Brien Lundin – If The Precious Metals Have Bottomed And Begun A New Bull Market, Then Why Aren’t Mining Stocks Responding More?
Brien Lundin, Editor of The Gold Newsletter and out host at the New Orleans Investment Conference, joins us to review the rebound in the precious metals sector over the last few months and kicking off 2023, and why it is that the mining stocks haven’t responded with more leverage. We discussed the sector sentiment still lagging the moves we’ve seen for months in silver, gold, and the PM mining stocks, and the old truism that: “A market is often loved least by those who know it best.”
The discussion then turns to where the macroeconomic drivers are heading this year that have been so prominent over the last year like inflation expectations, Fed policy, and what may happen once they wrap up their tightening cycle in the first half of this year. We also reflect on how if inflation is starting to moderate, while metals start climbing higher in price, that this should be a boon for the PM producers financial margins and for the economics of development projects. Brien feels that companies that have large scale resources will start to shine as they have their economics rerated higher, and he is still also animated by some of the select drill play exploration stocks with quality work programs for the year to come.
We wrap up discussing that Brien feels the bottom in the precious metals sector is now behind us, and after seeing a pattern of higher highs and higher lows in the metals and mining stock ETFs, that we should not be disheartened if we see a near-term pullback to digest the last few months gains.
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Click here to visit the Gold Newsletter website to learn more about Brien’s letter.
Rise Of The Gold-Backed E-Yuan
Richard Mills – Ahead Of The Herd – Jan 6, 2023
“The leading gold holders are some of the world’s most powerful nations, such as the US, Germany, Italy and France; they are keeping 60% of their foreign reserves as gold. This is a testament to the significance of gold in the central banking system.”
“Central banks bought 399 tonnes of gold in the third quarter, by far the most ever in a single quarterly period. According to the World Gold Council, they added another 31t of gold to official reserves in October, putting central bank holdings at their highest level since 1974. ”
“Data compiled by the World Gold Council shows demand outstripping any annual amount in the past 55 years, with China and Russian being the largest accumulators of the precious metal in 2022 (Financial Times, Dec. 28, 2022).”
https://aheadoftheherd.com/rise-of-the-gold-backed-e-yuan-richard-mills/
Transformed (DV) (DOLLF) Dolly Varden Silver In Discovery Mode, Says CEO
Henry Lazenby – Mining.com – January 5, 2023
“Looking back on the past two years since he took the reins as CEO of Dolly Varden Silver (TSXV: DV), Shawn Khunkhun points to a critical acquisition the company made in December 2021 as being the lynchpin to the company’s recent exploration and fundraising success. The British Columbia-focused explorer has district-scale holdings, the Kitsault Valley project, in the southern leg of the province’s ‘Golden Triangle’.”
“Our goal is to either groom this project into a saleable asset in the next 36 months or to have it ready for a construction decision for ourselves. If someone like Hecla Mining (NYSE: HL) were to acquire us today, we’d comprise about 15% of their total resource base,” said Kunkhun in an interview.
https://www.mining.com/transformed-dolly-varden-silver-in-discovery-mode-says-ceo/
The senior gold miners are already up almost 50% in 3.5 months.
https://stockcharts.com/h-sc/ui?s=%24HUI&p=W&yr=5&mn=0&dy=0&id=p73281771342&a=1323768108
Celsius scores a legal victory but its former CEO now faces a new lawsuit in New York
Jordan Finneseth – Kitco – Thursday January 05, 2023
“The judge presiding over the bankruptcy case for the defunct crypto-lending platform Celsius Network has ruled that the funds deposited by customers into the company’s ‘Earn’ program are the property of Celsius, per the terms of service.”
“Approximately 600,000 accounts that held assets valued at $4.2 billion – including $23 million worth of stablecoins – are affected by the ruling from U.S. Bankruptcy Judge Martin Glenn, who wrote in a court order that the company does not have enough funds to fully repay those deposits.”
“The Court concludes, based on Celsius’s unambiguous Terms of Use, and subject to any reserved defenses, that when the cryptocurrency assets (including stablecoins, discussed in detail below) were deposited in Earn Accounts, the cryptocurrency assets became Celsius’s property; and the cryptocurrency assets remaining in the Earn Accounts on the Petition Date became property of the Debtors’ bankruptcy estates (the ‘Estates’),” Glenn wrote.
It is simply astounding that so many claimed they flocked in to cryptocurrencies for the decentralized aspect to reduce their counterparty risk to fiat currencies, and yet, they piled onto centralized exchanges that absolutely immediately became major 3rd-party risk factors as they saw their funds frozen, stolen, hacked, or lost in bankruptcies.
It’s not just Celsius or FTX or Bitconnect or MFGlobal or Crypto.com etc… that have had issues…. there have been almost a dozen of these exchanges that blew up investors capital that was deposited. Instead of buying the cryptos directly and storing them on their own digital wallets, most investors elected to just get allocations through intermediaries… ie. exchanges. That ceases to be decentralized at that point.
