WHTW: May 26 - June 1st
Bad News From West Africa, Good News From Argentina, M&A, and Tariffs.
Good afternoon. Today, we introduce a new format, “What Happened This Week,” which will be published each Sunday. This will not be another macro spam newsletter; rather, a concise collection of newsworthy items that are particularly relevant for natural resource investors. That includes some macro, however. Let’s get started:
1. Guinea’s military government cancelled 129 mineral exploration permits on Monday, including four gold exploration permits from Endeavour Mining. Officials argued that those were mostly underutilized licenses, but this move is especially concerning as Niger, Mali and Burkina Faso have been similarly revoking permits or nationalizing assets recently. We stay away from West Africa for now.
2. On Tuesday, Harmony Gold (NYSE: HMY), a large South African gold producer, agreed to pay $1.03 billion to purchase MAC Copper (ASX: MAC) in Australia. This is another significant M&A deal, and those are currently really speeding up. We see Liberty Gold and G2 Goldfields as upcoming prime targets.
3. A US court ruled Wednesday that Trump’s reciprocal tariff scheme is illegal, challenging his use of the International Emergency Economic Powers Act. US and Asian markets went up on the news. We believe that this optimism is unwarranted, and Trump will likely find a way to push through with tariffs.
4. Elon Musk is being formally offboarded from his role at D.O.G.E., which turned out to be a non-starter. Readers of David Stockman’s book, “The Triumph of Politics,” anticipated this. Needless to say, the pressing deficit will likely cause dollar devaluation, supporting an extended bull run for precious metals.
5. Argentina raised $1B selling peso-denominated sovereign bonds to foreign investors in US Dollars. This is a vote of confidence in Argentina and Milei, and bullish for projects in Argentina, such as AbraSilver, which will benefit from the RIGI initiative the most if Milei gets reelected in 2027.
The weekend was rather quiet (after filtering out all the noise), but on Sunday, US Treasury Secretary Scott Bessent did say that “The United States of America is never going to default, that is never going to happen.” Further, he claimed, “We are on the warning track and we will never hit the wall.” Of course, he would say that. However, there really only is one alternative solution, which is inflating away the net present value of the debt. The US government did this in the 1970s, and our suspicion is that:
Anyways, retail investors are currently very proud of buying the dip in April, as stocks have rebounded sharply. Suits sold and urged caution. Unfortunately, it is currently our outlook that the worst is yet to come, possibly yielding bad surprises for retail. We shall see.
Anyways, all of this is pretty much bullish for gold and, as such, miners. That is why we plan to use the weakness in a few select stocks next week to accumulate more. Stocks we’re looking at include PAAS 0.00%↑ and $GTWO.TO. For gold investors, we believe the best is yet to come.
That’s it for this week. As we said, no spam, and straight to the point.
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