Trent Primmer, our Head of Trading, featured on ausbiz speaking about the iron ore and gold prices update. 

As global governments around the world are focusing on infrastructure spending, especially during the Covid19 crisis, Trent expects that iron ore prices will benefit from it in the long term. 

Besides, with the current market volatility, or particularly, volatility in the crypto market, people are also getting into a more reliable and typical asset like gold.

Will iron ore and gold prices continue to rise? 

Here is the transcript:

Annette Beacher:

"And with that, thanks to capital economics. Julian Evans- Pritchard senior economist has distributed this chart, it's about iron ore flows. It also ties in with what Scutty I think is going to have a chat about it."

David Scutt:

"Yeah I think guys my view today just when it comes to the potential for supply chain disruptions and we know that China of course, has been targeting select Australian imports over the past year as part of it so in the program to go and to try and tighten the screws and get us to go and appease some of the things it's got some troubles with at the moment. I know it hasn't been touched yet. It's understandable so, because of how important it is to China, if they were going to cut off that, it will basically throw their steel sector under the bus, and probably up in the industrial sector in the process. But longer term, that note from our capital economics I noted that there’s an actual scenario that within the next sort of three, four or five years, where China could actually get to the point where it could go and cut off Australia imports. Now, lots of moving pieces of the puzzle there that doesn't necessarily mean it will happen."

Annette Beacher:

"I'll believe that when I see it."

David Scutt:

"Yeah. It's interesting to see, because iron ore prices where they sit at the moment, both in prices and export volumes are at record highs."

Annette Beacher:

"I was going to say don't forget $36 billion export record for April, so words are not translating into deeds."

David Scutt:

"Well, sticking on the iron ore front side Dalian futures were down about 3% overnight, adding to the losses that we're seeing over the course of this week. So what to make of this dip, is it part of a longer term trend, or was it just an opportunity to go and buy ? Let's find out, Trent Primmer joining us from Barclay Pearce Capital, live at the desk here in our Barangaroo studios. Trent, it’s good to see you."

Trent Primmer:

"Thank you for having me."

David Scutt:

"What do you reckon is going on in iron ore? China’s government has spoken, they want to go and eliminate speculation in the market. We've seen things like this happen before. Will they succeed? "

Trent Primmer:

"Look, we don't think so. They're cracking down on basically, local hoarding, speculation and price-fixing. I think any short term, downward movements in the iron ore price is an opportunity for us to accumulate, and we're happy long-term holders look. Even if the iron ore price comes off 10- 15% that’s quite high, I think demand will continue to outrun supply though and we're confident holders of iron ore longer term."

Annette Beacher:

"And that's because we're in an envious position for two reasons. One is high-grade and two is, Rio and BHP can punch it out for 15- 20 bucks, right?"

Trent Primmer:

"Yeah, exactly, exactly. Sort of that lower cost spectrum. Global governments all across the world focusing on infrastructure spend, it's a way of putting people in boots during the COVID crisis and obviously improving unemployment numbers and figures globally. So, we expect that infrastructure spend to continue to drip through and the iron ore price to benefit as a result."

David Scutt:

"Let's, switch across from bulks to precious metals; gold. Pretty divisive when it comes to the outlook, a lot of people are very bullish, a lot of people are pretty bearish about it. So you can see driven by real yields US dollar, are very key factors in that. $1,900 announced just above recently, what's your take? "

Trent Primmer:

"Four month highs. I've always been a pretty staunch supporter of gold. I've traded a lot in the past. I like it around these levels. We like it longer term. You've got inflation hedging assets like gold doing well around this period. Gold itself ended positive I think 13 out of the past 16 sessions.

You've also got crypto coming off and being quite volatile at the moment. I think people are looking at typical, risk hedging assets like gold. I mean, it's tried and true right? Over the past several years, investors have flocked to it as a storage of wealth, particularly when inflation is rising, and the market's slowing down or coming off. It's definitely where you want to be." 

David Scutt:

"Yeah. It's interesting that you mentioned the crypto space because some people have suggested that maybe there's a bit of switching between the two. Do you think it actually is taking place? "

Trent Primmer:

"A hundred per cent. You're seeing the flowing of wealth out of one asset class into another if I can call crypto and asset classes the moment."

Annette Beacher:

"Oh thank you."

Trent Primmer:

"So, I think gold is definitely where you want to be. And yeah, well, anytime that there's market volatility or particularly volatility in something like crypto, you're seeing people, you know, sort of taking their money out and storing it into more reliable asset classes like gold."

Annette Beacher:

"Yeah, we're sceptics here, so you're, you're in good company. So I'm actually interested in what you're saying with the China story because so many people who are analysts and mining specialists are calling iron ore to, you know, 160, 150, 100. Are you more optimistic than that on the price front, or you're saying that fall doesn't matter in terms of dynamics?"

Trent Primmer:

"I don't think it matters a huge amount over the short to medium term. As I said, we like it longer term. I think if you're looking at some exposure in your portfolio as an investor, and you're happy to hold over the next, you know, three to five years, short-term price movements like that, shouldn't worry. And yes, it has to cool off eventually. And I think the last time we spoke, we were pegging sort of third quarter, fourth quarter, we'd see some sort of price consolidation in iron ore. Though, that just means that we're happy to buy around those levels and hold longer term."

Annette Beacher:

"Alright, fantastic. Thank you for a buoyant update. We're always happy to hear that hear. Thank you so much, Trent, from Barclay Pearce. Cheers."

Trent Primmer:

"Thank you very much."

---------

Barclay Pearce team members are often featured by the media, sharing their insights on the market. Receive the latest market summaries and market-moving news, subscribe to As Barclay Sees It.