It's Not Just Gold Prices; Trade Wars Present Another Major Threat To Junior Explorers - Mining CEO
(Kitco News) - While the lackluster gold price in an environment of growinguncertainty weighs on sentiment in the mining space, one junior CEO said thatthere is a more significant issue the sector faces in a global trade war.
In a recent telephone interview with Kitco News, ThomasSmeenk, CEO of Broadway Gold Mining (TSX.V: BRD) said that there is someanxiety that financing for junior miners could dry up as investors sit out thisperiod of uncertainty.
“For junior explorers, we have very tight windows forfinancing and the greatest threat to a global trade war is stability infinancial markets and a junior’s ability to find capital,” he said.
Smeenk is just the latest CEO to comment on a growing trendof investors and fund managers holding more cash in their portfolios to protectagainst market uncertainty and further losses in equity markets.
While Smeenk said that the mining sector could face anothertough year of capital inflows, he is confident that money will be available forcompanies with a substantial resource and diverse mineralization. Broadway goldis currently developing its Madison copper-gold project in central Montana.
He added that a rise in the gold prices could also helpboost investor sentiment in the sector. While gold has struggled recently,Smeenk said that chaos and volatility coming out of Washington D.C. on a dailybasis should eventually drive gold prices higher as a safe-haven monetaryasset.
Smeenk’s comments come as President Donald Trump threatenedto escalate a trade war with China, proposing more tariffs on $200 billion ingoods. The threat has not been favorable for equity markets with the Dow JonesIndustrial Average turning negative on the year again Tuesday.
Although equity markets have dropped sharply in the facingof escalating trade tensions, the gold market has seen little interest asprices remain below critical support, hovering near a six-month low. Augustgold futures last traded at $1,276.10 an ounce.
By Neils ChristensenFor Kitco News
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nchristensen@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.