$9,000 gold and triple-digit silver prices will come, but do this first – Midas Touch Consulting

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Long-term, investors can expect gold prices to climb multiple times its current value, and silver prices to rally into the triple digits, but they should not count on the precious metals to break out in the short-term.

In , a correction is due and investors should take this as a buying opportunity, said Florian Grummes, managing director of Midas Touch Consulting

“It looks like [gold will get] a consolidation on the higher levels, with one nasty, little pullback where all the weak hands are shaken off and then the next wave up towards $1,800 and then the all-time highs of $1,920,” Grummes told Kitco News. “Once gold sustainability takes out the all-time high of $1,920, it can run easily a few hundred dollars further.”

In the next five to ten years, gold prices could climb to $8,000 to $9,000, with silver following suit in this bull-run, due to the similar macroeconomic environment that we currently share with that of the 1970’s, when gold prices climbed several hundred percentage points, Grummes noted.

“If you look at it from a very long-term perspective, and you can only compare it to the bull market of the 1970’s. Once the bull market started again in 1976, it went up for four years and it went up basically from $100 to $890, so nearly nine-fold. If you use the same ratio to today’s numbers, we would end up having gold, at some point in the future, $8,000, $9,000 gold, but we’re talking five to 10 years, I think,” he said.

What makes our situation similar to the economic landscape of the 1970’s is the potential for stagflation to set in, Grummes noted.

Silver’s outlook is equally positive on a long-term basis, and investors should not worry too much about the entry point if their time horizon is sufficiently long.

“Silver has huge upside potential. It’s extremely undervalued in comparison to gold. It’s a very cheap inflation hedge. I think at some point over the next few years silver will run up against the $50 level again,” he said. “There will be another breakthrough over the next two to five years and once that happens, I think silver is off to three-digit numbers.”

On bitcoin, Grummes said that the largest cryptocurrency is like the digital version of gold in its hedge properties, and should be owned in the same portfolio as the yellow metal.

 

By Kitco News

David

Corvus Gold jumps 15% on Nevada drill results

Nevada explorer Corvus Gold (TSX:KOR) traded up 15% to $2.58 a share on Wednesday after announcing a new discovery below its Mother Lode deposit.

The company highlighted a drill result showing 125.5m @ 2.6 g/t gold including 14.8m @ 8.9 g/t gold & 24.7m @ 4.9 g/t gold.

In a news release Jeffrey Pontius, President and CEO of Corvus, said the results reveal the potential of CIZ.

“These new results now reveal the potential of the CIZ. We will be evaluating this exciting target with our ongoing innovative core drilling program at Mother Lode. In addition to the ongoing exploration work that is expanding the Mother Lode deposit, development work is also rapidly progressing on our low-Capex, quick to account, Phase1 starter project at North Bullfrog. These exciting Corvus Gold developments are highlighting the potential of the Bullfrog District and along with new land acquisitions and discoveries by our neighboring production companies it is shining a bright light on this under explored area of Nevada. We expect that the Bullfrog District and Corvus Gold will become one of the major focuses of the Nevada and North American gold sector in 2020.”

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David

Osisko Gold Royalties reports higher adjusted 1Q profit

Osisko Gold Royalties Ltd. (TSX & NYSE: OR) posted a larger adjusted profit in the first quarter as revenues were boosted by higher prices of precious metals, the company said late Tuesday.

Revenues from royalties and streams totaled $37.8 million, an increase of 13% from $33.5 million in the same quarter a year ago. The company listed 18,159 gold equivalent ounces, down from 19,753 a year ago. However, the average gold rose to $1,583 an ounce.

Osisko listed adjusted earnings of $7.5 million, or a nickel per share, up from $5.8 million, or 4 cents, in the same quarter of 2019.

However, the company recorded a net loss of $13.3 million, or 9 cents per share. This included a non-cash impairment charge on the Renard diamond stream of $26.3 million, or $19.3 million net of income taxes. The COVID-19 pandemic delivered a double whammy to the diamond stream – the selling price of diamonds fell sharply, and even when the Quebec government ended a temporary mine shutdown due to the virus, the operator of the mine extended the care-and-maintenance period due to the depressed market, Osisko explained.

