26 July 2020
A historic moment for the gold price, surpassing the all-time high set in 2011, which reflects the state of the global economy as a consequence of an enduring COVID-19.
In our view, the fundamentals for gold were compelling prior to the pandemic. The AUD gold price has especially been strong for some time. Existing multi-asset producers are the main beneficiaries of the current pricing environment, with unhedged positions seeing very attractive margins. We remain positive on precious metals equities with a focus on large Australian producers with lowest quartile operating costs and leading ESG policies.
14 July 2020
An article that details a recent report by the World Economic Forum – The Future of Nature and Business. The report highlights that when it comes to mining and power generation a nature-positive business could generate an estimated $3.5 trillion worth of annual value and create 87 million jobs by 2030.
The transition to a green economy is being fuelled by minerals, with demand for resources projected to double by 2060. This means that the mining sector will play a critical role in the massification of technologies such as wind turbines and solar panels. Improving resource recovery in extraction could save up to $225 billion by 2030, the report says.
Investing in environmental, social and governance (ESG) is currently estimated at over $20 trillion globally in assets under management. Companies that fail to deliver value beyond compliance could face financial consequences and a blow to their reputations.
15 July 2020
Copper prices have surged recently based on strong demand from China and due to COVID-19 supply concerns in South America, which are similar themes that have been driving iron ore prices higher.
Eden remains positive on the long-term outlook for major and mid cap tier one copper producers. We anticipate the long-term pricing environment to remain strong, particularly driven by underfunding into new projects generally leading to weakening future supply and the expanding demand from the growth of battery use.
Equities continued to post gains in June as global economies eased restrictions further during the month, additionally supported by widespread stimulus measures which resulted in an increase in consumer confidence.
Gold and iron ore prices have been standout performers for the month, with base metal prices also posting strong gains spurred by a rebound in Chinese demand. Oil prices continued their upward trend supported by ongoing supply reduction measures implemented by OPEC+. Demand for basic agricultural goods continued to increase overall for June as global restriction measures eased.
We think that the recent surge in virus cases poses significant risk to global equities in the short-term, given the uncertain economic outlook attached to possible “second wave” infection outbreaks. This could potentially see gold prices edge towards the all-time high of US$1,900/oz reached in 2011.
29 June 2020
An article from Reuters highlighting that exports of iron ore and gold are responsible for the majority of the heavy lifting in supporting Australia’s resources and energy exports to reach a record A$293 billion in the current fiscal year ending 30 June.
This figure is expected to drop next fiscal year, however it has been reported that estimated earnings from minerals and energy exports will still be 50% higher in real terms than during the 2008 global financial crisis.
The Eden Global Natural Resources Fund remains positive and favours Australian based precious metals and iron ore large cap production equities with leading ESG policies.
12 June 2020
Please see attached brief commentary from Eden on an area of strong interest for us – sustainable finance and ESG-linked bonds.
The Eden Global Natural Resources Fund can invest both in equities on a long only basis and fixed income securities such as bonds to support the development of natural resources assets.
Eden is exploring opportunities in ESG related financing and we look forward to potentially participating in new sustainability linked bonds in the resources sector and seeing growth in the green financing market.
In our May report, we provide insights into global markets as they benefit from the implementation of major stimulus packages, the gradual reopening of economies and the hopes of a vaccine being developed for COVID-19.
Gold prices continue to experience steady gains whilst the silver price rallied, which reaffirms our positive view on precious metals equities. Oil prices surged along with iron ore prices, whilst base metals posted steady advances.
We think there is an extraordinary opportunity for investment in high quality resource equities to provide exceptional long-term returns.
28 May 2020
In this short article we highlight the strength of iron ore prices: Chinese demand has proved resilient to the global pandemic whilst Brazilian supply has been restricted both by disease and weather preventing restarts of shuttered production. We have a positive outlook on iron ore pricing at least in the short term and accordingly for the Australian large-cap miners.
In Eden’s April market report, we discuss the ongoing impact of the global lockdown: market volatility has reduced, however remains at high levels; gold continues to outperform as a safe haven asset; and oil prices remain below accepted breakeven levels.
In Eden’s view, resource equities are at levels which present a compelling case for long-term positive returns.
27 April 2020
Australia’s resources export revenue has underpinned a 29 per cent improvement in the value of Australia’s goods exports in March compared with the previous month. Exports of goods increased to $36.1 billion in March 2020 from the revised February 2020 merchandise trade estimate of $28 billion.
The increase in March was predominantly driven by a $4.7 billion (20 per cent) increase in the value of exports of non-rural goods, including iron ore exports to support China’s rebounding economy, as well as increases in the value of Australia’s gold, coal and petroleum exports.
24 April 2020
We outlined the dramatic increase in gold demand currently experienced by the Perth Mint in our gold piece last week.
This article by Bloomberg elaborates on this and explains that the Perth Mint is now ramping up production of one kilogram bars to ease the supply squeeze in the U.S. that helped drive a surge in the premium for New York futures. At one point recently, the premium for New York futures over the London spot price rose above $70, the highest in four decades.
21 April 2020
A short reflection on a historic day for WTI oil prices. Storage capacity for WTI oil has been filled over the past few months causing a negative pricing environment as traders moved to avoid being caught out holding an expiring May US oil futures contract that would require the buyers to take delivery of the physical barrels of oil. Without the same storage constraints as WTI, Brent Crude is trading at around US$24/bbl, which is unsustainable in the long-term.
We expect to see a prolonged period of low oil prices over the next 1 – 2 years. This may present an opportunity for entry into selective global oil equities benefiting from an eventual recovery.
13 April 2020
In this short article we take a look at gold’s performance to date in 2020 amid COVID-19 and how gold continues to outperform, as a safe haven asset, during periods of economic uncertainty.
We examine the disproportionate performance in the gold price when compared to selected equities both pre and post crisis. EAM is positive on gold for the remainder of 2020 and we look forward to establishing several positions in attractive global gold equities with tier one production assets, leading ESG policies and strong balance sheets.
16 March 2020
EAM is pleased to share its quarterly investment report relating to the Eden Global Natural Resources Fund. In this edition, we provide summary analysis and commentary around our core focus areas of metals & mining (precious and base metals), bulks (iron ore and met coal), energy and agriculture. We have seen significant levels of volatility in global equity and commodity markets during the first quarter, adjusting to the constant developments and the impacts of COVID-19 pandemic. As at the time of writing this report, the S&P Global Resources Index (SPGSCI) had fallen 43% for the year-to-date and the 100 day volatility average climbed to circa 40% from its long term mid-teen average.
We believe that these circumstance present a significant opportunity for the Eden Global Natural Resources Fund to benefit from participating in equity price recoveries as the crisis eventually begins to ease. There has also been a prolonged period of underinvestment and underfunding into commodity related projects generally to weaken future supply, with compelling global demand factors ramping up, as seen recently, for example, the extent electrification and the growth of batteries will have on long-term demand.