Mergers in the mining space continue and comments on the negative Fed Funds Futures
Chris Temple joins me to recap some of the news this morning out of the resources sector. 2 mergers were announced, SSR Mining with Alacer Gold and Gran Columbia Gold with Guyana Goldfields. Plus SolGold arranged a $100million financing with Franco Nevada for a 1% royalty that can be up-sized to 1.5% with an additional $50million.
We also discuss the move last week into negative territory for the Fed Funds Futures rate. This is something we will be talking about for a long time.
Click here to visit Chris’s site and read over his fee articles and sign up for his newsletter.
MAG sure has had a huge move since its March low but I would still choose it out of the three that you’re interested in.
Thanks Matt! MAG looks good. Will buy it later this week.
I’m no expert but buy the shit out if impact at every correction!
Nicely done Glenfidish. Me too!
IPT is my 2nd largest silver mining position at this point.
Hi Confused – I don’t usually use the word “safe-ish” with most mining stocks, especially the volatile Silver stocks, but will offer my 2 cents for what it is worth.
As mentioned above in response to Marty’s comment on the weekend show, Alexco is a great Canadian pure Silver development company moving towards production, and continuing to nail their exploration as well. It is my 4th largest position now in the Silver miners.
Your comments regarding Mag Silver are very appropriate and it is a beast of a development project in Mexico and along with Silvecrest is one of the more anticipated projects moving towards production in Mexico.
Really all 3 of those developers (AXU, MAG, SILV) all have known ounces in the ground that will get re-rated higher as Silver prices run higher they are all “safe-ish” speculations. Bear Creek Mining is in a similar position but needs higher Silver prices to be economic, where the 3 aforementioned developers, can make it work even at today’s silver prices.
As for the producers you mentioned First Majestic and Pan American. Both definitely have jurisdiction and operational risks, but they are solid companies and have mostly Silver exposure. The last few cycles, (AG) and (PAAS) have outperformed (MAG) – which has channeled sideways since 2018 as it was in the orphan phase of development. I’d be more apt to own them over MAG, but that’s because I’d rather take on more risk and have more reward. Fortuna (FSM) would be a relatively “safe-ish” play as well as one of the medium-sized silver producers.
Most of the other larger Silver companies are more base metals conglomerates, like Hochschild, Sierra Metals, and Fresnillo, or have gone more Gold focused than Silver, like Hecla, Coeur, SSR Mining, or even Wheaton Precious Metals.
My largest Silver producer position that I feel is relatively safe is Silvercorp (SVM), since they have such low costs and AISC, from their 2 mines and base metals credits, but some don’t like that they are operating in China, and that is likely why they are trading double where they are now. They are in the process of taking over (GUY) Guyana Goldfields to expand into gold production, which appears to be the trend lately, (as noted above). This increases their South American exposure, because they also own about 28% of the Silver explorer (NUAG) New Pacific Metals in Bolivia.
(USAS) Americas Gold & Silver is also one of my larger Silver & Gold positions, and their asset mix is turning from more base metals production (Zinc/Lead/Copper) to more precious metals production with 75% of production in 2021 slated to be from Gold & Silver. I feel it safe-ish, but could really run more than some of the more bloated larger companies.
Personally, I’m not in the Silver miners for safety, and like some of the more full throttled and highly torqued smaller producers like Impact, Santacruz Silver, Excellon Resources, and Endeavour silver. I also have a number of Silver developers like Alexco, Bayhorse, Kootenay Silver, Discovery Metals Corp, and Orex Minerals. Lastly I have a few irons in the fire with riskier explorers like Dolly Varden, Vizsla Resources, Metallic Minerals, Brixton Metals, and Defiance Silver.
There are some other interesting companies I didn’t mention, but that’s the general idea.
Believe the silvercorp takeover of Guyana is in trouble.