Osisko withdrew its 2020 production guidance as a result of uncertainties related to the pandemic.

“Even though our business has been impacted by the measures taken to contain the spread of COVID-19, the revenue deferral is manageable given our efficient business model,” said Sean Roosen, chair and chief executive officer. “We further believe that our opportunity set will grow in the coming quarters, and we are well positioned to deploy capital toward royalty and streaming transactions and create value for our stakeholders.”

The company said it improved the silver stream on the Gibraltar mine by investing $8.5 million to reduce the transfer price from $2.75 per ounce of silver to zero as of last month.

The company announced a second-quarter dividend of 5 Canadian cents per share to be paid on July 15 to to shareholders of record as of the close of business on June 30.

 

By Allen Sykora
For Kitco News

 

David

Hold on for inflation equities trade, JP Morgan says

HANDOUT – 18 September 2019, US, Washington: US Federal Reserve (FOMC) chairman Jerome Powell speaks during a press conference. The US Federal Reserve on Wednesday lowered the target range for interest rates by a quarter point – the second cut in just ove

Equity investors should not worry about inflation for the time being despite central banks unleashing monetary policy, JP Morgan said.

The investment bank said it had received questions from clients about a potential surge in inflation caused by extreme stimulus measures from the US Federal Reserve, led by Jay Powell. Such a surge could put an end to strong outperformance by growth and quality stocks.

Mislav Matejka, JP Morgan's head of global and European equity strategy, said he had sympathy with this view but that investors should consider the timing and the sequence of events. In the meantime, technology and defensive shares are winners and gold will perform well during deflation and reflation, he said.

Economies need to work through a deflationary phase before reflation, which is unlikely before the fourth quarter of 2020, Matejka said in a note to clients. A technical rebound in PMI surveys in May or June will fade, he said.

Inflation tends to be a lagging growth indicator, trailing improvements in economic output by about six quarters, JP Morgan said. Given current weak activity inflation could pick up in the second half of 2021, it said.

Tighter bank lending standards also need to start relaxing to make an inflation trade to take hold properly, JP Morgan said. There will be short-term bounces along the way, though.

"These rotations will not be able to sustain as long as bond yields are constrained, oil is directionless, inflation forwards are down, lending standards are tightened, and actual core inflation, as well as wage growth and labour market, remain weak," Matejka wrote

 

David

Gold prices today fall for second day in a row, silver edges higher

Gold prices have struggled at higher levels due to weak physical demand

But in the past one year, gold prices are up about 40%

Gold prices in India fell for the second day in a row despite positive global cues. On MCX, June gold futures were down 0.2% to ₹45,722 per 10 gram, after falling 0.70% in the previous session. Silver prices however edged 0.42% higher to ₹43,475 per kg.

In global markets, gold prices were higher, holding above key $1,700 per ounce level. Despite firmer equities and a stronger dollar, gold held firm on worries about a new wave of coronavirus infections as many countries are gradually reopening their economies. Spot gold climbed 0.2% to $1,704.26 per ounce. Among other precious metals, platinum rose 0.7% to $770.66 while silver climbed 0.4% to $15.51.

The second tranche of government of India's gold bonds of this fiscal year opened for subscription today at a time when the investment demand for the precious metal is rising. It will close on May 15. The price of per gram of gold has been fixed at ₹4,590 while those applying online and making payment through digital mode will get a discount of ₹50 per gram.

South Korea has warned of a second wave of the new coronavirus while China on Sunday the highest daily increase in cases since April 28. Wuhan, the epicentre of the outbreak in China, reported five new locally transmitted COVID-19 cases, the highest since March 11.

On the other hand, some increase in physical gold demand improved was seen in China, the world's biggest consumer, though activity remained muted in other countries due to lockdowns and holidays.

Later this week, Federal Reserve Chair Jerome Powell is due to give a key note speech, an event which will be on the radar of gold traders.

