Are gold stocks set for explosive growth like last summer? Yamana exec Peter Marrone on challenges, opportunities

With the challenges of shutdowns brought by COVID-19 largely behind us, miners can now focus on rebuilding production to maximum capacity.

Inflation now remains the biggest challenge to miners, said Peter Marrone, executive chairman of Yamana Gold.

“It seems to me that the challenge that is fronting this industry presently is inflation, and how to interpret it. Is it transitory, or does it have a stickiness to it? And on what, should we be concerned about as it relates to inflation, is it labor, or is it consumables?” Marrone told David Lin, anchor for Kitco News.

Marrone highlighted that while gold miners’ share prices have dropped this year, concurrent with the drop in gold, revenues and production have continued to grow. A compression of share price, coupled with growth in earnings before interest, depreciation and amortization (EBITDA), leads to more attractive valuations.

“If we apply any of the measures, if we apply multiple to cash flow, multiple to net asset value, our net asset value has gone up, our multiple to net asset value has gone down. Our multiples to cash flow…we’re trading at about five or six times cash flows, and normally in this industry, and certainly some companies in this industry, can trade higher than ten times cash flow. In other industries, they’re trading at higher than ten times cash flow, so I think there’s a lot of room for upside,” he said.

For more information on Yamana’s latest project updates, as well as Marrone’s outlook on the gold sector, watch the video above. Follow David Lin on Twitter: @davidlin_TV (https://twitter.com/davidlin_TV).

By David Lin

For Kitco News

Kinesis Money the cheapest place to buy/sell Gold and Silver with Free secure storage

David

Gold and silver trade flat leading into the European open

performing well again on Thursday gold is heading into the European open flat. Silver is also trading flat after pushing 2.17% into the black during yesterday's session. Looking at the rest of the commodities complex, copper is -0.71% lower and spot WTI is half a percent in the red.

Indices in the Asia Pac area traded negatively. The Nikkei 225 (-1.80%), ASX (-0.33%) and Shanghai Composite (-0.43%) all lost ground overnight. Futures markets in Europe are indicating that there will be a negative cash open.

In FX markets, the dollar index is 0.14% higher as AUD/USD was the biggest loser overnight dropping -0.24%. In the crypto space, bitcoin has just dipped under the psychological $40k mark.

Looking at the news from overnight, the Biden administration says will not rule out further lockdowns if scientists recommend it.

Some of China’s key fertilizer companies are to suspend exports. This is a temporary measure to ensure there is enough supply in the domestic market.

Australia PPI for Q2 +0.7% q/q (prior +0.4%). Australia Private Sector Credit for June +0.9% m/m (expected 0.4%).

France Q2 preliminary GDP +0.9% vs +0.8% q/q expected.

Japan Retail sales for May +3.1% m/m (vs. expected +2.7%). Japan Industrial Production for June 2021 +6.2% m/m (preliminary) (vs. expected 5.0%). Japan Jobless (Unemployment) rate for June: 2.9% (expected 3%, prior 3%).

Iron Ore prices once again moved lower overnight with analysts citing the Chinese property market as a key concern. It has been noted that Chinese authorities there urged the cities of Yinchuan, Xuzhou, Jinhua, Quanzhou and Huizhou to stabilize their property markets with stronger regulation.

Workers in the Andina copper mine in Chile have chosen to go on strike.

Looking ahead to the rest of the session highlights include German GDP, EU CPI, EU unemployment rate, US PCE, Canadian GDP, and Michigan consumer expectation data. There will also be earnings from Glencore.

By Rajan Dhall

For Kitco News

Kinesis Money the cheapest place to buy/sell Gold and Silver with Free secure storage

David

Broader trends in the gold market still positive even as demand drops 10% in first half of 2021

Gold demand picked up in the second quarter, but it wasn't enough to undo the weakness seen at the start of the year, according to the latest research from the World Gold Council.

Thursday, in its quarterly Gold Demand Trends report, the WGC said that global gold demand in the second quarter totaled 955.1 tonnes, virtually unchanged from the second quarter of 2020. However, the report noted that due to a disappointing start in the first quarter, total gold demand dropped by 10% for the first half of the year.