It may be if Grand Columbia gold is successful in their counter bid, but there is no guarantees that will go through either and that bid is contingent upon 3 different companies coming to an agreement.
If Guyana breaks their agreement with Silvercorp they lose their loan agreement, and they would also need to pay Silvercorp $3.6 Million to break the contract, so that will need to be taken into consideration.
On (GUY) Guyana Goldfield’s website they have this official press release listed, but not the one from Gran Colombia Gold yet.
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SILVERCORP METALS TO ACQUIRE GUYANA GOLDFIELDS CREATING A DIVERSIFIED PRECIOUS METALS PRODUCER
04/27/2020
Silvercorp Metals Inc. (SVM) and Guyana Goldfields Inc. (GUY)are pleased to announce that they have entered into a definitive agreement whereby Silvercorp will acquire all of the issued and outstanding shares of Guyana Goldfields by way of a plan of arrangement under the Canada Business Corporations Act. The Transaction will create a diversified precious metals producer with two profitable underground silver mining operations in China and a gold mining operation in Guyana with a strong balance sheet to fund growth opportunities.”
“Concurrently with entering into the Arrangement Agreement, Silvercorp and Guyana Goldfields have also entered into a loan agreement, whereby Silvercorp will lend Guyana Goldfields up to US$15 million with a defined use of proceeds related to ongoing operations at the Aurora Underground Project, as well as for certain working capital and general corporate purposes.”
“The Arrangement Agreement provides for, among other things customary board support and non-solicitation covenants, with “fiduciary out” provisions that allow Guyana Goldfields to accept a superior proposal, subject to a “right to match period” in favour of Silvercorp. The Arrangement Agreement also provides for a termination fee of C$3.65 million to be paid by Guyana Goldfields to Silvercorp if the Arrangement Agreement is terminated in certain specified circumstances, and reimbursement of expenses for Silvercorp if the Arrangement Agreement is terminated in certain other specified circumstances.”
Today Gran Colombia got into the bidding war with Silvercorp to post this proposal:
Gran Colombia Gold Proposes to Merge With Guyana Goldfields and Gold X to Create a High-Growth, Latin American-Focused Intermediate Gold Producer
May 11, 2020
Gran Colombia Gold Corp. (GCM) (TPRFF) is pleased to announce that it has signed a definitive agreement to complete a business combination with Gold X Mining Corp. (GLDX) (SSPXF) and that it has submitted a proposal to Guyana Goldfields Inc. (GUY) to acquire all of its issued and outstanding common shares (the “Proposed Guyana Goldfields Transaction”; and together with the Gold X Transaction, the “Proposal”). The contemplated business combination between Gran Colombia and Gold X is conditional upon the successful concurrent acquisition of Guyana Goldfields, and the proposal to Guyana Goldfields is conditional on the concurrent acquisition of Gold X.”
“The combined entity will continue as Gran Colombia and will be managed by the current Gran Colombia executive team, with corporate headquarters remaining in Toronto. Shareholders of Gran Colombia will own ~60% of the combined company, with Guyana Goldfields and Gold X shareholders owning ~25% and ~15%, respectively, on a basic shares outstanding basis.”
Whatever happens, it is sure nice to see a bidding war going on in the mining space again. If Silvercorp bows out to Grand Colombia Gold, then they get $3.6 Million to do nothing, and can easily go back on the hunt for another company.
Honestly it makes more sense for Grand Colombia to roll up Guyana Goldfields along with their Gold X transaction, than for Silvercorp to acquire GUY, but at this point it’s up in the air.
What isn’t up for debate is that Silvercorp has been the lowest cost operator in the Silver / Zinc / Lead space for a few years now, and while most companies have been hurting and losing, they’ve been generating revenues and free cash flows for some time and will be able to buy another company if they choose. I kept thinking they’d buy NUAG New Pacific and that would make more sense as a high grade Silver explorer, but maybe they want to diversify into Gold.
