker 2>Metals melt down. Gold and silver continue to plunge, adding

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<v Speaker 2>to steak losses seen on Friday.

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<v Speaker 1>Gold and silver prices continued to fall after in the

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<v Speaker 1>star crash that happened in nineteen eighty, in early nineteen eighty,

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<v Speaker 1>that happened in twenty eleven, to a lesser extent in

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<v Speaker 1>twenty twenty one. And now I suppose the question would be,

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<v Speaker 1>has that just happened? Have we just had our peak

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<v Speaker 1>at just above one hundred and twenty dollars before this,

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<v Speaker 1>you know, really dramatic pullback on Friday where at one

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<v Speaker 1>point it was down by more than a third and

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<v Speaker 1>one day, which is the biggest you know, inter day

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<v Speaker 1>drop in the history of the metal, going back a

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<v Speaker 1>long long way. I think one of the issues for

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<v Speaker 1>silver is that you have sometimes spikes in investment demand,

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<v Speaker 1>so the demand for ETF for the ETF or demand

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<v Speaker 1>for physical bars and coins. In this case, there wasn't

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<v Speaker 1>that much available supply in bar form to trade, and

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<v Speaker 1>so the market became quite tight, and prices obviously have

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<v Speaker 1>increased very rapidly, you know, tripled in the space of

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<v Speaker 1>less than a year. But then the other side of

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<v Speaker 1>that is that there are across the world, you know,

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<v Speaker 1>many people with silverware in their kit. There's lots of

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<v Speaker 1>silver in private vaults and just held in different forms

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<v Speaker 1>that can, if there's enough demand, be converted into bar

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<v Speaker 1>form and put out into the market to meet that

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<v Speaker 1>investment demand. And I mean that's been happening. The refiners

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<v Speaker 1>have been telling us they're you know, completely slammed back

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<v Speaker 1>loud for weeks because there's on the one hand, lots

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<v Speaker 1>and lots of people bringing in you know, grandmother's forks

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<v Speaker 1>or whatever out of silver to turn it into investment bars.

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<v Speaker 1>And on the other side there's lots of people showing

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<v Speaker 1>up wanting to buy investment bars. But then the question

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<v Speaker 1>is how long can that massive flow of investment demand

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<v Speaker 1>be maintained until the refiners, which is the kind of

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<v Speaker 1>key bottleneck, managed to convert lots of that silver into

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<v Speaker 1>investment silver and put it out into the market.

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<v Speaker 2>That's fascinating. I didn't know people were taking in their

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<v Speaker 2>mother's forks. Jack, you mentioned silver and copper, Emanuel, I

0:13:03.679 --> 0:13:05.760
<v Speaker 2>just want to bring you back in here are we

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<v Speaker 2>seeing some of these other metals having any impact across

0:13:09.360 --> 0:13:13.000
<v Speaker 2>African producers as well. We know coppers and Zambia silver

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<v Speaker 2>not as much across the content, But I wonder what

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<v Speaker 2>else outside of gold sticks out to you.

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<v Speaker 4>I think the key one is copper, and we just

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<v Speaker 4>have to look at the energy transition story and how

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<v Speaker 4>critical copper is to that. At the point in time,

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<v Speaker 4>everyone's trying to get their hands on copper. You know,

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<v Speaker 4>it's considered a critical mineral governments, industrial players. It's a

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<v Speaker 4>big story of recial security for the future and a

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<v Speaker 4>lot of those decisions are being made now. So Africa,

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<v Speaker 4>like you mentioned, is blessed to have quite a mineral

0:13:43.200 --> 0:13:45.920
<v Speaker 4>rich region in terms of the cop about across from

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<v Speaker 4>Zambia on the DC. Some of these regions are yet

0:13:49.000 --> 0:13:51.640
<v Speaker 4>to be fully explored, and I think there's projects in

0:13:51.679 --> 0:13:54.680
<v Speaker 4>the future we can expect to see getting improved, which

0:13:54.760 --> 0:13:58.120
<v Speaker 4>again boosts investment into the region, boost out look for

0:13:58.160 --> 0:14:02.200
<v Speaker 4>these African economies can also help Africa be at the

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<v Speaker 4>forefront of helping fill the copper supply gap that we're

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<v Speaker 4>seeing in a lot of the forecasts and even our

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<v Speaker 4>fore costs into the future and the need for copper

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<v Speaker 4>and the future. You know, these near term price arises

0:14:14.120 --> 0:14:16.559
<v Speaker 4>have to be supported by the long term fundamental outlook.