Although gold demand is down sharply in the first half of the year, Juan Carlos Artigas, head of research at the WGC, said that investors need to look at the broader picture. He added that he would describe the selling in the investment market as a tactical adjustment from last year 's record inflows.

"Net-net, we are still in a positive investment territory," he said. "Nothing we have seen in the second quarter and the first half of the year would suggest a shift in the broader market trends."

Looking at the overall market, the WGC said that although the yellow metal stabilized between April and June, it could not recover from steep losses in investment demand in the first three months of the year. A wave of selling in gold-backed exchange-traded products swept through global markets during the first quarter. The report said that the gold ETF market saw inflows of 40.7 tonnes in the second quarter, leaving demand in the first six months of the year down by more than 129 tonnes.

ETF Investment demand is down sharply compared to 427.5 tonnes inflows seen in the second quarter of last year. However, the numbers are skewed as investors raced into gold at a record pace last year after central banks and governments worldwide pumped historic amounts of liquidity into markets to support the global economy devastated by lockdowns due to the COVID-19 pandemic.

The WGC said that global gold investment demand totaled 283.9 tonnes, down 52% compared to the second quarter of 2020. While ETF demand was fairly lackluster, the report noted that bar and coin demand remained healthy through the second quarter, rising by 243 tonnes, an increase of 56% from last year but down 30% from the first quarter of 2021.

"Thailand was the largest contributor after switching from net negative investment in Q2 2020 to modest positive investment," the report said. "Bar and coin demand is likely to gain on the back of rising inflation and gold 's strong returns momentum of the last couple of years, potentially reaching 1,100-1,250t. ETF investment, meanwhile, will almost certainly not maintain 2020 's record pace. Instead, we expect demand to return to a more sustainable level, with annual inflows at or below the 10-year average of 150t," the analysts said in the report.

The WGC also noted significant improvement in the Jewelry sector, which has been particularly hard hit due to the COVID-19 pandemic. The report said that global jewelry demand totaled 390.7 tonnes, up 60% from last year. However, total demand for the first half of the year was 873.7 tonnes, down 17% compared to the five-year average.

The WGC said that it expects jewelry demand to continue to improve throughout the year but remain below the five-year average.

"Continued global economic recovery should support consumer demand for global gold jewelry throughout 2021, although continued COVID disruption in some markets – most pertinently, India – will provide a headwind. While pent-up demand could serve as a boost, a strong price recovery in H2 could push jewelry demand towards the lower end of the range," the analysts said.

Looking at two important regional jewelry markets, the report said that China 's gold jewelry demand in the second quarter increased to 147t, up 67% compared to last year.

"Looking ahead to the rest of the year, we are optimistic about the prospects for Chinese gold jewelry demand. Not only is Q2 a seasonally low quarter for gold jewelry demand, but policymakers continue to focus on stimulating domestic consumption with initiatives such as shopping festivals, which are likely to be supportive of local gold consumption. Furthermore, economic growth should also remain supportive," the report said.

Meanwhile, India saw a 25% increase from its extremely low base reported last year. Demand in India during the first half totaled 157.6t, 46% below the H1 2019 and 39% lower compared to the five-year average.

One significant bright spot in the gold market was renewed demand from central banks. The report said that the central bank bought 333 tonnes of gold in the first half of 2021, 39% above the five-year average.

Thailand, Hungary, and Brazil were the biggest buyers in the gold market.

"Having been relatively subdued in the second half of 2020, demand picked up in the first half of 2021, with almost two-thirds concentrated in Q2," the analysts said.

Another bright but small part of the gold sector was an increase in industrial demand. The report noted that industrial demand for gold increased by 18% to 80 tonnes.

While gold demand was relatively muted in the second quarter, the report noted that supply increased 4% in the first half of the year to 2,308 tonnes. The report said that mine production rose 9% to 1,783 tonnes, the largest increase in the first half of the year on record.