Though analysts remain positive on gold amid the coronavirus crisis and massive stimulus announced by central banks, they say that weak physical demand may put pressure on prices at higher levels. Besides, supply worries have eased as some refiners have resumed operations.

Data released on Friday showed the US shedding a staggering 20.5 million jobs in April, the steepest plunge in payrolls since the Great Depression. The head of the International Monetary Fund on Friday warned the United States and China against rekindling a trade war that could weaken recovery from the pandemic.

US President Donald Trump said on Friday he was "very torn" about whether to end the so-called Phase 1 U.S.-China trade deal, just hours after top officials from both countries pledged to press ahead with implementing.

 

11 May 2020, 09:35 AM IST

Written By Surajit Dasgupta

David

Don’t be “deceived” by rallies; gold prices and stocks both due for pullback – Phil Streible

Gold prices, in U.S. dollar terms, and stocks are both overbought and traders can expect a correction in the short to medium term, this according to Phil Streible, senior market strategist at Blue Line Futures.

“I just think it’s overvalued at this point. There’s about 311 companies out there that have recently gone into this distressed state. The bankruptcy levels are increasing. I’m quite bearish on U.S. equities,” Streible told Kitco News. “As soon as [the NASDAQ] breaks down a bit, there’s going to be a quick run to the door. I think the S&P 500 should be around 2,500.

Gold prices should be testing the $1,666 an ounce level on the downside and if this floor is broken, the trend could become bearish.

“Gold has really stopped. If you look at that chart pattern, it got over that $1,750 on a closing basis, I thought we were going to run back up into $1,780, we just didn’t do it, we started to slide off. So if you look, it’s got this bearish pattern going on, we’ve got to break that downtrend,” he said. “I really think that gold is not going to be this great asset.”

While in the U.S., stimulus measures have largely been priced into gold since the Federal Reserve has already “thrown everything in,” Streible noted, other countries are about to follow suit and so gold could see price appreciation vis a vis foreign currencies.

“I think gold futures are not going to be as robust as they once were [in U.S. dollar terms], but if you look at gold versus the euro, right now it’s 1,575, the all-time high gold in euros is 1,625. I think that’s your play, gold versus the euro, it will continue to go up,” he said.

The stock markets are really not factoring in the extent of the damage that the economy has suffered due to the pandemic, Streible said.

“It’s very easy to destroy an economy, but it’s very tough to rebuild an economy. Many of these jobs that are lost are not going to come back,” he said, adding that consumer discretionary spending will likely remain weak until December.
 

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David

Gold breaks solidly to the upside with gains of 2.29% on the day

If you recall from my articles from earlier this week, first on Tuesday, May 5 titled “Gold prices firm as U.S. dollar continues to climb”, we included a daily candlestick chart which included a hand-drawn compression triangle, commonly referred to as a pennant formation. We also included an arrow indicating that we were expecting a breakout to the upside. Below is that chart which was available to viewers on Tuesday.

This was followed by another daily candlestick chart yesterday May 6 (see chart Below), in which we had drawn in the compression triangle even though the market had moved to the very bottom of the range, at the support trendline. This chart was sent to our subscribers. Although the market closed on that day right at a critical support line of the compression triangle, we reported that there was no solid break below that trendline, and that it did not constitute any kind of major technical chart damage.

This Western pattern (pennant) is a widely accepted technical tool in which we look for the compression of range, which simply put is created when a market trades sideways with a number of lower highs, and simultaneously higher lows. You can see that on the chart below.

As of yesterday, May 6, the fact that gold had opened at the high of the compression triangle and closed just at the lows made it seem a little less likely that the breakout I was expecting would be to the upside.

My rationale for looking for an upside break was that when technicians view a compression triangle as it releases energy from the apex of that triangle it will typically break above or below support and resistance lines, but most importantly have a significant release of momentum. The energy is accumulated as the range compresses, and is released once a stock or commodity breaks above or below the pattern. Typically, the break out once again move to the most prevalent trend direction, which in the case of gold has definitely been higher.

While it will be tomorrow’s Labor Department’s jobs report that will have a profound and great influence on how the week ends based upon the technical studies, we have presented over the last few days, I believe there is a high probability that we will see a continuation of higher pricing.

