Jun 30, 2016
Gold lifted by Brexit uncertainty
By Andrew Bell
We Spaniards know a sickness of the heart that only gold can cure – Hernan Cortes
On this day in 1520, the adventurer and his men were driven out of the Aztec capital of Tenochtitlan (now downtown Mexico City) after a rebellion by the locals. Emperor Montezuma II, who had submitted to the conquistadors, died soon afterwards in unclear circumstances. Cortes retook the city the following year.
Half a millennium later, gold still allures – and a 20 per-cent-plus jump in the bullion price has drawn investors to smaller producers and developers in particular. The TSX index of gold stocks is up a sizzling 92 per cent in 2016 but the smaller stocks, as tracked by the BMO Junior Gold Index ETF, have roared ahead 107 per cent.
Nine of the top 10 gainers in the TSX benchmark this year have been precious metal stocks, led by First Majestic Silver (FR.TO), which has soared 278 per cent. Base metal producer Teck Resources (TCK.TO) is No. 2 with a 205 per cent advance but all the rest of the 10 leaders are in gold and silver. Guyana Goldfields Inc. (GUY.TO) is up 196 per cent and Endeavour Mining Corp (EDV.TO) has risen 186 per cent.
The outperformance by smaller golds “is expected to continue in Q3 when gold price is seasonally strong and we recommend adding exposure to junior golds as they typically outperform producers during seasonal rallies,” CIBC analyst Jeff Killeen says. He joins us on Commodities at 11:10 a.m. ET with some stock ideas.
Gold has been lifted by Brexit uncertainty over the past week and at 10:20 a.m. ET we’ll hear from an economist who says Londoners are right to worry about their house prices. David Blanchflower, a professor at Dartmouth College in Hanover, NH, says a “major correction” is likely. He also reckons Bank of England Mark Carney should have toned down warnings about leaving the EU, taking a more balanced approach, and done a better job of outlining the specific economic effects. Dartmouth, by the way, is a venerable school. It was founded in 1769 by Congregational minister Eleazar Wheelock, also a pioneer in bringing European schooling to the aboriginal population.
We’re talking beer at 12:30 p.m. ET with Stewart Glendinning, CEO of Molson Coors Canada.
Flat sales mean “the beer industry is coming out of a period of some fairly difficult years,” he told the Financial Post.
The growth is in small-batch beers and Molson is “pushing new flavours, niche products, and even a beer recipe from 1908 in an attempt to capitalize on the increasing influence and growth of craft brewing.”
We’ll join the Molson Canada boss at a “gastrobrewery” in downtown Toronto opened by the Molson-owned Creemore Springs. (What is it about the prefix “gastro” that seems vaguely unappealing? Perhaps the association with “gastric”).
Have a wonderful weekend celebrating this wonderful country – and try not to run afoul of the police.
There’s no call for this type of behaviour: Apparently “a go kart driver was filmed by a witness fleeing from a police vehicle on a stretch of highway in California.”
It’s not clear if he got away.