By Neils Christensen

For Kitco News

Kinesis Money the cheapest place to buy/sell Gold and Silver with Free secure storage

David

Gold SWOT- Demand for Gold & Precious Metals Is Running Hot

Strengths

The best performing precious metal for the week was gold, up 0.21%. Gold remained stable during the week as bond yields retreated and investors weighed the outlook for global growth on concerns that coronavirus variants may threaten the economic recovery. The dip in Treasury yields last week helped boost the appeal of the non-interest-bearing metal. Gold then stabilized later in the week as the dollar and Treasury yields pared some of their gains made in the wake of U.S. inflation data that came in significantly higher than expected. Prices paid by U.S. consumers surged in June by the most since 2008, topping all forecasts and testing the Federal Reserve’s commitment to sticking with ultra-easy monetary support for the economy.

A UBS call with a leading diamond expert indicates diamond market fundamentals remain attractive with demand strong in the U.S. and China with mid-stream and producer inventories healthy. Midstream inventories have fallen to more sustainable levels due to structural changes and tighter credit, and profitability has returned. Supply fell 6% in 2020 to 119 million carats, the lowest level since the 1990s, due to curtailments/closures. Rough prices are back to pre-COVID levels, after falling 15% in the first half of 2020.

Kirkland Lake Gold reported positive production and sales information. The company produced 379,000 ounces of gold in the second quarter, 9% above consensus. Second quarter sales were 365,000 ounces, 5% above consensus. The company expects to end 2021 in the top half of 1.3-1.4-million-ounce guidance. Dundee Precious Metals reported preliminary production results for the second quarter as well, with consolidated gold output of 85,100 ounces exceeding consensus of 73,700 ounces. Gold production at Chelopech was very strong with 52,600 ounces benefiting from higher grades and improved recoveries. Performance remained solid at Ada Tepe. Dundee has produced 155,400 ounces and puts the company in good shape to aim for the higher end of the guidance range.

Weaknesses

The worst performing precious metal for the week was palladium, down 6.45% as UBS reported substitution with cheaper platinum is already taking place in auto-catalysts, becoming more pronounced in 2022. New Gold reported that weaker performance was achieved at Rainy River due to lower grades—stronger Rainy River second-half results are expected, but the mine is reportedly now on track to achieve the low end of guidance.

Fiore Gold released production for the three months ended June 30 of 11,800 ounces, slightly below estimate of 12,400 ounces from Stifel, but up 8% from the second quarter. The miss against Stifel’s numbers was driven by lower tons stacked and lower grade. The company ended the quarter with a cash balance of $18.5 million, slightly below anticipated $20.4 million.

Pure Gold announced second quarter production results. Second quarter (pre-commercial) gold production of 6,300 ounces was 40% below the 10,400-ounce forecast. Average daily mill throughput in the quarter of 509 tons per day was below the average 538 tons per day delivered in the first quarter.

Opportunities

According to the CEO of Barrick Gold, Mark Bristow, due to an aggressive near-mine exploration program, Kibali was continuing to replace its reserves faster than it was mining them, and now has a resource base that is approaching the 2013 levels when the mine first went into production. The company also said that significant exploration successes could extend the Tongon gold mine’s life. Bristow said 10 years after it went into production Tongon could get a new lease on life thanks to promising results from near-mine exploration campaigns designed to replace the mine’s depleted reserves.

AngloGold Ashanti is pleased to announce that a non-binding proposal has been submitted to the Board of Directors of Corvus Gold Inc. under which its direct wholly owned subsidiary, AngloGold Ashanti Holdings plc, would be willing to acquire for cash all the issued and outstanding common shares of Corvus. AngloGold Ashanti currently holds a 19.5% indirect interest in Corvus.

Aya Gold & Silver reported second quarter production from Zgounder of 439,100 ounces handily beating aggressive estimates of 401,700 ounces due to higher throughput and head grade. This puts the mine on track for 1.66 million ounces in 2021, well above guidance of 1.2 million ounces.

Threats

Jefferies is cautious on mining equities in the near-term as investors’ sentiment has turned more negative on the sector. The group said, “we attribute the weakness to the delta variant of coronavirus and associated lockdowns, China tightening, and fears of weaker demand as some believe global growth has peaked.”