Once the speculators deposit their money in an exchange, that exchange often owns those assets, and they are merely custodians of the associated stable coins that allow them to put allocations towards specific cryptos. When the exchange goes down, the funds go bye-bye. When will people learn?
So Mexico nationalized its lithium mines in April 2022 by an overwhelming majority vote.
Is it that much of a stretch to think they would do the same with other “strategic” metals, like silver, especially if there is a global currency crisis?
I’ll bet most of the silver miners that have been sucking wind since November have substantial operations in Mexico, and that the ones that have kept up with silver, like HL, do not, but that is just a cynical guess.
In fact, the higher silver goes, one would imagine the urge to nationalize the silver mines will become unbearable for these shortsighted Mexican politicians.
Greenspanconscience – That is not good for the Lithium stocks in Mexico, but keep in mind, there are very few lithium companies even operating in Mexico, (as most are in the Lithium triangle of Argentina, Bolivia, and Chile). If those countries ever nationalized lithium assets, then that would really be a game-changer.
As for Mexico, we’ve heard rattling about the government seizing the gold or silver mining projects for decades and it has never happened. They are smarter than that, as silver mining in particular is a major employer of people in most Mexican states, and that is largely fueled by foreign investment capital from Canada, the US, Australian, and more recently, China. Nationalizing the silver mines would be a major policy miss-step so no administration has been dumb enough to consider it. They usually press the issue with how they tax mining companies, and even there, the barks / concerns have been far worse than the bites / reality for many years now.
I have plenty of exposure to Mexican silver companies, and it doesn’t keep me up at night. Now I have diversified into more North American focused silver stocks like Hecla (that you mentioned), Coeur, Dolly Varden, Metallic Minerals, Blackrock Silver, Summa Silver, etc… or even Americas Gold & Silver diversified across 3 countries (Canada/US/Mexico), or Santacruz Silver in 2 countries (mostly Bolivia and some Mexico)… or Silvercorp operating in China, to diversify my silver exposure to just Mexico, but for better or for worse, it is where a lot of the silver is located, and thus where the silver companies are operating.
If Mexico were to nationalize its silver mines, it would be the perfect end to my investment tribulations in the sector since 2015. I’ve waited patiently for 7 years for this sh!tshow to play out, and it would be perfect (and tragic) if Lucy pulled the football away now.
If I switch to silver futures, my guess is COMEX will default a few weeks after I buy, with my luck.
Fortuna(FSM) is getting more grief from Mexican government.
Yes, Terry, but that is not the Mexican government nationalizing mines (which they would be idiotic to attempt)… rather it’s about renewal of a mining extension based on their environmental license to operate, which they already cleared up and won the court battle last year on.
Here is a statement from the CEO from just yesterday on Jan 5th in a press release:
Jorge A. Ganoza, President and CEO, commented, “It is incomprehensible that we find ourselves again having to contest a controversial resolution issued by SEMARNAT. This specific authorization, one of the many under which San Jose operates, was confirmed by the Federal Court last November, with a ruling in our favor against SEMARNAT.” Mr. Ganoza added, “Moreover, under the four years of the current Mexican Administration, the San Jose Mine has been audited annually by the Federal Environmental Attorney’s Office (PROFEPA) as well as the National Water Commission (CONAGUA), and in every single audit, San Jose’s compliance with environmental obligations has been confirmed. Further, during this period, SEMARNAT has issued two multi-year environmental authorizations for the mine and tailings facility.” Mr. Ganoza concluded, “Minera Cuzcatlan is diligently working with the government authorities to resolve this matter and is concurrently pursuing all pertinent legal protection.”
https://ceo.ca/@globenewswire/fortuna-challenges-decision-to-re-assess-extension
The Dow looks poised to make a run for its all time highs believe it or not. The weekly candle this week looks incredibly bullish.
I agree! Chinese stocks also just turned and going to run now.
Gold Is Continuing The Rally It Began In Early November, Yet It Seems Few Gold Bugs Are Recognizing What’s Going On.
Brien Lundin – Golden Opportunities – January 4, 2023
“As I noted last month and many times over the years, gold tends to bottom around mid-December and, while most investors are distracted by the holidays, it begins a rally that continues well into the next year. This time has gone largely according to script, except for the fact that gold actually began moving higher in early November. ”
“But what’s really amazing is that few of the avid metals and mining investors seem to be aware of what’s been going on. Part of this is due to the fact that the mining stocks, from the majors down to the juniors, have not been responding to gold’s rally. That may be changing today, as there’s a lot of green on my screen right now, and the major gold-stock indices are all up over 4%.”
Still, as I noted on Twitter this morning…
“One of the more interesting truisms of investing is that a market is often loved least by those who know it best. Thus, you’ll find few in junior mining who recognize that we’re in the midst of a major metals rally.”
https://tinyurl.com/2puj6cek