Gold explorers and capital markets advisers predict that the Aussie-dollar price of the precious metal will hit $3,000 by Christmas.
That was the clear prediction among panellists of a high-profile chatroom at this week’s Mines and Money APAC virtual conference.
Featuring White Rock Minerals (ASX: WRM) managing director Matt Gill, Artemis Resources (ASX: ARV) executive director Alistair Clayton, Hartleys executive chairman Ian Parker and PCF Capital managing director Liam Twigger, the panel discussed the remarkable sharemarket recovery, the importance of foreign investment, exploration hotspots and – of course – the likely trajectory of the gold price. The panel was moderated by Cannings Purple’s Investor Relations Director Peter Klinger.
Mr Parker said the Perth brokerage had seen a surge in new accounts while the COVID-19 triggered downturn appeared to have prompted investors to show a willingness for risk exposure that had typically been missing from the resources sector.
“I’ve never seen an appetite for risk like this. The quantity of capital raisings is extraordinary,” he said.
All four panellists were bullish on gold and three predicted that it would finish the year above $3,000/oz.
PCF’s Mr Twigger said history gave him many reasons to be confident.
“I vividly remember the last gold boom back in the early 1990s, stocks went up 10-fold. If we think that this (gold price) is too high, go back and look at history. This can go a lot higher,” Mr Twigger said.
The billion-dollar question, as Mr Parker called it, is whether we have seen the worst of the COVID-19 market downturn or whether we are experiencing a false-dawn recovery.
Mr Parker said that since 23 March the market recovery had been “nothing short of remarkable”.
“The (cash) injection that the government has put into markets sort of outweighed, for the moment, the potential economic shock of the pandemic,” he said.
Commenting on the North American market, Mr Twigger made comparisons to the global financial crisis when markets fell 50% and took more than seven weeks to hit their bottom. However, with the COVID-19 sell-off the market hit its bottom in four weeks and only lost 30%.
“The bounce back has been amazing, but the question is, have we seen the bottom? I’m not sure,” he said.
Artemis’ Mr Clayton, who is based in London, echoed Mr Twigger’s sentiment. He said the real test of the economy, especially in the UK, would be how business coped once governments’ furlough schemes stopped.
“We’re all really waiting with bated breath to see if these businesses are really opening and for how long they will last without government money,” Mr Clayton said.
In the meantime, Artemis is enjoying strong attention from gold-hungry investors.
Artemis resumed drilling at its two gold-copper projects in the Pilbara in March and its share price has jumped more than 180% since then, closing out this week at 6.5¢ per share.
Mr Gill, who led White Rock’s $7.35 million capital raising to fund exploration work at the Last Chance gold prospect in Alaska, called the investment climate “bizarre”.
“We set out to raise $2 million in March, roll the clock forward and we could have raised $10 million. To think that we raised our market cap ($7 million) on a gold stream sediment anomaly in central Alaska is nothing short of bizarre,” Mr Gill said.
“Half of the money we raised came out of North America and at the end of the raising, 20% of our register will be in North America.
“It only reinforces that good projects should be able to find funding no matter where they are.”
White Rock’s share price has been on a tear since the raising, closing the week at 0.8¢ – the raising was done at 0.3¢.
With the appetite for investment in resources projects in Australia so far shielding our economy from a significant downturn, the panellists also raised concerns that changes to the Foreign Investment Review Board (FIRB) approval threshold – all foreign investments are now subject to a lengthy approvals process – were becoming increasingly problematic in a sector traditionally reliant on foreign investment.
Mr Twigger said the FIRB regime change was a massive and growing issue in any dealings involving the Australian resources sector.
“They’re putting the handbrake on a lot of deals,” he said.
This concern was echoed by Mr Gill, who said investments out of Asia were essential for Australian projects.
“There is just not enough money in Australian institutions to fund these things, for Australian companies doing these projects, so overseas money is essential,” he said.
“You would hope that with FIRB common sense would prevail.”