On July 15, Barrick reported that an incident occurred at its Hemlo mine on the evening of July 14, resulting in the death of a contractor. Hemlo operations are suspended, and an investigation is underway.

Sibanye Stillwater Ltd. may wind down its three South African gold mines in the next decade or so as it becomes harder to exploit aging assets in an industry that was once the world’s largest. Sibanye, which was spun off from Gold Fields’ oldest South African mines in 2013, employs about one-third of the roughly 93,000 workers in the nation’s gold industry. Sibanye is actively seeking gold acquisitions, likely in North America.

By Frank E. Holmes

Contributing to kitco.com

Kinesis Money the cheapest place to buy/sell Gold and Silver with Free secure storage

David

Gold, silver and bitcoin rise ahead of the European open

After a tough end to last week gold has started the week on the front foot rising 0.23% in the Asia Pac session. Silver is also trading well and has moved 0.23% higher to trade at $25.22/oz. In the rest of the commodities complex, copper is 0.40% higher and spot WTI has lost -1.18%.

In the indices, the Nikkei 225 has risen 1.04% and the ASX traded flat. The Shanghai Composite however fell a massive -2.50%. Index futures in Europe are also pointing towards a negative cash open.

In the FX markets, the biggest mover overnight was USD/JPY which fell -0.20%. The dollar index is trading -0.08% lower but to strengthen against the Australian dollar as AUD/USD fell -0.18%. In the crypto space, bitcoin has had a revival over the weekend and looks like it could hit $40k.

Looking at the major stories from the weekend and overnight, the companies in China struggled in the markets overnight after Beijing tightened regulations. This included a ban on companies offering tutoring in the school curriculum going public and raising capital.

Some housing companies also suffered in China after the PBOC ordered lenders in Shanghai to raise mortgage loan rates for first-time homebuyers.

Japanese Manufacturing PMI (Jul) 52.2 vs prev 52.4.

More from China as the Vice Foreign Minister said that the relationship with the U.S. is at a stalemate and now faces difficulties. Although, China says it has asked the U.S. to remove sanctions on Chinese leaders.

The U.S. infrastructure talks continued over the weekend and apparently, there is still a substantial disagreement.

Sydney is to announce an extended lockdown today (to mid-September).

In the U.S. Fauci says some in the US may need booster shots of COVID-19 vaccine.

Looking ahead to the rest of the session highlights include the German IFO reading, U.S. new home sales, and comments from BoE's Vlieghe.

By Rajan Dhall

For Kitco News

Kinesis Money the cheapest place to buy/sell Gold and Silver with Free secure storage

David

‘We’re in untested waters,’ hard assets are real winners

'We're in untested waters,' hard assets are real winners

Gold is fighting for its spot above the $1,800 an ounce level. But analysts are not ruling out a selloff towards $1,730 as risk appetite and a stronger U.S. dollar weigh on gold.

Here's a look at Kitco's top three stories of the week:

3. Elon Musk on owning bitcoin, ethereum and doge: 'I might pump, but I don't dump'

2. This shows 'how easy' it is to manipulate the gold market – trader's chat logs

1. 'We're in untested waters' with inflation and the real winners are hard assets like gold – former JPMorgan MD

By Anna Golubova

For Kitco News

Kinesis Money the cheapest place to buy/sell Gold and Silver with Free secur

David

Gold/Silver- time to get technical

We just experienced one of the quieter weeks for Gold with all the distractions and headlines focusing on the "Delta Variant" and its potential negative impact on the reopening trade and Small Cap stocks. The Russell 2000 came under significant pressure along with Crude Oil on Monday and Tuesday, followed by a "V" shaped recovery that extend gains into the weekend. The significance is that volatility of specific asset classes will continue throughout the rest of the year due to the crowding of those risk asset exposures. Essentially everyone owns those same financial products, and when a new "Narrative" takes hold, everyone collectively runs for the door. Remember, the markets take the elevator up and the window down.

