Gold and silver crashed and burned on Friday, January 30, according to the headlines. It was indeed a bad day: gold fell $481, or 9% (close to close), or 12.5% from Thursday's high of almost $5,600. Silver plunged 26% (close to close), its worst one-day performance ever. The major gold and silver miner ETF (GDX) fell 13%, surprisingly modest in the circumstances.
Let's put this in perspective, however. For gold, this was its sixth-largest one-day drop since 1973, notable but not unprecedented. Perhaps more importantly, though, it only took the price back to where it was trading a week ago; Friday's closing price is still an all-time monthly close, and barely below the all-time weekly close. From the intra-day high, gold has retraced half of its last two-week rally: hardly devastating, then.
Is There 'Warsh' to Come?
The drop came after President Trump nominated Kevin Warsh to be the next Federal Reserve chairman. He was considered the most hawkish of the three candidates under consideration, and, following the Fed's decision to keep rates steady at the meeting last week, apparently put paid to a rapid decline in rates that had apparently been priced into the gold market. More importantly, perhaps, gold and silver were primed to drop after their recent explosive rallied, with gold up 27% in one month, silver up an astonishing 147% in the past two months. Increasingly, analysts were questioning the strength of the rallies. They were both overdue for pullbacks.
What next? After the 25 largest one-day declines, gold was up within the month 60% of the time. We think back to October 20, which many at the time seemed to think signalled the end of the gold bull market. That drop does not even make it the worst 25 one-day declines. With seven days, gold his its bottom and moved steadily up thereafter, hitting new highs two months later.
History Does Not Indicate This Is a Top
Will history repeat? Maybe, maybe not, but there is nothing in history to suggest that this must be a long decline.
Fundamentals suggest the opposite. All the drivers of gold over the past three years are still in place, and buying from Tether for its gold-backed stable coin is a potent new source of buying (as we have discussed, Bulletin #991). The uncertainty that partial fuels gold is hardly going away. And it remains to be seen whether Kevin Warsh will be as hawkish as commentators are suggesting. I doubt it. It would be unusual to see "V" shaped recovery after such a sharp one-day drop, but we suspect that gold will find a bottom sooner rather than later.
And some final food for thought: over the past five years, the gold price has only kept up with the increase in the global money supply.
Barrick's Nevada Plans May Be Stymied
Barrick Mining Corp. (ABX:TSX; B:NYSE) announced that Graham Shuttleworth is departing as CFO, to be replaced by existing board member Helen Cai, a former investment banker. Shuttleworth was at Randgold before the merger with Barrick and follows others from Randgold leaving Barrick in the wake of Mark Bristow's exit.
Separately, it was revealed that any attempt to spin off or sell Barrick's Nevada assets would require approval from partner Newmont, which has the right of first refusal.
This twist comes among high speculation that Barrick will spin off its North American assets (including its share in Nevada Gold Mines) in an effort to realize full value for its assets. Barrick owns 61.5% of NGM and is the operator.
This provides Newmont with a great opportunity to gain control of the Nevada assets at a reasonable price.
Hold.
OR Ups a Royalty at an Attractive Price
OR Royalties (OR:TSX; OR:NYSE) acquired an additional 1% royalty on the Namdini Gold Mine in Ghana, doubling its royalty interest to 2%. The total payment is up to $103.5 million, with $28.5 million upfront and the remainder in milestone and anniversary payments, reducing outlay and risk for OR.
The mine, which is currently in its ramp-up phase, is operated by Shandong Gold and estimated to produce an average of 287k oz over its 15-year mine life, with initial years significantly higher. There is potential for mine extension given higher gold prices since the mine was planned.
This is a good acquisition on a property OR already know, priced well below NAV (20% or more, depending on the gold price assumptions). The royalty is backdated, so the company will receive its first payment in this quarter, covering Q4 2025.
Arguably, OR's near-term growth is below peers (though not its longer term growth) and this acquisition helps address that.
Separately, Murray John has resigned as a director, to be replaced by Kevin Thompson, most recently Senior VP for Strategic Matters at Barrick.
We are holding, but OR is approaching a price where we would turn buyers again.
Franco Buys New Royalty as Changing of the Guard at Board
Franco-Nevada Corp. (FNV:TSX; FNV:NYSE) has helped fund its Orezone acquisition of the Casa Berardi mine from Hecla with a $100 million stream. The returns should be solid at today's gold prices, and the mine, in Quebec, has a long history with known economics.
Franco will receive fixed volumes during a planned three-year pause in production for heavy capex, and then a 5% stream thereafter, with an estimated IRR at spot of over 20%. However, the stream is small, representing less than 1% of Franco's future revenues.
Franco also announced that chairman David Harquail would move to Chairman Emeritus to be replaced by current lead director Tom Albanese, former CEO of RTZ. It also announced a 16% increased in its dividend, its 19th consecutive dividend increase (though given the appreciation in Franco's stock, this represents only a 0.7% yield at today's price).
Hold.
Production Record Augers Well for Wheaton
Wheaton Precious Metals Corp. (WPM:TSX; WPM:NYSE) received positive news on its major streaming asset when Vale reported record production at its Salobo mine.