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(SVM) Silvercorp Reports Production Guidance Achieved and the Release Date for Fiscal Year 2020 Financial Results
May 7, 2020
Despite the extended shut-down during Q4 Fiscal 2020, the Company was able to achieve its full year production target, surpassing its Fiscal 2020 guidance:
> Silver production of approximately 6.3 million ounces, 3% above Fiscal 2020 guidance;
> Lead production of approximately 67.4 million pounds, 3% above Fiscal 2020 guidance; and
> Zinc production of approximately 25.6 million pounds, 17% above Fiscal 2020 guidance.
Here are a few investor reactions to the counterbid news for Guyana Goldfields over at ceo.ca:
> @dimi123 – Wow, that’s big news. Thanks for sharing! As an $SVM shareholder I’m obviously not happy about the bidding war that seems to be forming but that’s obviously good for long suffering $GUY shareholders. Having read the details it seems like quite a complicated deal between 3 different companies and they’ll have to outbid $SVM.”
“Personally, I liked the $SVM deal because it was a real bargain but I didn’t like the gold exposure. I invested in $SVM as a silver play. Since now they’ll have to offer more than 50% extra on the original bid in order to outbid Gran Colombia I hope that $SVM will drop out of this and won’t get involved in a bidding war! 3 about 12 hours ago”
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> @bunnys.rabit – “It will be very interesting to see what happens here with $GUY….if Silver runs between now and June (gold remaining unchanged) then the $SVM share price could move higher relative to $GCM and thereby implicitly raising the offer price by $SVM without any formal variation. All theory, of course….the chance of this happening is very unlikely…”
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@Baveno – “I hope they leave it all.This is the best thing that could have happened.
The climate in Guyana is brutal, I have experienced that myself. They can never really work effectively there.”
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> @Tony4ever – “It looks like if the deal with $SVM does not go though, $GUY will pay some fees to $SVM: “The Arrangement Agreement also provides for a termination fee of C$3.65 million to be paid by Guyana Goldfields to Silvercorp if the Arrangement Agreement is terminated in certain specified circumstances, and reimbursement of expenses for Silvercorp if the Arrangement Agreement is terminated in certain other specified circumstances.” $SVM normally does only about 2/3 of business in March quarter because of Chinese New Year holidays. The break out of the Covid-19 virus in China this year increased the holiday by at least 2 more weeks. So, the metals produced in March Q will be probably only 1/2 of the average of the previous 3 Qs. However, $SVM should have strong June quarter because it will likely run on full capacity (while many other miners had to stop mining operations for a few weeks). The June Q will likely have more working days because some the “extra” holidays taken around Chines New Year will need to pay back.”
I would also look into regional political differences when trying to sort out the safest plays. All of Mexico is not the same. FSM, for example, has had some trouble but I no longer follow it so I don’t know if there’s currently any problem.
IPT has never political or employee problems that I know of in the last 12 years that I’ve watched it.
A quick search shows that potential problems continue for FSM:
https://nacla.org/news/2019/12/01/mining-culture-wars-oaxaca-tourism
That’s a good point Matthew, and I believe Great Panther has had some issues with blockades and protests in the past in Mexico as well in years past.
First Majestic took over for Primero that had all those Union issues to contend with as well as San Dimas that could crop back up, but they have multiple properties in different parts of Mexico and are more diversified than a company like Fortuna is.
Americas Silver had a few hiccups at their Cosala operations in Mexico that are back on track, but they also have the Relief Canyon Gold mine in Nevada (one of the best jurisdictions on the planet) and Galena Silver operations in Idaho (another solid jurisdiction). I like the benefits of companies like that which have spread their jurisdiction risks around a bit, in multiple states, provinces, countries, instead of concentrating them only in 1 spot. Of course, it depends on where that spot is.
There is no telling if Mag Silver will run into issues when it goes into production because it’s been in development for about a decade at this point, but the bigger the project, the bigger the target.
