Editor's Picks: David Morgan Talks Gold, Liontown Rejects Albemarle

TL;DR

Gold could climb further after surpassing a new high around 2060 because momentum-driven buying may meet limited selling, according to David Morgan. The update also explains why Liontown Resources rejected Albemarle’s $250-per-share proposal as a substantial undervaluation, despite recent lithium-sector softness. Read on for the key gold-price mechanics, Liontown’s previous offers, and progress at the Kathleen Valley Project.

Transcript

welcome back to our weekly update I'm Charlotte McLeod with the investing News Network and I'm here to give you a quick look at our top stories for the week the gold price has cooled down after market turmoil allowed the yellow metal to break the 2000 per ounce Mark not once last week but twice gold is only past this key level a couple of times in ... Read More

Key Insights

• 😎 Gold price has cooled down after reaching the $2000 per ounce mark twice.
• ✋ Buying momentum can drive gold even higher once it surpasses previous highs.
• 💡 Lion Town Resources rejected Albemarle's undervalued bid of $250 per share in the lithium sector.
• 🌥️ The rejection highlights the potential cost for large producers seeking advanced properties in their portfolios.
• 👷 The Kathleen Valley Project in Western Australia is progressing well, with mining operations underway and construction on schedule.
• 💡 Albemarle's bid for Lion Town amounts to $3.7 billion in USD.
• 🧑‍🏭 Market turmoil and recent softness in the lithium sector are factors influencing valuation and acquisition decisions.

Questions & Answers

Q: What does David Morgan expect after gold reaches a new high?

David Morgan says that once gold enters new-high territory, around 2060, algorithms recognize the momentum and the lack of upward resistance. Even a small amount of buying can then push the price higher, especially when there is relatively little selling.

Q: Why can gold rise quickly after surpassing its previous high?

A new high can attract algorithmic and momentum-driven buying because there is no upward resistance from earlier price levels. Repeated highs can also generate market excitement, potentially producing the parabolic moves Morgan describes.

Q: When had gold previously passed the $2,000-per-ounce level?

The transcript identifies two earlier occasions: July 2020 amid global COVID-19 pressures and February 2022 following Russia’s invasion of Ukraine. Gold then broke the $2,000-per-ounce mark twice during the week discussed in the update.

Q: What market problem did David Morgan connect to gold’s situation?

Morgan described gold as a special case because the market was facing a banking crisis, failure, or broader problem. He presented that banking turmoil as part of the context surrounding gold’s move.

Q: Why did Liontown Resources reject Albemarle’s proposal?

Liontown Resources said Albemarle’s $250-per-share proposal substantially undervalued the company. It also called the approach opportunistic given the recent softness among companies exposed to the lithium sector.

Q: What previous offers had Albemarle made for Liontown Resources?

Before the rejected $250-per-share proposal, Albemarle offered $235 per share on March 3 of that year. It had previously offered $220 per share on October 20 of the prior year.

Q: How much was Albemarle’s bid for Liontown Resources worth?

The bid amounted to $3.7 billion in U.S. dollars. Liontown’s rejection prompted discussion about how much large producers may need to pay to add advanced properties to their portfolios.

Q: What progress was reported at Liontown’s Kathleen Valley Project?

Liontown said its flagship Kathleen Valley Project in Western Australia was being de-risked as mining operations started and construction continued on schedule. The project was expected to deliver its first output in mid-2024.

Summary & Key Takeaways

• The gold price broke the $2000 per ounce mark twice in the past amid global COVID-19 pressures and Russia's invasion of Ukraine.

• Market expert David Morgan explains that once gold surpasses its previous highs, buying momentum can drive it even higher.

• In the lithium sector, Lion Town Resources rejected Albemarle's bid of $250 per share, considering it undervalued amidst recent softness in the industry.