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<v Speaker 4>In order to get these brown field and these green

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<v Speaker 4>field projects accelerated. We should start seeing, similar to the

0:14:23.360 --> 0:14:27.000
<v Speaker 4>gold sector pick up in a lot more investments, a

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<v Speaker 4>lot more m and a activity within the region. But

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<v Speaker 4>also what we're seeing is governments are wanting to beneficiate

0:14:32.760 --> 0:14:35.160
<v Speaker 4>a lot more of the projects or the product and

0:14:35.200 --> 0:14:38.920
<v Speaker 4>copper products locally. You know, it can't just be a

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<v Speaker 4>case of shipping out the copper concentrate at the bottom

0:14:42.640 --> 0:14:45.720
<v Speaker 4>end of the value chamber trying to move further up

0:14:45.760 --> 0:14:48.200
<v Speaker 4>the valley chain. So a lot more of that investment

0:14:48.200 --> 0:14:52.240
<v Speaker 4>to build those refinery, to build those processing capacities has

0:14:52.280 --> 0:14:55.080
<v Speaker 4>to come into Africa. One thing to mention is that

0:14:55.120 --> 0:14:58.640
<v Speaker 4>the regulation and the policy framework has to be favorable

0:14:58.680 --> 0:15:00.320
<v Speaker 4>for these investment decisions to happen.

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<v Speaker 2>There's quite a lot to pay attention to for both

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<v Speaker 2>of you from a near term perspective and longer term.

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<v Speaker 2>So it seems like an exciting time to be in

0:15:08.400 --> 0:15:10.480
<v Speaker 2>metals and mining, but I'm sure it always is. Before

0:15:10.480 --> 0:15:12.680
<v Speaker 2>I let both of you go, I just wanted to

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<v Speaker 2>get your take on what excites you most over the

0:15:16.160 --> 0:15:20.280
<v Speaker 2>next few weeks and maybe days, what you're paying attention to.

0:15:20.760 --> 0:15:22.600
<v Speaker 1>For me, it's kind of going back to what I

0:15:22.640 --> 0:15:26.080
<v Speaker 1>was talking about with silver and just actually watching the

0:15:26.160 --> 0:15:29.920
<v Speaker 1>silver price and looking at what is going to happen.

0:15:30.160 --> 0:15:33.480
<v Speaker 1>Is this going to be the classic scenario where you

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<v Speaker 1>get this sudden price collapse from the dramatic run up

0:15:38.320 --> 0:15:41.720
<v Speaker 1>or is this something different? Is this a new period

0:15:41.840 --> 0:15:46.000
<v Speaker 1>in time where you know, investors are talking about demand

0:15:46.040 --> 0:15:50.960
<v Speaker 1>related to AI and in particular silver panels, or do

0:15:51.080 --> 0:15:55.640
<v Speaker 1>you get the quite rapid substitution of silver in some

0:15:55.720 --> 0:15:58.680
<v Speaker 1>of these industrial applications because of the high prices.

