Canada’s imports fell 1.7% in September 2019 while exports declined 1.3%, according to data recently published by Statistics Canada. This decline in Canada’s trade balance for September appears to be largely due to weakened gold trade.
Via Statistics Canada,
“Gold imports contributed the most to the drop in September, after increasing in August on higher acquisitions of gold assets.”
August 2019 was certainly a feverish time for Canadian gold mergers and acquisitions; during this period, O3 Mining completed its acquisition of Alexandria Minerals, Sailfish Royalty completed its acquisition of Terraco Gold, and Desert Gold completed its acquisition of Ashanti Gold. Meanwhile, Nexa Resources announced it would be acquiring Karmin Exploration while Carube Copper announced it had signed an LOI to acquire Latin America Resource Group (according to the Latin America Resource Group, its Jasperoide Project is located “in one the world’s most intensely mineralized gold and copper belts.”)
As for Canadian gold exports, Statistics Canada goes on to state,
“Exports of metal and non-metallic mineral products (-7.3%) posted the largest decline in September, mostly on lower gold exports (-$371 million). After two consecutive monthly increases, exports of refined gold fell in September, largely offsetting all the gains in July and August.”
In other words, despite the meteoric rise in gold prices between July and August (the price per ounce of gold rose roughly 9.68% from US $1,385 to US $1,519), it appears that September’s decline has all but erased the July – August gains in Canadian gold exports. During September 2019, the price per ounce of gold fell 5.48% from a 52-week high of US $1,550 to US $1,465 by the end of the month.
Unsurprisingly, M&A deal activity in Canada’s metals and mining industry also plunged in September.
Via Global Mining Review,
“Canada’s metals & mining industry saw a drop of 17.5% in overall deal activity during September 2019, when compared with the last 12 month average, according to GlobalData’s deals database.”
Canada’s Economy Is Becoming Increasingly Tied To Gold
With no relief for Canada’s energy sector in sight and agricultural trade tensions with China simmering, Canada’s international trade balance is more tied to the performance of gold than ever before. However, given that the U.S.-China trade deal still seems to be at an impasse, gold prices are likely to remain firm as risk appetite softens.