The Fed and the Gold Price

Source: Rudi Fronk and Jim Anthony for Streetwise Reports 03/23/2020 Seabridge founders Rudi Fronk and Jim Anthony provide an update on the Fed’s actions and the gold price. Many times a day, we are asked what we think will be the impact on gold prices of the enormous money-printing by the Fed. We think the impact is much greater than you might imagine because it is in combination with huge fiscal stimulus. In a nutshell, we think the current path leads to a new all-time high in gold this year and a crisis of confidence in the dollar. It’s baked in the cake, in our view. Please note, this is an opinion not investment advice. Two points need to be made. First, most of the monetary stimulus to date is repo… money that must be returned in time certain and does not add to bank reserves. Repos unfreeze short-term liquidity but it’s the POMO…Permanent Open Market Operations or QE… that grows the balance sheet and bank reserves. There is much more QE to come, in our view, to keep mortgage rates down and bank balance sheets healthy (two Fed priorities). Repos have not satisfied the markets. To date, the Fed has announced $500 billion in new POMO Treasury purchases since COVID-19 of which more than half was used in the first few days. We expect new QE to total $4 trillion+ before the Fed is done. Second, and most important, the fiscal stimulus is even greater and far more problematic … Continue reading

Rick Rule: 'A Different Phrase for Bear Market Is Sale'

Source: Maurice Jackson for Streetwise Reports 03/20/2020 Rick Rule of Sprott USA and Maurice Jackson of Proven and Probable explore the effects of coronavirus on the precious metals markets and the best ways to invest in a recession. Maurice Jackson: Today, we will find out if there is a crisis response for your investment portfolio. Joining us for a conversation is legendary investor Rick Rule of Sprott USA. Rick Rule: Maurice, thank you so much for having me on. These are really interesting times, and it’s fun to address your audience in times like these. Maurice Jackson: Sir, it is an absolute privilege to have you on our program during these extreme global market conditions. Speculators want to find out what you’re doing as a crisis response and what actions they may take on their portfolio under these current market conditions. From your perspective as one of the most highly regarded credit analysts in the world, was this financial collapse inevitable? Rick Rule: I believe it was. I think what is more interesting than the pin, the pin being the virus, was the balloon. I really believe that the balloon is a function of various policy decisions and decisions that people, individually and as a society, made. I’m not belittling, by the way, the virus. I think that the rapid spread of the virus and the fact that there is, at present, no cure per se for the virus—that what you do is support the patient until the patient heals … Continue reading

Alasdair Macleod Wants to Invent a New Form of Math

Source: Bob Moriarty for Streetwise Reports 03/20/2020 Bob Moriarty of 321gold discusses misunderstandings over the role of banks versus speculators in commodity trading. I lived in California when I was in the 7th grade. The state led the rest of the US in education. That was before it turned into a socialist paradise. I took an algebra course in the 7th grade; California would let you take any course the teacher would allow you in. I pretty much aced it with one exception. I kept doing the math in my head. The teacher caught me and showed me that while it was really cool that I could work out the figures in my head, when the numbers got too big, I was going to have to work the problem out using the techniques he taught. That was cool with me. When my parents moved to Texas in the early 1960s I had the benefit of attending a serious high school in Fort Worth with vigorous course requirements including three years of real math. So I took four, I liked math a lot. It was dead easy for me. After I left the service in 1970 I started college, after all, everyone knows you have to have a college degree to get ahead. Except for Steve Jobs and Bill Gates. I signed up for all the math courses I could take. It was easy for me after all. Until I ran into The New Math. It seems that between 1964 and … Continue reading

Gold Producer in Nicaragua Nurtures Prospects and Collaborations

Source: Maurice Jackson for Streetwise Reports 03/19/2020 In this interview, Maurice Jackson of Proven and Probable talks with Ryan King of Calibre Mining about the latest news from the company. Maurice Jackson: Joining us for a conversation is Ryan King, the vice president of corporate development and investor relations for Calibre Mining Corp. (CXB:TSX.V; CXBMF:OTC.MKTS). Delighted to have you back to provide us with a number of updates regarding the value proposition of Calibre Mining, which is focused on execution, opportunity and discovery. Before we begin, Mr. King, please introduce Calibre Mining and the opportunity the company presents to the market. Ryan King: Calibre Mining is a multi-asset gold producer focused on execution and building sustainable value for our shareholders, communities we operate in, and all stakeholders. This past year Calibre has gone through a very significant transaction with B2Gold Corp. (BTG:NYSE; BTO:TSX; B2G:NSX). Prior to this transaction we were, and still are, an exploration company, but we were predominantly an exploration company focused on some assets in Nicaragua called the Borosi Triangle, or Golden Triangle, up in the northeast section of Nicaragua. We went through a transaction where we acquired two producing gold mines and one development-stage project in Nicaragua with B2Gold. We raised a little over $100 million dollars to complete that transaction. Our team is the ex-Newmarket gold team, which successfully discovered very high-grade gold mineralization at the Fosterville Mine in Australia, and then went on to merge Newmarket Gold with Kirkland Lake Gold Inc. (KL:TSX; KL:NYSE). … Continue reading