Ex,
thanks for all the valuable information. I will look into Silvercorp as a possible alternative to MAG. I am in Alexco now.
Hi confused. I had responded back to you on the weekend show regarding Alexco and AXU is a fantastic Silver development company and near-term producer in Canada, with very high grades.
Another positive for Alexco is their lower projected AISC than most of the Silver producers at an all-in sustaining cost of $11.94 per ounce of Silver all in.
When one factors in that their mill is built, and has already produced in the last cycle, and their earthworks and inclines have been dug into Flame & Moth and Bermingham deposits, then it makes Alexco one of the most attractive and “safe-ish” Silver miners out there. All they need is their remaining water license and it is go time.
Silvercorp is my largest Silver mining position and I’ve been in it for years because it is more “safe-ish”, but I like it for being such a low cost producer because they continue to throw off free cashflows quarter after quarter, where most Silver companies have been barely surviving for the last few years.
Mag Silver is a different kettle of fish, in that it is the largest Silver development project moving towards production, but it got stuck in sideways channel for year, and hasn’t performed as well as other Silver stocks during the upcycles since the 2016 low in the miners. However, MAG is finally getting closer to making it into production, so it may get a bit peppier.
Regarding the torque to the upside:
Many of the silver miners went up 5-10 times off their 2016 lows to their 2016 highs (Impact, First Majestic, Americas Gold & Silver, Brixton, Alexco, Silvercorp etc…)
MAG.TO went from a low of $9 up to $21 doing a little more than doubling during that epic run. That was the high point thus far for Mag Silver. It is currently trading around $15.97 so it really hasn’t done much all this time and has essentially channeled sideways the last 4 years between $9-$17, so that just isn’t volatile enough for my trading interests, and I’ve never owned it as a result.
SVM.TO went from $.63 up to $4.50 going up about 700%, and kept climbing to a high of $5.90 in early 2017 at almost a 10 bagger (when many mining stocks were pulling back). SVM.TO made it up to a high of $7.67 just recently in late December, making it a 12 bagger thus far off the bear market low in early 2016.
I’ll take that performance any day over a company that has barely been able to double. Again, Mag Silver may gain a bit on Silvercorp as it moves into first pour, but I’m sure glad Silvercorp was one of my top positions in silver the last 4 years, and it grew to my largest position as it outperformed the other companies and I traded around it over the years buying the dips and trimming the rips.
Impact Silver and Santacruz Silver are in 2nd & 3rd place as the 2 highly torqued smaller silver producers on steroids (and they both outperform on both the upside and downside). The smaller producers are fantastic to trade as a result of their volatility, and when Silver really gets moving, they can simply move so much more than larger cap companies can.
Alexco is in 4th largest Silver position and my favorite developer hands down, and I’d much rather own it, and have since early 2016, than Mag Silver.
Americas Silver is in 5th position as hybrid Silver/Gold/Base metals company, and I’ve been building a position in it since late 2015 and I still don’t believe it has been valued up anywhere close to where it is heading yet and see it as an easy 5-10 bagger from here.
I have 13 other Silver stocks besides those companies for a total of 18 Silver stocks, but those are my personal favorites.
What about Silver Wheaton (Wheaton Precious) as the safest silver play?
They are only 40% Silver these days and 60% Gold and other metals.
Ex, all that gold makes that silver pretty safe! 😉
Agreed, but I’d classify WPM as a Gold company with a strong Silver credit now, which is why they changed their name from Silver Wheaton.
It’s the same now with SSR Mining (formerly Silver Standard, and why they changed their name), due to their increase in exposure to Gold. Or how about Coeur where 75% of production is coming from Gold (not Silver), or Hecla where 60% of production is from Gold. There are fewer and fewer primary Silver producers, and that was my point about what a big deal it is that Alexco will have 70% Silver production… it’s a rare thing these days.
Ex, you were supposed to laugh!
