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Gold’s Big Picture SPONSOR: American Creek Resources $AMK.ca $TUD.ca $SII.ca $GTT.ca $AFF.ca $SEA.ca $SA $PVG.ca $AOT.ca

Posted by AGORACOM-Eric at 2:44 PM on Saturday, January 18th, 2020

SPONSOR: American Creek owns a 20% Carried Interest to Production at the Treaty Creek Project in the Golden Triangle. 2019’s first hole averaged of 0.683 g/t Au over 780m in a vertical intercept. The Treaty Creek property is located in the same hydrothermal system as the Pretivm and Seabridge’s KSM deposits. Click Here for More Info

From the HRA Journal: Issue 314

The fun doesn’t stop. Waves of liquidity continue to wash traders cares away. Even assassinations and war mongering generate little more than half day dips on Wall St. It seems nothing can get in the way of the bull rally that’s carrying all risk assets higher.

It feels like it could go on for a while, though I think the liquidity will have to keep coming to sustain it. By most readings, bullishness on Wall St is at levels that are rarely sustained for more than a few weeks. Some sort of correction on Wall St seems highly likely, and soon. Whether its substantial or just another blip on the way higher remains to be seen.

The resource sector, especially gold and silver stocks, have had their own rally. Our Santa Claus market was as good or better than Wall St’s for a change. And I don’t think its over yet. I think we’re in for the best Q1 we’ve seen for a few years. And we could be in for something better than that even. I increasingly see signs of a major rally developing in the gold space. It’s already been pretty good but I think a multi-quarter, or longer, move may be starting to take shape.

I usually spend time on all the metals in the first issue of the year. But, because the makings of this gold rally are complex and long in coming I decided to detail my reasoning. That ended up taking several pages so I’ll save talk on base metals and other markets for the next issue.

Eric Coffin
January 7, 2020

Gold’s Big Picture

“Après moi, le déluge“

No, I’m not writing about Louis IV, though there might be some appropriateness to the analogy, now that I think about it. The quote is famous, even though there’s no agreement on what it was supposed to mean. Most figure Louis was referring to the biblical flood, that all would be chaos once his reign ended.

The deluge I’m referring to isn’t water. It’s the flood of money the US Fed, and other central banks, continue to unleash to keep markets stable. Markets, especially stock markets, love liquidity. You can see the impact of the latest deluge, particularly the US Fed’s in the chart below that traces both the SPX index value and the level of a “Global Liquidity Proxy” (“GLP”) measuring fiscal/monetary tightness and weakness.

You can see the GLP moved lower in late 2018 as the Fed tightened and the impact that had on Wall St. Conversely, you can see the SPX running higher in the past couple of months as the US backed off rate increases, increased fiscal deficit expansion, and grew the Fed balance sheet through, mainly, repo market operations.

Wall St, and most other bourses, are loving these money flows. The Santa Claus rally discussed in the last issue continued to strengthen all the way to and through year end. As it turned out, the Fed either provided enough backstop in advance or the yearend repo issues were overstated. The repo market itself was calm going through year end and a lot of the short-term money offered by the Fed during that week wasn’t taken down.

Everything may have changed in the past couple of days with the dramatic increase in US-Iran tensions. I don’t know how big an issue that will be, since no one knows what form Iran’s retaliation will be or how much things will escalate. I DO think it’s potentially a big deal with very negative connotations, but it may take time to unfold. Someone at the Fed thought so too, as the past couple of days saw a return to large scale Fed lending in the repo market.

I’ve no doubt Iran will try and take revenge for the assassination of its most famous military commander by the US. But I don’t know what form it will take and if this means the US has drawn itself into the Mideast quagmire even more. I fear it has though. The US is already talking about adding 3,000 troops to its Mideast presence and they’re just warming up. Even larger scale attacks, if they happen, may not derail Wall St, but they’re certainly not a positive development at any level.

We know how stretched both market valuations and sentiment were before the Suleimani drone strike. The chart below shows a three-year trace of the “fear/greed index”. You can see that its hardly a stable reading. It flip flops often and extreme readings rarely hold for long. At last check, the reading was 94% bullish.

Sentiment almost never gets that bullish and, when it does, nothing good comes of it for bulls. A reading that close to 100% tells you we’re just about out of buyers. Whatever happens in and around Iran, I think a near term correction is inevitable. The only question is whether it’s a large one or not.

A rapid escalation in US-Iran tensions could certainly make a near term correction larger. If the flood of liquidity continues though, a correction could just be another waystation on the road to higher highs. There are a couple of other dangers Wall St still faces that I’ll touch on briefly at the end of this article. First however, lets move on to the main event for us-the gold market.

It wasn’t just the SPX enjoying a Santa rally this year. Gold experienced the rally we were hoping for that gold miner stocks seemed to be foretelling early last month. Gold’s been doing well since it bottomed at $1275 in June, but it didn’t feel that way during the long hiatus between the early September high and the current move. The gold price currently sits above September’s multi-year high, after breaching that high in the wake of the Baghdad drone strike. And the first retaliatory strike by Iran. Volatility will be very high for a while going forward.

I think we’ll see more multi-year highs going forward. I hate that the latest move higher is driven by geopolitics. Scary geopolitics and military confrontations mean people are dying. We don’t want to profit from misery. And we won’t anyway, if things get ugly enough in the Mideast to scare traders out of the market.

Geopolitical price moves almost always unwind quickly. I’d much prefer to see gold moving higher for macro reasons, not as a political safety trade. I expect more political/military inspired moves. As the Iran conflict unfolds. Make no mistake, Iran is NOT Iraq. Its army is far larger, better trained and better equipped than Iraq. This could get ugly.