Cutting out the narrative this week and focusing on the technicals of one of our high conviction plays, we have been monitoring the constructive technical chart formation in the Gold market. If we do see a "risk-off" appetite in the equities, it could give Gold the spark it needs to punch a ticket through $1850/oz. To further help you understand the quantitative analyses of the precious metals markets, we created a free "Gold Trends Macro Book," updated with silver slides. You can request yours here: Free Gold Trends Macro Book.

Daily Technical Gold Chart

Gold continues to hold above key psychological support at $1800/oz while firmly above trendline support at $1775/oz. We are monitoring for another "Breakout" above the downward sloping channel near the $1825-1835/oz pocket resistance. If you are one of our clients or looking to become one of our clients and would like to position in Gold for the long run, we suggested considering using FOUR Micro 10 oz December Gold contracts per $25,000 and buying TWO at 1775 and TWO at 1685, with a stop at 1640. Doing such would ideally risk $3,600. We would look to a gold target of 2100/oz, which would allow for a profit of $14,800. If you would like to learn more about the strategies we are implementing or learn more about technical analysis, we created a guide to provide you with all the steps to create an actionable plan used as a foundation for entering and exiting the market. You can request yours here: 5-Step Technical Analysis Guide to Precious Metals.

By Phillip Streible

Contributing to kitco.com

Kinesis Money the cheapest place to buy/sell Gold and Silver with Free secure storage

David

Gold fights against the currents of the dollar, rising yields, equities, and crypto

Gold is undoubtedly swimming against strong currents, which are curtailing any move to the upside. Recently it has been struggling successfully to stay above $1800 per ounce. On Monday as well as today, gold prices came close to testing the 100-day moving average, which is currently at $1792.10, and on both occasions closed just above $1800.

In the case of today’s intraday low of $1794.30 for gold futures, it was dollar strength in trading overseas last night that took prices to that low. However, the dollar closed lower in New York trading, which resulted in gold moving back above $1800. As of 5:30 PM EST gold futures basis, the most active August 2021 Comex contract is fixed at $1803.80, which is a net decline of $7.50. Concurrently the dollar index has come off of the highs of 93.19 achieved last night and is currently trading at 92.84, which is a net decline of -0.015%.

Yields on the 10-year Treasury Note gained 0.0710 or 5.87% and is currently fixed at 1.28%, creating another strong current that is curtailing any upside movement in gold.

There is also a case to be made that investment dollars today were flowing into U.S. equities markets. The S&P 500 gained 0.82%, the Dow gained 0.83%, and the NASDAQ composite gained 0.92% in trading today.

Cryptocurrencies also showed significant gains today, with Bitcoin Futures gaining 7.07% and Ethereum gaining 8.85%.

Investors always look to have their money in asset classes that will return the greatest results. With strong U.S. equities markets and the potential for cryptocurrencies to have found tentative support, it makes it more difficult for gold prices to rise.

Market participants await the FOMC conclusion meeting on July 28

The future direction of gold prices could certainly be influenced by the upcoming FOMC meeting, which begins on July 27 and concludes the following day when a statement is released, and Chairman Powell has a press conference. The statement, along with Chairman Powell’s press conference, will reveal any change in their current monetary policy.

Market participants are also waiting for any announcement by the European Central Bank on Thursday. According to an article by James Hyerczyk written in FX Empire said, “Gold futures are edging lower on Wednesday, pressured by a firmer U.S. Dollar ahead of the European Central Bank (ECB) announcements on Thursday, another rise in U.S. Treasury yields and increasing demand for riskier assets with U.S. equity markets hovering slightly below record highs. Despite having its gains capped, the market appears to be underpinned by some inflows into the safe-haven metal due to concerns over a surge in COVID-19 cases.”

The fact that gold remains above $1800 is bullish. Especially as we have seen the dollar move higher, yields in 10-year notes and U.S. equities markets both exhibiting gains.

By Gary Wagner

Contributing to kitco.com

Kinesis Money the cheapest place to buy/sell Gold and Silver with Free secure storage

David

Gold and silver are flat leading into the European open

Gold and silver are trading flat this morning leading into the European open. Gold is still hanging on to the $1800/oz level while silver is just below $25/oz. In the rest of the commodities complex, copper has dropped 0.69% while spot WTI (0.72%) continues to consolidate after the large fall on Monday.