Oh. Well, I did chuckle a little bit. 🙂
Alacer is a well run and great long-term play, but as long as Turkey doesn’t have a revolution.
Agreed Confused, Alacer is a well run company, but it was odd for SSR Mining to branch out into Turkey, which is a bit riskier.
As for SSR selling off 10% that is normal for the acquiring company to get hit after announcing buying another company, so I don’t read anything into that at all. However, Alacer selling off on the news was not positive.
There have actually been quite a few Mergers and Acquisitions announced lately, so that is a real plus to see in the Precious Metals sector:
TMAC to be Acquired by SD GOLD
8 May 2020
“TMAC Resources Inc. (TSX: TMR) is pleased to announce that it has entered into a definitive agreement with Shandong Gold Mining Co. Ltd. (SH:600547; SEHK:1787) , through its wholly-owned, overseas subsidiary Shandong Gold Mining Co., Limited, pursuant to which SD GOLD has agreed to acquire all of the outstanding shares of TMAC at a price of C$1.75 per share in cash.”
(WM) Wallbridge Announces (BAR) Balmoral Securityholder Approval of Arrangement
8 May 2020
https://ceo.ca/@newswire/wallbridge-announces-balmoral-securityholder-approval
(EXN) Excellon Completes Acquisition of (OOO) Otis Gold
April 23, 2020
http://www.excellonresources.com/news/details/index.php?content_id=240
(ADT.AX) Adriatic Metals to Acquire (TETH) Tethyan Resource Corp, Creating a Leading Polymetallic Explorer and Developer in the Balkans
by @newsfile on 11 May 2020
https://ceo.ca/@newsfile/adriatic-metals-to-acquire-tethyan-resource-corp-creating
(ROS) Roscan Gold Enters into Binding LOI to Make Strategic Acquisition of Adjoining Dabia Sud Property from (KMT) Komet Resources
11 May 2020
https://ceo.ca/@newsfile/roscan-gold-enters-into-binding-loi-to-make-strategic
(UCU) Ucore Rare Metals Completes Acquisition of (IMC) Innovation Metals Corp. and RapidSX(TM) Separation Technology
11 May 2020
https://ceo.ca/@newsfile/ucore-rare-metals-completes-acquisition-of-innovation
(FMG) First Mexican Gold Completes Acquisition of Golden Giant Project
by @newsfile on 8 May 2020
https://ceo.ca/@newsfile/first-mexican-gold-completes-acquisition-of-golden
Cory mentioned that there has not been much M&A among the smaller companies, but that’s a half dozen right there in just the last few weeks.
I’m seeing an uptick in M&A, not a slow period and I’m sure we’re going to see this pace pick up with Gold prices elevated and many companies completely going back to the drawing boards in valuing other projects at $1700 Gold.
Gold miners’ profits ‘set to explode’, but companies persist with no-premium mergers
The gold sector may have reached a critical juncture
Gabriel Friedman – May 11, 2020 – Financial Post
“In a reminder that some market forces still exert more power than the economic fallout from COVID-19, Vancouver-based SSR Mining Inc. on Monday announced a no-premium, all-stock “merger of equals” with Denver-based Alacer Gold Corp. that was months in the making and would create a US$4 billion company.”
“While the combination doesn’t offer any obvious operational synergies, and any savings on corporate expenses have yet to be calculated, Antal and outgoing SSR CEO Paul Benson promised that the scale and diversification of a combination would bring relevance in a world crowded with intermediate gold producers.”
I guess SSR Mining and Alacer are just merging to get bigger and more noticed, but this merger doesn’t excite me like the one that Equinox and LeaGold did.
At least the merger with EQX and LMC had many more synergies between those 2 companies with neighboring jurisdictions and complimentary teams and strategy behind growing the production profile and raise revenues to fast track the other development projects. I’m just not getting the same “wow factor” from this SSR and Alacer business combination.