Silver & Gold Producer Achieves Solid Q4/19

Source: Streetwise Reports 03/19/2020 An update on Fortuna Silver Mines is provided in a CIBC report. In a March 15 research note, CIBC analyst Cosmos Chiu reported that Fortuna Silver Mines Inc.’s (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE) Q4/19 financials were solid but the company increased capex for its Lindero operation in Argentina. As for Q4/19, Fortuna Silver’s adjusted earnings per share (EPS) and cash flow per share (CFPS) were a beat, Chiu relayed. EPS was $0.07 and CFPS was $0.17, higher than consensus’ $0.06 and $0.11 projections, respectively, and CIBC’s estimates. Chiu highlighted that the Canadian company’s Q4/19 production from its San Jose mine in Mexico and its Caylloma mine in Peru was steady and cash flow generating. It amounted to 2,250,000 ounces (2.25 Moz) at a cash cost of $8.27 per ounce and an all-in sustaining cost of $12.58 per ounce. Both costs were 10% and 5% better, respectively, than in Q3/19. Fortuna’s 2020 production guidance remains unchanged at 7.5–8.3 Moz of silver and 101,000–125,000 ounces of gold (101–125 Koz), with 60–80 Koz coming from Lindero. Chiu noted that after the recent announcement that the first pour at Lindero would be delayed to sometime in Q2/20, Fortuna increased total capex for Lindero to about $320 million from $298 million and raised preproduction working capital needs to $40 million from $25 million. “Fortuna should be able to meet the remaining capital requirements at Lindero until commercial production is announced, expected in Q3/20,” Chiu commented. CIBC kept its Neutral rating but decreased … Continue reading

When You Reward Failure, You Encourage Fraud

Source: Bob Moriarty for Streetwise Reports 03/19/2020 Bob Moriarty of 321gold expresses his views on the potential bailout of industries. When the banking system was on the verge of complete failure in 2008, during the Great Financial Crisis (GFC), the world had a wonderful opportunity to do a total financial reset. All we had to do is let the failures go bankrupt. We will always need a banking system; we just don’t need a banking system riddled with fraud and failure. Sigh! We missed a great chance to make the world a better place. Perhaps we can do better this time around. The banks and powerful corporations who have controlled the US government for the last fifty years are in the process of trying to raid the last of the treasure from US vaults. They want their servants in government to reward them for their fraud and utter stupidity. It would be a crime of the first order to allow this. The Congressional idiots are screeching for more government giveaways not realizing that government giveaways and borrowing is what landed the US in this mess in the first place. It began in the summer of 1944 at Bretton Woods in New Hampshire. The conference agreed that the US dollar should become the world’s reserve currency and be directly tied to gold. Most other countries linked their currency to gold by linking to the dollar. This gave the US a giant competitive advantage. If the US wanted dollars to pay for … Continue reading

Genesis Drills for High-Grade at Chevrier

Source: James Kwantes, Resource Opportunities, for Streetwise Reports 03/18/2020 James Kwantes of Resource Opportunities discusses the investment thesis behind this Discovery Group company operating in “the prolific Abitibi Greenstone Belt.” For veteran speculators, the latest hits to junior mining share prices feels like déjà vu all over again. Sentiment is gloomy and market capitalizations are depressed. But gold, in U.S. dollar terms, is still up more than 25% year-over-year. And US$1,500 gold translates to more than CA$2,150, an exceptional price for Canadian projects whose expenses are measured mostly in loonies. Gold producers that deplete their reserves with every shift and every scoop still rely on junior exploration companies to find the deposits that will replenish their ore. Most juniors, meanwhile, had yet to respond even before the coronavirus corrections—which has further pummeled the sector. Expectations are very low, along with share prices. For exploration companies with strong management and backing, a flush treasury and potential for high-grade discoveries, it’s not a bad setup. Genesis Metals Corp. (GIS:TSX.V; GGISF:OTC) fits the bill. The Discovery Group company has $3.5 million in the treasury to drill its flagship Chevrier project in Quebec’s Chibougamau mining district. Chevrier is located in the eastern portion of the prolific Abitibi Greenstone Belt (180 million ounces [180Moz] of historical gold production). Genesis is drilling an initial 2,500 meters (10 holes) at Chevrier, part of a planned 8,000-meter drill program this year. The initial program is designed to tap into high-grade shoots within the Chevrier Main zone deposit, expanding … Continue reading

Is There a Real Shortage of Physical Gold and Silver?

