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