With EQX you also get the higher product profile with lower market cap
Matt Geiger: Keep Some Powder Dry for the Next Opportunities in Gold and Uranium
Palisade Radio – May 11, 2020 #AudioInterview
“Collin welcomes back friend and MJG Capital Fund manager Matt Geiger to the show. Matt is cautious about this market and expects a re-test of the mid-March lows. The Feds unprecedented action is an unknown variable that has to be considered. Investors should hold enough cash in case of another market sell-off.”
“You want to be extremely selective with which companies you invest. A lot of demand destruction is currently occurring as a result of unemployment and reduced consumption. Uranium and Gold are the two most obvious places to be in this market, and demand for both is holding up. The world wants Gold as a safe-haven, and we still need energy. Nuclear reactors are not shutdown quickly or easily, and most utilities are reluctant to take that action.”
As usual, I agreed with most of the points Matt Geiger made in that interview up above.
He is like my brother from another mother. lol!
PAAS is well run and if they can reopen their big mine in Guatemala and get the Navidad project permitted in Argentina one day, they will add about a billion oz of silver to their reserves. With all that and $50 silver they will soar like a hawk.
Matthew, would you sell some XOM if you had some? Thanks.
I would not sell XOM here unless I was underexposed to the gold sector and needed the money for that. I bet that doesn’t apply to you.
Unlike the stock market, I think we just witnessed the lows for everything oil. The sector doesn’t get an “all clear” from me just yet but I think it will this year.
XOM is currently at resistance that might cause it a little short term pullback but I think it will trade higher very soon.
https://stockcharts.com/h-sc/ui?s=XOM&p=W&yr=7&mn=3&dy=0&id=p37635920278&a=752856310
Anyone in here believe we have hit an intermediate top? or do you believe it’s up tomorrow and resume to hit that strong resistance at 1800 gold?
I will stick to my guns and will make a friendly wager with my pals matt and ex lol..
We do not blow by all time highs and no way we go over $2000 this year,
who is in? I sound bearish lol..
Glenfidish – It is possible Gold may get up in the low $1800s in the shorter term before correcting for the medium term, but regardless, Yes – believe Gold will take out the all time high this year of $1921 (from back from Sept 2011).
As far as taking out $2000, I’m thinking that may take until next year in 2021, but for fun – sure I want to see it in break above the 2 century mark in 2020.
Personally, the current Gold prices in the low to mid $1700s are plenty high for the producers to make money and for the developers to get rerated. I agree with Matthew’s comments on the weekend show blog that I’d rather see the miners move up in value relative to real money = relative to Gold.
If Gold gets up into the $1800’s the miners have even more room to run. Once Gold does take out it’s prior all-time high at $1921, the news headlines will the main stream media, and I believe that may create a small frenzy to push the yellow metal above the $2000 level. I guess it depends on when $1921 is taken out (my guess would be September).
Gold is definitely not very strong at the moment from a short term perspective but if it does manage to reach 1800 soon, I think it will then head straight for its all-time high before correcting.
Interesting. Well that would be a big move up in Gold if it just kept chugging to a new A.T.H.
BTW just reread my post above at that should have said:
” but for fun – sure I want to see it in break above the 20th century mark in 2020.”
Thanks, Matthew. No, I am NOT underexposed to precious metals. I am so glad I sold a third of my XOM last year@76 and put the money into BTI@37. And I am glad I sold half my RDS@38.60 before they cut their dividend 67%. Now I worry that XOM may cut their dividend too later this year, and I am tempted to sell some more and buy more MO, PSLV, and LOMLF.
Bonzo, the risk-reward of PSLV is hard to beat!.
Ex/shad
I could not disagree with you! I’m in the same boat.. I think we can all agree that the overall price is much higher and this bull is far from over.
Yes matt made good points..
Cheers
Glen
Matt,
100% in agreement! Also thanks again for brining impact to my attention about a year ago maybe more!
