Exploration work and financings are back on the table, and foreign investors are taking notice.
EXCEPT FOR THE ODD moment here and there, the Midas Touch has been missing in action from the gold market for the past five years. But guess what? After watching prices slide sideways or slip downward along with most other mining stocks during the long dry spell — when raising money for gold companies is described by Frank Mariage of Fasken Martineau DuMoulin LLP as “an extreme sport” — investor appetite for gold is quietly rebounding.
There are a few different reasons for the renewed demand, but one that keeps coming up is the US dollar. Seen as the global reserve currency and a safe haven since World War II, that view has slowly been eroding. In recent months, geopolitical tensions have ratcheted up while US consumer spending has come in below expectations — suggesting the American economy is not as strong as the market had been pricing in.
Gold and the US dollar move in opposite directions. So any pressure on the US dollar makes gold more expensive for Americans but cheaper for foreign investors to buy — an attractive combination for investors looking to hedge their US-denominated investments. Continue Reading →