Rob McEwen Talks Coronavirus, Physical Gold Faces Crunch

Apr 6, 2020

Another week is at an end, and as always the INN team has been actively covering the resource and cannabis investment spaces.

Read on or click on this link for content highlights from Charlotte McLeod, our editorial director. If you missed a story this week, now’s the time to catch up and get informed.

RESOURCE

For a change this week we’re starting off not with gold, but with copper. Like most commodities, the red metal has been affected by the coronavirus outbreak, with prices trending lower since the start of the year — and in the near term little relief is expected.

Speaking with INN’s Priscila Barrera, Stefan Ioannou of Cormark Securities said that for now copper supply disruptions due to COVID-19 won’t be enough to boost prices because demand has been disrupted too. My most interesting takeaway was that if prices stay low, large copper mines that go on care and maintenance due to the coronavirus may stay shut down even after restrictions are lifted. That means a copper deficit could emerge in the next year or two if demand rises and supply can’t immediately catch up.

Looking over to gold, this week we published my interview with Rob McEwen of McEwen Mining, who shared his thoughts on how the coronavirus outbreak is affecting the resource space. While he believes the current environment will ultimately be constructive for the gold price, McEwen said companies are going to have to rethink their cost and production guidance as countries take steps to stop the spread of COVID-19.

“I think that the guidance given by companies for production and costs — you’re going to have to throw this out the window right now,” he said over the phone.

As gold companies continue to react to COVID-19, those who want to buy the metal are facing their own issues. Reports of physical gold shortages are gaining momentum, so we asked our Twitter followers this week if they have tried to buy gold in the last two weeks — and if so, what happened. Overall, about 50 percent said they could not make a purchase; the other half were able to buy, but 25 percent of them said it was not easy to do so.

We’ll be asking another question on Twitter next week, so make sure to follow us @INN_Resource or follow me @Charlotte_McL to share your thoughts!

Click here to learn about big news this week from INN’s resource clients

CORONAVIRUS

Keeping up with how COVID-19 is affecting the mining industry is hard, but if you want a good place to start, check out our series on how companies focused on a wide range of commodities are responding. Click to read our Gold and COVID-19: Who’s Reacting and How? piece, then use the menu in the top right corner to navigate to the rest of the series.

CANNABIS

In the cannabis space, sales are returning to normal levels after a spike in mid-March. The abrupt rise was driven by panic buying as consumers worried about store closures due to COVID-19. Since then, however, sales have returned to normal levels.

In a note released this week, BMO Capital Markets analyst Tamy Chen attributed the sales increase seen previously at the government-run Ontario Cannabis Store to “pantry loading activity.” She said that if self-isolation and other coronavirus measures continue in the province there could be other similar sales increases in the future. However, it’s possible that overall the outbreak could weigh on sales this year.

Click here to learn about big news this week from INN’s cannabis clients