The Weekly Dig - March 17, 2017

by Mick Carew, PhD, and The Haywood Mining Team

Gold and Canadian Dollar Surge Following FOMC Rate Decision


Following a number of comments from Federal Reserve officials in recent weeks, the benchmark interest rate range was lifted by a quarter of a percentage point on Wednesday to between 0.75% and 1%, with two further rises expected to come this year. While it appeared likely that the raise would occur, encouraging jobs data from the U.S. likely was a large factor, with 235,000 jobs created in February and wages rising by 2.8%. Despite the interest rate rise, the price of gold shot through the US$1,200 per ounce level after briefly falling to as low as US$1,197; the momentum of gold was somewhat counterintuitive to expectations given the typical inverse relationship between U.S. interest rates and the price of gold. Some commentators suggested that several rate rises had been expected in 2017; with the Federal Reserve only indicating 2 further rises for the year, the price of gold rose accordingly. However, it remains to be seen how the price of gold will perform for the remainder of 2017 given the continued positive economic data out of the U.S. Gold equities responded in kind, with the S&P/TSX Global Gold Index hitting 210 before settling at 206.5 on Friday. It was positive gains across the board for both precious and base metals; silver (up 2.0%), platinum (up 2.3%) and palladium (up 3.8%) all followed the gold price to finish the week at US$17.39, US$965 and US$777 per ounce respectively. Base metal prices recovered some of last week’s losses; copper (up 3.4%), nickel (up 3.6%), lead (up 1.0%), and zinc (up 6.2%) all rising to finish at US$2.68, US$4.63, US$1.03 and US$1.30 per pound. After last week’s 10% drop, WTI crude was relatively level with where is began the week, finishing at US$49 per barrel. 

Click here for the full report         


Important Information and Legal Disclaimers

All prices are in C$ unless noted

This report is neither a solicitation for the purchase of securities nor an offer of securities. Our ratings are intended only for clients of Haywood Securities Inc., and those of its wholly owned subsidiary, Haywood Securities (USA) Inc., and such clients are cautioned to consult the respective firm prior to purchasing or selling any security recommended or views contained in this report.

Estimates and projections contained herein, whether or not our own, are based on assumptions that we believe to be reasonable. The information presented, while obtained from sources we believe reliable, is checked but not guaranteed against errors or omissions. Changes in the rates of exchange between currencies may cause the value of your investment to fluctuate. Past performance should not be seen as an indication of future performance. The investments to which this report relates can fluctuate in value and accordingly you are not certain to make a profit on any investment: you could make a loss.

Haywood Securities, or certain of its affiliated companies, may from time to time receive a portion of commissions or other fees derived from the trading or financings conducted by other affiliated companies in the covered security. Haywood analysts are salaried employees who may receive a performance bonus that may be derived, in part, from corporate finance income.

Haywood Securities, Inc., and Haywood Securities (USA) Inc. do have officers in common however, none of those common officers affect or control the ratings given a specific issuer or which issuer will be the subject of Research coverage.  In addition, the firm does maintain and enforce written policies and procedures reasonably designed to prevent influence on the activities of affiliated analysts. 

Dissemination of Research

Research reports are disseminated either through electronic medium or in printed copy.  Clients may access reports on our website, or receive publications directly via email.  Haywood strives to ensure all clients receive research in a timely manner and at the same time. It is against our policy for analysts to discuss or circulate their recommendations internally prior to public distribution. This policy applies equally to recommendation changes, target changes and/or forecast revisions.

For Canadian residents: Haywood Securities Inc. is a Canadian registered broker-dealer and a member of the Investment Industry Regulatory Organization of Canada, the Toronto Stock Exchange, the Toronto Venture Exchange and the Canadian Investor Protection Fund and accepts responsibility for the dissemination of this report. Any Canadian client that wishes further information on any securities discussed in this report should contact a qualified salesperson of Haywood Securities Inc.

For U.S. residents: This investment research is distributed in the United States, as third party research by Haywood Securities (USA) Inc. Haywood Securities (USA) Inc. is a wholly owned subsidiary of Haywood Securities Inc., registered with the U.S. Securities and Exchange Commission, and is a member of FINRA and the Securities Investor Protection Corporation (SIPC). Haywood Securities (USA) Inc. as a U.S. registered broker-dealer accepts responsibility for this Research Report and its dissemination in the United States. Any U.S. client that wishes further information on any securities discussed in this report or wish to effect a transaction in these securities should contact a qualified salesperson of Haywood Securities (USA) Inc. Haywood Securities Inc. Research Analysts are considered Foreign Research Analysts to the USA and are not registered/qualified as Research Analysts with FINRA. As these analysts are considered Foreign Research Analysts they may not be specifically subject to FINRA (formerly NASD) Rule 2711 and FINRA (formerly NYSE) Rule 472 restrictions on communications with a Subject Company, Public Appearances and trading securities held by a Research Analyst Account.

This report may be distributed in the following states: nil. Otherwise, this report may only be distributed into those states with an institutional buyer state securities registration exemption.

Analyst Certification

We, Mick Carew, Geordie Mark, Colin Healey, Pierre Vaillancourt, and Kerry Smith, hereby certify that the views expressed in this report (which includes the rating assigned to the issuer’s shares as well as the analytical substance and tone of the report) accurately reflect my/our personal views about the subject securities and the issuer. No part of my/our compensation was, is, or will be directly or indirectly related to the specific recommendations.

Important Disclosures

Of the companies included in the report the following Important Disclosures apply:

* n/a

Other material conflict of interest of the research analyst of which the research analyst or member knows or has reason to know at the time of publication or at the time of public appearance:

* n/a