Like I’ve said you and ex keep this timing and entertaining from technical point of view. Main reason why I’m here. I do enjoy all the other education talk jerry and many others bring.
$2000 plus will come
Glen, I agree with you: “Buy the shit out of Impact every correction!”
+1
Thanks Glenfidish. Yes this bull is far from over, and this time, $2000 Gold will eventually come.
This latest guest on Palisade Radio doesn’t believe Gold will make it to it’s all time high, and instead is calling for Gold to head down to $800 first. Yikes, we got a Harry Dent Jr here, except he says he’s a bullish on Gold longer term.
Honestly, this doesn’t make much sense, because if Gold went down to $800 it would break the Gold bull market, decimate sentiment for a long time, kill off most of the Gold miners, and it would be time to fold up shop and get into cryptos. 🙂
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Henrik Zeberg: Why Gold is Heading to $800 Before an Explosive Upside Move
Palisade Radio – May 12, 2020 #AudioInterview
Conversely, this guest on Palisade, Mark Yusko, has much more a clue and cogent comments.
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Mark Yusko: Gold Miners are Orders of Magnitude Undervalued Relative to Gold
Palisade Radio – May 6, 2020 #AudioInterview
Time Stamp References:
0:30 – His journey into investing.
5:30 – This rally isn’t sustainable.
8:40 – America is addicted to debt.
10:30 – Bear markets take 18 to 24 months.
12:15 – 3 Trillion in additional debt.
16:00 – The value of a dollar today.
20:00 – Why value doesn’t die.
23:30 – His alternate FANG.
29:00 – Gold is wildly undervalued.
30:00 – Countries will inflate their currency.
36:30 – Avoiding your personal cognitive bias.
I like JSMineset.com round table discussion from last week available Now at that site. Sinclair both there and Greg Hunters: USAWATCHDOG.COM
The guy is a DUMB ASS……..HZ…….that is……jmo… of course….
Tell the guy…about tier one assets…..
Sinclair……has a better reason why gold is going up. although his number seems to be a little high.. , it is reasonable based on the printing……I like his thoughts on the reason for the virus shut down….not that I agree with the shut down, ..JMO
Agreed OOTB. I’d never heard of that Henrik Zeberg dude before, but am willing to give anyone a listen one time to understand their reasoning.
He went off down the Elliot Wave rabbit-hole as his rationale, and seems to think Gold would rally to new highs after first crashing down to $800 (Harry Dent style). As mentioned above, a crash like that way below production costs for most companies would damage the Gold charts, gold miners, and sentiment in the sector for many years and, no, gold would not rocket back up to new highs after that kind of a move.
It is pretty ridiculous when Gold is just about $200 shy of making it to the all time highs now, and after it has been in a bull market since making it’s Major Low at $1045.40 in Dec 2015. Gold is up about $700 and 70% since then, and is far more likely to break out to new highs in 2020 on or 2021.
All of those bears (or supposed bulls like this guy) that have been calling for a “Final Washout” since Dec of 2015 have been flat out wrong, and there has never been this alleged final washout. Instead there have been a number of substantial pullbacks like off the highs in 2016, or in 2018 into year end, or May of 2019, or March of 2020, and each time those were buying opportunities, but these scare-mongers were advising to wait until Gold goes down and breaks $1000 to $800, $700, $400….. and then the rally will start. Yes, they are idiots….
EX…..I agree 100%…..on….that way below production costs for most companies would damage the Gold charts, gold miners, and sentiment in the sector for many years and, no, gold would not rocket back up to new highs after that kind of a move.