Wishing you as always good trading and good health,

By Gary Wagner

Contributing to kitco.com

 

 

 

David

Wheaton loads up in silver in Q1

Wheaton Precious Metals (TSE:WPM) said today attributable gold equivalent production was over 180,000 ounces in the first quarter partially driven by record attributable silver production at Peñasquito.

Silver ounces produced was at 6.7 million ounces, up 18.5% from the same period a year ago.

Revenue was $255 million in the first quarter of 2020 representing a 13% increase from the first quarter of 2019 due primarily to an 18% increase in the average realized gold equivalent price; partially offset by a 4% decrease in the number of gold equivalent ounces sold.

Over $177 million in operating cash flow was generated in the quarter, an increase of over 50%.

Net debt was reduced by $182 million with Wheaton ending the first quarter in a net debt position of $589 million.

The company declared a quarterly dividend of $0.10 per common share.

Wheaton said its outlook is currently withdrawn.

"This pandemic is evolving rapidly and its effects are uncertain," wrote the company.

Last month the company announced a $5 million fund to aid communities affected by COVID-19.

 

By Kitco News

For Kitco News

David

B2Gold touts record revenue, cashflow, gold production

B2Gold (TSX:BTO) said today it had record quarterly total gold production of 264,862 ounces in Q1.

Revenue was up 44% to $380 million, also a record.

The quarterly consolidated cash flow provided by operating activities from the company's three operating mines was $216 million, also a record. Cash-flow was up $130 million or 151% over the first quarter of 2019.

The jump in gold production over the first quarter of 2019 was driven by the Fekola Mine in Mali, which had a strong start to the year with record quarterly gold production of 164,011 ounces, well-above budget by 9% (14,011 ounces) and 49% (53,662 ounces) higher compared to the first quarter of 2019. Fekola's significant increase in gold production over the first quarter of 2019 was mainly due to expansion of the Fekola mining fleet and optimization of the pit designs and mine plan for 2020, which have provided access to higher grade portions of the Fekola deposit earlier than anticipated in previous mine plans.

Consolidated all-in-sustaining-costs for the first quarter of 2020 were $695 per ounce sold, $110 lower than AISC in the first quarter of 2019. The favourable budget variance resulted from lower-than-budgeted cash operating costs and lower-than-budgeted sustaining capital and exploration expenditures (mainly due to timing and expected to be incurred later in 2020).

At the end of the first quarter of 2020, B2Gold's Calibre announced the temporary suspension of its Nicaraguan operations due to COVID-19. B2Gold has a 34% share of Calibre's production.

The company said it doesn't anticipate any other work stoppages due to COVID-19.

By Michael McCrae
For Kitco News

David

Coronavirus pandemic, and about $145 billion remains in the congressionally approved fund, the U.S. Small Business Administration and Treasury Department said Sunday.

The SBA has processed about 2.2 million loans worth more than $175 billion since Congress last month authorized more funding for the Paycheck Protection Program, part of almost $3 trillion in spending to fight the heavy economic toll of the pandemic, which has thrown about 30 million Americans out of work.

The second round of funding was launched on Monday, allowing lenders to issue forgivable, government-guaranteed loans to small businesses shuttered by the outbreak.

The average loan size in the second round of the PPP loan processing has been $79,000, according to the statement released on Sunday.

The U.S. government's $660 billion small business rescue program has stumbled on missing paperwork, technology failure, and the misdirection of funds to big corporations. It also faces the hurdle of forgiving those hastily arranged loans.

The latest data released by the government does not address complaints around the transparency of the program. For example, it not include a breakdown of industries that have received loans.

The pandemic, which has killed more than 66,000 people in the United States, has shuttered wide swaths of American life, closing many businesses and schools and leaving hundreds of millions largely sheltering at home. Over the past week some U.S. states have begun to allow some businesses to reopen.

U.S. processes over $500 billion in small business loans to stem coronavirus fallout

The United States has made over $500 billion in loans to small businesses hit hard by the coronovirus

David