The indices in the U.S. recovered somewhat during yesterday's session after a tough start to the week. The S&P 500 closed 1.52% higher after falling -1.59% on Monday. Overnight in the Asia Pac area, the major indices followed that lead as the Nikkei 225 (0.46%), ASX (0.86%) and Shanghai Composite (0.73%) all pushed higher overnight.

In FX markets, the dollar index continued to push higher but this time it was AUD/USD that was the biggest casualty falling -0.46%. In the crypto space, bitcoin popped back above $30k and is trading nearly 3% higher.

Looking at the main news stories from overnight, Goldman Sachs says it is looking for $2,000/oz for gold. The investment bank now has a bullish outlook on commodities.

Chinese media is reporting that analysts are expecting the PBOC may lower financing costs further in H2 2021.

The Chinese NRDC has suggested stepping up its game on commodities price monitoring to ensure overall price targets are met this year.

A study has suggested that the JNJ coronavirus vaccine is ineffective against the delta variant and people who have had it will need a booster shot.

US Deputy State Secretary says the US will continue to engage with Chinese officials.

US Senate is set to vote on the infrastructure proposal on Wednesday (after 2.30pm Washington time).

US Democratic Senator Manchin says the two sides are not far apart in infrastructure negotiations.

AuU.S. President Biden said temporary price rises (inflation) were expected and it is also expected to be transitory.

Looking ahead to the rest of the session highlights include U.S. building permits and the earnings season continues. Anglo American are a big highlight from the miners.

By Rajan Dhall

For Kitco News

Kinesis Money the cheapest place to buy/sell Gold and Silver with Free secure storage

David

Gold bounces back from yesterday’s lows leading into the European open

Gold bounces back from yesterday's lows leading into the European open

Gold bounced back from the lows of $1795.14/oz seen yesterday to trade at $1817.20/oz leading into the European session. Silver has not recovered in the same fashion as its precious metal counterpart and trades flat at $25.15/oz. In the rest of the commodities complex, after a tough session yesterday, copper has moved 0.69% higher and spot WTI has pushed up a tiny bit after a dramatic -6.80% fall following the OPEC+ decision to increase production.

Risk sentiment was once again poor in the Asia Pac area. The Nikkei 225 (-0.94%), ASX (-0.46%) and Shanghai Composite (-0.11%) all closed lower overnight. Futures in Europe are pointing to a positive cash open this morning.

In the FX markets, the dollar index broke the previous wave high to trade 0.13% higher overnight. The biggest loser was NZD/USD which fell -0.66%. In the crypto space, bitcoin has dipped below $30k again to trade at $29,676 at the start of the session.

Looking at the news from overnight, The PBOC held the 1 and 5-year rates steady today for the 15th month in a row. 1-year 3.85% (as expected) & 5-year 4.65% (as expected).

The New Jersey Attorney General is preparing an order against the bitcoin platform BlockFi.

Japan National Headline CPI for June 2021: 0.2% y/y (vs. expected -0.1%).

The U.S. has formally accused China hackers of a cyberattack on Microsoft.

The U.S. CDC raised the U.K. to its highest risk level and urged Americans not to travel to Britain.

U.S. Senate leader Schumer said he will put forward a motion to vote on the $1.2trl infrastructure bill on Wednesday.

Incoming BoE member Mann said the BoE must not be premature with the tightening of monetary policy.

In Australia, the RBA said they remain committed to maintaining a highly supportive monetary policy and the central bank will not raise the cash rate until inflation is above the 2-3% target range.

U.S. President Biden said temporary price rises (inflation) were expected and it is also expected to be transitory.

Looking ahead to the rest of the session highlights include U.S. building permits and the earnings season continues. Anglo American are a big highlight from the miners.

By Rajan Dhall

For Kitco News

Kinesis Money the cheapest place to buy/sell Gold and Silver with Free secure storage

David