0:15:58.840 --> 0:16:01.720
<v Speaker 4>Amnuel, Yeah, I agree with Jack Omselve. Is going to

0:16:01.720 --> 0:16:04.680
<v Speaker 4>be a very interesting story we're watching as we're heading

0:16:04.680 --> 0:16:07.080
<v Speaker 4>into earning season. What a lot of these miners capture

0:16:07.080 --> 0:16:10.600
<v Speaker 4>allocation strategies are going to be investment both into brownfield

0:16:11.080 --> 0:16:13.720
<v Speaker 4>and green field projects. That's going to be a key

0:16:13.760 --> 0:16:18.760
<v Speaker 4>thing heading into this reporting season. But from a metals perspective, fundamentally,

0:16:18.880 --> 0:16:22.360
<v Speaker 4>I think we are still We're still quite positive gold. Yes,

0:16:22.440 --> 0:16:25.360
<v Speaker 4>one of the anchors instead of the in terms of

0:16:25.400 --> 0:16:28.520
<v Speaker 4>the FED independence has fallen away. You know, the geopolitical

0:16:28.600 --> 0:16:30.800
<v Speaker 4>uncertainty that I think we touched on and Jack mentioned

0:16:30.840 --> 0:16:34.160
<v Speaker 4>earlier to what's being driving gold, the Central Bank buying

0:16:34.680 --> 0:16:36.960
<v Speaker 4>a lot of that is still in play, and this

0:16:37.200 --> 0:16:39.160
<v Speaker 4>anchors are the metals in terms of silver and the

0:16:39.160 --> 0:16:43.200
<v Speaker 4>precious metals complex. It's an interesting time, but be worry,

0:16:43.280 --> 0:16:45.360
<v Speaker 4>like Jack said of the Devil's metal silver in terms

0:16:45.360 --> 0:16:49.120
<v Speaker 4>of volatility, but I think there's still some positive, positive

0:16:49.120 --> 0:16:52.880
<v Speaker 4>anchors and positive support factors for gold and the precious

0:16:52.920 --> 0:16:54.600
<v Speaker 4>metals complex as a whole.

0:16:55.240 --> 0:16:57.800
<v Speaker 2>And you can read all of our coverage on metals

0:16:57.800 --> 0:17:04.480
<v Speaker 2>and mining across Bloomberg platform. Now here's some of the

0:17:04.480 --> 0:17:07.359
<v Speaker 2>other stories from the region we've been following. This week,

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<v Speaker 2>the US renewed a trade preference program with African nations

0:17:11.960 --> 0:17:15.640
<v Speaker 2>for one year, though the step has little immediate impact

0:17:15.680 --> 0:17:19.960
<v Speaker 2>because of global tariff's. President Donald Trump imposed renewal of

0:17:20.040 --> 0:17:23.200
<v Speaker 2>the African Growth and Opportunity Act or a go UP,

0:17:23.520 --> 0:17:28.280
<v Speaker 2>originally enacted in two thousand. Demonstrates continued by partisan support

0:17:28.359 --> 0:17:31.880
<v Speaker 2>for trade with the region in a politically divided Congress,

0:17:32.520 --> 0:17:37.679
<v Speaker 2>and the head of Kenya's Independent Electoral and Boundaries Commission

0:17:37.880 --> 0:17:42.840
<v Speaker 2>resigned eighteen months before elections scheduled for August of next year.

0:17:43.280 --> 0:17:46.560
<v Speaker 2>Kenya has a painful history of disputed elections that have

0:17:46.720 --> 0:17:51.720
<v Speaker 2>resulted in violence, eroding public trust in the electoral authority,

0:17:52.359 --> 0:17:55.439
<v Speaker 2>and you can follow these stories across Bloomberg, including the

0:17:55.480 --> 0:17:58.000
<v Speaker 2>Next African Newsletter. Will put a link to that in

0:17:58.040 --> 0:18:03.920
<v Speaker 2>the show notes. This program was produced by Adrian Bradley

0:18:03.960 --> 0:18:06.879
<v Speaker 2>and tiwa Adebayo. Don't forget to follow and review the

0:18:06.920 --> 0:18:10.400
<v Speaker 2>show wherever you usually get your podcasts, But for now

0:18:10.480 --> 0:18:13.160
<v Speaker 2>I'm Jennifer's Appasaja. Thanks as always for listening.