Michael Oliver’s magic number for gold:
https://kingworldnews.com/michael-oliver-gold-update-the-magic-number/
Gold has been correcting for 4 weeks but has refused to break down. My “magic” number is a close above 1730.
https://stockcharts.com/h-sc/ui?s=%24GOLD&p=D&yr=0&mn=7&dy=0&id=p72263043960&a=719515489
The above would set-up the potential for a shot straight to a new all-time high…
https://stockcharts.com/h-sc/ui?s=%24GOLD&p=W&yr=8&mn=11&dy=0&id=p11174810336&a=495649167
A move below 1685 tomorrow would bring a bearish downside breakout of the above pennant formation and that would almost certainly lead to the failure of the important 1680 area:
https://stockcharts.com/h-sc/ui?s=%24GOLD&p=W&yr=5&mn=0&dy=0&id=p07505907643&a=711120664
That was a good piece from Michael Oliver on KWN. He’s a sharp technician and I like his thinking here:
> The Magic Number
“If this week we see a trade up to $1,738.70 (using the June future), that will take out the oscillator highs of the past two weeks (red line on momentum).”
“Again, short-term daily momentum action last week looks like it has validity and traction; this weekly momentum action would simply increase our conviction. ”
“And please note that last week was very eventful in the silver market and in the gold/silver mining sector. Silver broke out above both of our monthly momentum trigger levels. We now expect a further sharp recovery in poor man’s gold. ”
https://kingworldnews.com/michael-oliver-gold-update-the-magic-number/
Brien Lundin: New Metals Bull Market Ahead, Gold to Maintain Momentum
INN – Priscila Barrera – May 11th, 2020 #AudioInterview
Some good quotes from Brien in that interview:
“The coronavirus isn’t the reason for the next round of currency creation, it’s just the excuse. It affects only the timing,” he said, noting that he wouldn’t have been surprised to see a round of massive stimulus even without the coronavirus.
“I was expecting a lot of the things we are seeing right now to unfold in the next three to five years,” he added. “In fact, much of it unfolded in three to five days; everything is coming at us hard and fast … we have to be ready for it and we have to be able to react and get positioned for it.”
Talking about the US Federal Reserve’s actions in the past years and its most recent interest rate cuts, Lundin said markets are addicted to easy money.
“Like an addict that is addicted to a drug, they create a tolerance to the drug,” he said. “So the markets don’t need easy money, they need even easier money.”
During his 20 minute presentation, the host of the New Orleans Investment Conference also highlighted the Federal Reserve’s debt, saying it is out of control.
“Right now, and we are just in May, the US federal budget deficit is at US$2.61 trillion, with the Congressional Budget Office estimating it will come at about US$3.5 trillion, and when have we seen (it) overestimate the deficits?” he said. “I think that’s the ‘under,’ and I will take the ‘over’ on that — I think it is going to be much more.”
Pure Gold: sign of life. Good pop on no news found …yet. Pure Gold doesn’t pop. It ages slowly.
At least it ages like wine, not milk.
I’ll drink to that.
I’m drinking wine to the news release from Pure Gold yesterday about their first gold pour, which is why there was the trading action today. Cheers!
Canada’s Next Gold Mine on Track for First Gold Pour in Q4
by @nasdaq on 11 May 2020
https://ceo.ca/@nasdaq/canadas-next-gold-mine-on-track-for-first-gold-pour
Matt & Excelsior,
just found some more money since the last time we spoke regarding “safeish” gold investments. Sandstorm has been quiet since I bought it, but I’m not too fussed about that. I see it hitting $14 CND resistance within the next 3 months.
Anyway,
now that I have discovered more money, I would like to move it into some “safe-ish” silver plays (risk is relative!). I own a few hyper volatile silver-exposed juniors like IPT and BBB. The only big silver I own is First-Majestic. Now based on the charts, should I be moving into MAG or PAAS or First Majestic? I’m leaning towards MAG right now…as it is down %5 today and rockets when silver jumps a few bucks at a time. I would be open to any great 4-10 CND$ safish-ish silver plays too if they exist. There seems to be only a few great ones out there. Sometimes less choice makes life easier:) Any thoughts on the above would be appreciated.