Source: Bob Moriarty for Streetwise Reports 03/18/2020 Bob Moriarty of 321gold discusses the current situation with physical metals and paper markets. Every time the price of gold and silver go down in a big way, the manipulation/conspiracy crowd come creeping out of their rat holes to start preaching about naked short selling and a disconnect between physical metals and paper markets. As you will see, both issues tend to reveal how little these guys understand about how markets and people work in the real world. And an utter display of their basic ability to think for themselves. A little Econ 101 first. Commodity markets go down because of an excess of motivated sellers. Anyone who actually knows how commodity markets work understands that for every contract there is one buyer and one seller. That’s why it is impossible for there to be anyone doing “naked short selling.” You can sell first or you can buy first but you will do both eventually. If somehow someone managed to dump trillions of dollars worth of commodity contracts “naked” on the market, at some point they would have to buy those contracts back. A lot of people like to believe that commodity prices go down because there are more sellers than buyers but since every contract requires an equal and opposite party on the other side, if ten contracts are sold, someone has to buy ten contracts. There is never any other alternative. One buyer, one seller. Both margined or having the ability … Continue reading

No Time for Panic: Too Late to Sell But Too Early for Broad Buying

Source: Adrian Day for Streetwise Reports 03/17/2020 Rather than focusing on individual companies, money manager Adrian Day turns his attention to the overall markets, noting “recent events are unusual, and demand some commentary.” As everyone knows, these past couple of weeks have seen the markets on a wild ride, based on concerns about the coronavirus, culminating in the sharpest declines in most markets since 2008, and many for much longer. By Friday, no market or sector had escaped the slaughter. The S&P lost a quarter of its value over the past four weeks before Friday’s rally. Most European markets are down over 30% this year. The Brazilian market lost almost 25% of its value on just Wednesday and Thursday. Gold stocks fell 26% over the last three days. And so on. It was a bubble in search of a pin We have few stocks in global markets on our list. Needless to say, we were not preparing for a coronavirus to wreak havoc on global markets. But as Peter Schiff reminds us, it’s the bubble, not the pin, that’s important. Looking at any specific stock we still hold, rather than how few we hold in global markets, is missing the forest for the trees. Gold is a different matter. We have many gold and precious metals stocks on our list and had in recent months added more. This emphasis on gold was based primarily on global monetary policy. Nothing has changed there, at least nothing to change our mind about … Continue reading

Alamos Gold Shares Rise on Royalty Repurchase and Mining Cost Reduction

Source: Streetwise Reports 03/16/2020 Shares of Alamos Gold traded 15% higher after the firm reported that it has repurchased a 3% net smelter return royalty on its Island Gold mine located in northern Ontario. Intermediate gold producer Alamos Gold Inc. (AGI:TSX; AGI:NYSE) today announced that “it has entered into an agreement to acquire and cancel a 3% net smelter return royalty payable on production from the Island Gold mine for total cash consideration of $54 million (CA$75 million).” The company indicated that “the royalty was acquired from a privately held company and is payable on gold production within four patented claims that comprise the majority of currently defined Mineral Reserves and Resources within the Island Gold deposit.” The firm advised that acquiring and eliminating the royalty will immediately reduce operating costs, increase operating cash flow and provide increased exposure to significant exploration potential at the Island Gold mining project. The firm indicated that “as of December 31, 2019, the claims subject to the royalty contained 0.9 Moz of Mineral Reserves, representing 71% of Island Gold’s total Mineral Reserves and 1.1 Moz of Inferred Mineral Resources.” Due to the elimination of the royalty payment, the firm now expects a “$40 per ounce, or 7%, decrease in Island Gold’s 2020 total cash cost guidance to between $480 and $520 per ounce and $40 per ounce decrease in mine-site all-in sustaining cost guidance to between $740 and $780 per ounce”. The company’s President and CEO John A. McCluskey commented, “The acquisition of the … Continue reading