Extrapolating Wheaton's gold stream revenue from the copper production reported would indicate revenue above expectations.
Hold.
Pan American Beat Quarter, but Issues Weaker Guidance for Year Ahead
Pan American Silver Corp. (PAAS:TSX; PAAS:NYSE) reported Q4 production slightly above expectations but with mixed guidance, with production below and costs above consensus. To some extent, the higher costs reflect increased royalty payments from higher commodities prices.
All-In Sustaining Costs (AISC) guidance for gold picked up to between $1,700 and $1,850, with silver AISC increased nearly 30% to a wide range of $15.75-$18.25 per ounce. Sustaining capex also increased meaningfully and was above expectations.
The company ended the year with $1.3 billion in cash.
Hold.
Fortuna Moves Ahead With Mine Expansion
Fortuna Mining Corp. (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE) announced a reserve update at its flagship Séguéla mine, adding 401k oz to the Sunbird underground deposit. This is the first underground reserve defined at the project, and extends mine life to another nine years, with development on the underground to begin sometime this year.
Sunbird remains open down dip.
A study on a possible plant expansion is expected in the second-quarter.
Fortuna is a buy for those who do not own.
Tether Continues Buying Metalla
Metalla Royalty & Streaming Ltd. (MTA:TSX.V; MTA:NYSE American) saw Tether increase its stake in the company to 7.3%.
Since taking control of Elemental Royalty and engineering the acquisition of EMX Royalty, Tether has acquired reportable stakes in three smaller royalty companies.
It is known to have approached some large shareholders in Metalla but so far without success so has been buying in the market.
Buy.
Altius Revenue in Line, With Some Gainers, Some Losers
Altius Minerals Corp. (ALS:TSX) reported Q4 royalty revenue in line with expectations.
Base metals, battery metals, and potash were weaker, the last only moderately, while renewables and iron ore were higher, the latter after Altius increased its ownership in the publicly traded Labrador Iron Ore Royalty Co. Potash was affected by annual maintenance shutdowns.
Hold.
Orogen Has Active Year Planned
Orogen Royalties Inc. (OGN:TSXV; OGNNF:OTC)has a busy year ahead, with 12 partner-funded drilling programs, for over 40,000 metres, expected in 2026; this excludes drilling plans by First Majestic at Ermitaño, at which Orogen holds a cash-flowing royalty.
This is up from almost 38,000 metres of drilling last year, which number includes drilling at Ermitaño. In addition, there are three partner-funded alliances with Altius, Triple Flag Precious Metals Corp. (TFPM:TSX; TFPM:NYSE), and South 32 (SHTLF:OTC); BHP Billiton Ltd. (BHP:NYSE; BHPLF:OTCPK) recently ended its alliance.
Six projects are under option.
Most of the company's projects are in Nevada and other states in the Western U.S., among drill programs expected is one at the La Rica copper-gold porphyry in Colombia to be undertaken by a well-backed private company, MCC Mining, which has several copper projects in the country.
Shareholders include large and mid-tier copper companies.
Drilling is expected in "early 2026" though, since MCC is private, there may not be much information released. The market expects MCC to go public at the end of this year or early next.
Orogen holds a 1% NSR on the project, subject to a 0.5% backdown.
Buy Orogen if you do not own.
Lara's Planalto an Attractive Prize
Lara Exploration Ltd. (LRA:TSX.V) announced updates on work on the newly acquired Atlantica ground southwest of Planalto, including identifying several drill targets.
This suggests the potential to add to the strike length of Planalto, of up to 3 km, which would make the copper project more valuable.
Lara may need to raise additional funds in order to undertake a proper exploration, including drilling, of the ground.
In today's copper price environment, Planalto, in a mining friendly jurisdiction and low capex, may not remain the hands of a junior for very long, and the market is clearly seeing that.
Continue to buy.
Gladstone Maintains Dividend
Gladstone Investment Corp. (GAIN: NASDAQ) announced its monthly distributions for the next quarter, at 8 cents per month, the same as it has been since 2022.
This equates to a 6.9% yield.
However, Gladstone frequently pays special cash distributions from net capital gains, the last being 54 cents last June.
Hold.
Nestlé Admits Waiting for Disclosure
Nestle SA (NESN:VX; NSRGY:OTC) has acknowledged that it waited over a week for a health-risk analysis before alerting authorities to the detection of a toxin in its baby formula. The company halted production at the affected factory immediately, however, while undertaking tests.
TOP BUYS this week, in addition to the above, include Kingsmen Creatives Ltd. (KMEN:SI).
Important Disclosures:
- As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Barrick Mining Corp., OR Royalties, Franco-Nevada Corp., Wheaton Precious Metals Corp., Fortuna Mining Corp., Metalla Royalty & Streaming Ltd. Altius Minerals Corp., Orogen Royalties Inc., Triple Flag Precious Metals Corp., and Lara Exploration Ltd..
- Adrian Day: I, or members of my immediate household or family, own securities of: All. My company has a financial relationship with: None. My company has purchased stocks mentioned in this article for my management clients: All. I determined which companies would be included in this article based on my research and understanding of the sector.
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