Gold & Precious Metals

Silver or Red Hot Chilli Peppers?


So John (and Jack2343 and Jane1928273) went long, and silver went up, and physical silver split from paper – because if you are going to nail yourself to a cross of precious metal then do it properly, right?

At least it made a change from the social media meme of Fry from Futurama holding out (paper) money and saying: “Shut up and tell me which stocks to buy to punish rich people.” And did we achieve a global reflation as a result?

Ironically, Bloomberg crows that, yes, reflation trades are indeed back on, with the US Treasuries 5s-30s spread widening out to 143bp on Monday, the widest since 2016. All I can say is that those buying that particular market trend are like Fry from Futurama holding out (newly printed central-bank paper) money and saying: “Shut up and tell me which commodities to buy to punish poor people.”

What we see all round us is global billionaire after billionaire getting more billionaire-y, and their pet projects to match: overnight Hollywood genius, galactic explorer – how long until one decides to turn the moon into cheese? Hedge funds would buy it; and if it were shorted by them then Redditors would, so cheesy moons are surely a win-win. Or how about just wiring up a monkey brain to play video games? But rather than gargling such central-bank bong water, let’s recall markets are allegedly trading for The Great Reflation, and not The Great Gatsby, because we are going to see joined up fiscal and monetary policy.

Now this would be a real game-changer. Really. Except it isn’t happening.

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The Resurgence of Silver


Most investors who focus on precious metals and commodities know that gold had a great year in 2020, up 24.6%. However, not as many know that silver did even better! Silver was up 47.4% in 2020, rising from $17.80 per ounce on January 2, 2020, to $26.35 per ounce on December 31, 2020.

Silver didn’t just outperform gold in 2020; it also outperformed every other major asset class, including U.S. small cap stocks (up 18.5%), U.S. stocks (up 15.5%), U.S. corporate bonds (up 9.7%) and U.S. Treasuries (up 3.6%). Many other asset classes declined in price in 2020, including commodities, the U.S. dollar, real estate and crude oil.

Silver backed off a little in early 2021 (it’s now trading around $25.25 per ounce), but it has held onto almost all of its 2020 gains. Of course, the question for investors is: Where do we go from here?

Read On


Mining supercycle talk back as copper, iron ore prices surge to 7-year highs

The copper price was trading at its highest since March 2013 on Tuesday after Chinese data showed manufacturing and construction in the world’s second-largest economy was expanding at a pace not seen in a decade.

On the Comex market, copper for delivery in March jumped 2.4% to $3.5215 a pound ($7,764 a tonne) in New York, racking up its fifth straight day of gains. The copper price has advanced 26% year to date after recovering from a dip below $2.00 a pound at the height of the pandemic in March.

According to Fastmarkets MB, benchmark 62% Fe fines imported into Northern China were changing hands for $132.13 a tonne on Tuesday. That was the highest level for the steelmaking raw material since January 2014 and brings gains for 2020 to over 43%. CLICK for complete article

The Gold Rally Has Finally Run Out Of Steam

This year has been proving to be a gold speculator and investor’s dream after the yellow metal rallied hard to hit historical highs thanks to a perfect storm of  a global pandemic, massive government stimulus packages, weakening dollar and a stock market bull run that had finally run out of gas. The torrid rally represented the sharpest gain the metal has mustered in more than a decade. Wall Street hedge funds have been extremely bullish on gold, with some eyeing prices of $3,000 and even $5,000 per ounce.

To wit, Bank of America Merrill Lynch said that it expects gold to hit $3,000 by early 2022 while Citigroup and billionaire Thomas Kaplan, founder of New York-based asset management firm Electrum Group, believed that $5,000 was in the cross hairs.

But now there’s growing evidence that the gold rally could be done for now, and those lofty targets will remain out of reach for gold punters.

Gold prices have pulled back 13% after touching an all-time high of $2,075 in August, as a barrage of potential Covid-19 vaccine candidates continues to give the world hope that the worst could be in the rearview mirror. CLICK for complete article


Q3 Mining Trends, Themes and Companies to Watch

Growth and Balance Sheet Improvement:
With commodity prices across the metals complex improving q/q and many operations returning to full capacity after Covid related downtime in 2Q20, the majority of precious and base metals producers in our coverage universe posted strong FCF growth q/q driving balance sheet improvement. Among the gold producers we highlight AEM, AUY, BTO, CXB, IAG and KGC as having significant q/q increases in FCF with FM and LUN as standouts among the base metals producers. The strong FCFs drove a reduction in net debt for the majority of our coverage companies

Gold Producers Increase Giving – Dividends Keep Increasing:
With the strong FCFs and improving balance sheets, all of our dividend paying gold producers increased dividend rates in 3Q with KGC re-instating its dividend after a multi-year hiatus. Over the past year, BTG has quadrupled its dividend while both AUY and AEM have grown dividends by ~160% and 100% respectively. The base metals producers maintained dividend rates in the quarter

4Q20 Expected to be Strongest Production Quarter of the Year:
The majority of our gold producers are expecting 4Q20 to be the strongest production quarter of the year incorporating operational re-starts, ramp-ups and mine sequencing. With the exception of OGC, gold producers in our coverage universe have delivered 71-75% of annual production guidance YTD which we expect will allow the majority to achieve production guidance for the year when incorporating the expectation of a strong 4Q. Our modeling suggests AEM could exceed annual production guidance while we expect OGC’s production to come in slightly below the guided level. Among the base metals producers, we expect FM and ERO to have strong 4Q production positioning both to achieve the top end or potentially exceed annual production guidance… CLICK HERE for the full report

Gold price tumbles on covid vaccine breakthrough

Gold prices erased last week’s gains on Monday as news of the first successful late-stage covid-19 vaccine trials prompted investors to dump safe-haven bullion and flock to riskier assets instead.

Spot gold sank below $1,900 per ounce during early hours of trading, down 5.3% to $1,853.42 by 11:15 a.m. ET. This marks its biggest single-day slide since August.

US gold futures also declined 5.0% to $1,853.70 per ounce in New York.

Equities surged after Pfizer said its experimental covid-19 vaccine was more than 90% effective. Pfizer and German partner BioNTech SE said they expect to seek US emergency use authorization later this month.

“(The news) really exceeded everyone’s best-case scenarios. There was growing nervousness that we might not get a strong vaccine result, so this unleashed the risk-on trade and for gold, signaled a massive exodus of safe-haven plays,” Edward Moya, senior market analyst at OANDA, told ReutersCLICK for complete article