David Erfle - Gold Market Commentary – Tue 25 Sep, 2018

Beaver Creek Recap and Silver/GDX Leading The Sector

David Erfle, Founder of The Junior Miner Junky joins me to recap the recent Beaver Creek Conference. We discuss the attitude at the show and the fact that lots of junior companies had meetings with larger companies. In terms of the overall PM market David is looking to silver and GDX to lead the way for the sector. Again it is important to note that there could be some crazy swings tomorrow after the Fed meeting and nothing is a sure thing in terms of upside for the sector.

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Featuring:
Dave ErfleCory Fleck
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Comments:
  1. On September 25, 2018 at 12:28 pm,
    Paul says:

    What your thoughts on the gold testing double bottom bcc efore it makes a final breakout? Most analysts and newsletters dont see gold making a final sustained move up until later 2019, your thoughts?

    • On September 25, 2018 at 6:21 pm,
      Excelsior says:

      “Something is finally different in the silver market” – Tom McClellan

      https://twitter.com/McClellanOsc/status/1044753941169299457

    • On September 26, 2018 at 5:09 am,
      David Erfle says:

      I would like to see a weekly close above $1211 in December gold for much better odds of the bottom being in place for the medium term. On the downside, a close below $1194 would bring a double bottom below $1170 into view short term and possibly a wash-out down to $1125. I am not expecting this but am prepared for it.

    • On September 26, 2018 at 10:13 am,
      Matthew says:

      A weekly close at 1209 should be all we need to get gold moving. Then, and more importantly, we need a weekly close above the 600 week MA at 1233. Gold went 15 years without a weekly close below that (12 year) MA but has done so for the last 9 weeks. The bulls need to take that line back to scare the more tenacious bears.
      http://schrts.co/sJoQRQ

  2. On September 25, 2018 at 12:51 pm,
    Bob Grierson says:

    Hi Al / Cory

    There has been a lot of jaw boning about the merger between Barrick and Randgold but nobody has addressed the fact that much of Randgold’s activities are in the Democratic Republic of the Congo. The gentlemen running the show there recently passed a very mining unfriendly law which amounts to profit confiscation. I hope your guests will comment on this.

    • On September 25, 2018 at 1:58 pm,
      Cory댊 says:

      Good question Bob! I will see who can address that this week.

      • On September 25, 2018 at 6:23 pm,
        Excelsior says:

        Cory – thanks for posing the question to David regarding the Mid-tiers actually doing most of the acquiring for the last 2 years, and only a few few takeovers have been from Majors.

        I think he misunderstood the question and responded about the valuations of Mid-tiers and not their larger role in the M&A space, but those comments were good as well.

        Ever Upward!

        • On September 25, 2018 at 6:45 pm,
          Excelsior says:

          The other point I was trying to get across in my long-winded post yesterday was that most of the companies that were acquired were actually development stage companies and the smaller producers (most of the pick ups were not explorers).

          In that post I listed 14 takeovers and only 3 were for advanced explorers, and the rest were acquiring developers/producers.

          Other than the Barrick/Randgold merger none of those takeovers were done by a true Major, unless one considers Coeur, Hecla, or First Majestic majors in the Silver space. Ironically, we’ve seen the trend for a while from Tahoe, Fresnilo, SSR, Hecla, and Coeur of previous “silver” companies diversifying into gold assets, to the point where many have more gold now than silver. Compared to other gold producers I guess they’d still be Mid-tier, as I consider Majors companies doing over a million ounces of gold production a year.

          Regardless, the trend is clear, and I could have sited more where main participants initiating takeovers are the Mid-tier producers, and they were mostly distressed assets. Those companies want a good deal too, and those stocks they picked up were often trading near lows, and so the 40-60% premium didn’t bail out longer term shareholders, but did reward investors that bottom-fished oversold developers and producers.

          As mentioned yesterday, we’ve seen very few Kaminak / Goldcorp type acquisitions, but far more good but not great development/production assets acquired because the prior teams didn’t execute or because those projects were cash-starved.

          Food for thought for investors still starving from the narrative of Majors buying out the little explorers (which is very rare in reality, but seems to get parroted over and over again).

    • On September 25, 2018 at 6:52 pm,
      Excelsior says:

      Bob Grierson, I agree that Congo is a terrible jurisdiction, but Randgold only has one main project there.

      There other 4 projects are West Africa (in Mali, Cote d’ Ivoire, and Senegal). West Africa is much safer, more stable, and has dozens of well run gold companies compared to the mid-African cesspool of the DRC.

      http://www.randgoldresources.com/operations-key-info

    • On September 26, 2018 at 5:25 am,
      David Erfle says:

      50% of Tier 1 gold deposits are in easier jurisdictions while 50% are in more difficult areas and a world class operator must be able to operate effectively in both. At the DGF, Barrick Chiarman John Thornton noted challenges in Tanzania and Argentina are a result of ineffectively operating in its host countries, which is something that the Randgold model is expected to improve. A big positive is Mark Bristow announced his intention to stay on as CEO for the next 5+ years and he is planning to roll his Randgold shares into Barrick shares. I have based most of my criteria of which developers to invest using the Randgold model checklist.

  3. On September 25, 2018 at 1:38 pm,
    Norm says:

    For those who are interested, the Beaver Creek Metals Conference (Sept 20 – 22, 2018 ) is at

    http://www.gowebcasting.com/conferences/2018/09/20/precious-metals-summit

    A number of companies highlighted at KER have online presentations, including:
    Auryn Resources, Balmoral, Maple Gold, Revival Gold, Sabina, Skeena

    • On September 25, 2018 at 6:20 pm,
      Excelsior says:

      A number of the individual presentations were also posted on last weekend’s show.