The balance of this piece will deal with my macro argument for higher gold prices over an extended period. The geopolitical stuff will be layered on top of that for the next while and could strengthen both gold prices and the $US in risk-off trading. It should be viewed as a separate event from the argument laid out below.

What else is driving gold higher? In part, it was gold’s inverse relationship with the US Dollar. As you already know, I’m not a believer that “its all about the USD, all the time” when it comes to the gold market. That’s an over-simplification of a more complex relationship. It also discounts the idea of gold as its own asset class that trades for its own reasons.

If you look at the gold chart above, and the USD chart below it, its immediately apparent that there isn’t a constant negative correlation at play. Gold rallied during the summer at the same time the USD did and for the same reason; the world-wide explosion of negative real yields. Gold weakened a bit when yields reversed to the upside and the USD got a bit of traction, but things changed again at the start of December.

The USD turned lower and lost two percent during December. US bond yields were generally rising during the month and the market (right or wrong) was assuming economic growth was accelerating. So, neither of those items explains the USD weakness.

If gold was a “risk off” trade, you sure couldn’t see it in the way any other market was trading. So, is there another explanation for recent strength in the gold price, and what does it tell us about 2020 and, perhaps, beyond?

Well, I’ve got a theory. If I’m right, it could mean a bull run for gold has a long way to go.

Some of this theory will be no surprise to you because it does partially hinge on further USD weakness. There are long term structural reasons why the US currency should weaken. But there are also fluctuating sources of demand for USDs, particularly from offshore buyers and borrowers that transact in US currency. That can create enough demand to strengthen the US over long periods. We just went though one such period, but it looks like that may have come to an end, with more bearish forces to the USD reasserting themselves.

How did we get here? Let’s start with the big picture, displayed on the top chart on the next page. It gives a long-term view of US Federal deficits and the unemployment rate. Normally, these travel in tandem. Higher unemployment means more social spending and higher deficits. Government spending expands during recessions and contracts-or should- (as a percentage of GDP) during expansions. Classic Keynesian stuff.

You rarely see these two measures diverge. The two times they did significantly before, on the left side of the chart, was due to “wartime deficits” which acted (along with conscription) to stimulate the economy and drive down unemployment.

You can see the Korean and Vietnam war periods pointed out on the chart.

The current period stands out for the extreme size of the divergence. US unemployment rates are at multi decade lows and yet the fiscal deficit as a percentage of GDP keeps rising. There has never been a divergence this large and its due to get larger.

We know why this is. Big tax cuts combined with a budget that is mostly non-discretionary. And the US is 10 years into an economic expansion, however weak. Just think what this graph will look like the next time the US goes into recession.

We can assume US government deficits aren’t going to shrink any time soon (and I think we can, pun intended, take that to the bank). That leaves trade in goods to act as a counterbalance to the funding demand created by fiscal deficits.

The chart above makes it clear the US won’t get much help from international trade. The US trade balance has been getting increasingly negative for decades. It’s better recently, but unlikely to turn positive soon, and maybe not ever.

To be clear, this is not a bad thing in itself, notwithstanding the view from the White House. The relative strength of the US economy and the US Dollar and cheaper offshore production costs have driven the trade balance. It’s grown because Americans found they got more value buying abroad and the world was happy to help finance it. It’s not a bad thing, but not a US Dollar support either.

The more complete picture of currency/investment flows is given by changes in the Current Account. In simplified terms, the Current Account measures the difference between what a country produces and what it consumes. For example, if a country’s trade deficit increases, so does its current account deficit. If there are funds flowing in from overseas investments on the other hand, this decrease the Current Account deficit or increase the surplus.

The graph below summarizes quarterly changes in the US current account. You can see how the balance got increasingly negative in the mid 2000’s as both imports and foreign investment by US companies increased.

Not coincidentally, this same period leading up to the Financial Crisis included a sustained downtrend in the US Dollar Index. The USD index chart on the bottom of the next page shows the scale of that decline, from an index value of 120 at the start of 2002 all the way down to 73 in early 2008.

The current account deficit (and value of the USD) improved markedly up to the end of the Financial Crisis as money poured into the US as a safe haven and consumers cut back on imports. The current account deficit bas been relatively stable since then, running at about $100bn/quarter until it dipped a bit again last year.

Trade, funds flows and changes in money supply have the largest long-term impacts on currency values. When the US Fed ended QE and started tightening monetary conditions in 2014, the USD enjoyed a strong rally. The USD Index was back to 100 by early 2015 and stayed there until loosening monetary conditions-and lots of jawboning from Washington-led to pullback. Things reversed again and the USD maintained a mild uptrend from early 2018 until now.

There are still plenty of US Dollar bulls around, and their arguments have short-term merit. Yes, the US has higher real interest rates and somewhat higher growth. Both are important to relative currency valuations as I’ve said in the past. Longer term however, the “twin deficits” -fiscal and current account-should underpin the fundamental value of the currency.

Movements don’t happen overnight, especially when you’re talking about the worlds reserve currency that has the deepest and largest market supporting it. Changing the overall trend for the USD is like turning a supertanker. I think it’s happening though, and it has big potential implications for commodities, especially gold.

Dollar bulls will tell you the USD is the “cleanest shirt in the laundry hamper”, referring to the relative strength of the growth rate and interest rates compared to other major currencies. That’s true if we just look at those measures but definitely not true when we look at the longer term-fiscal and current account deficits.

In fact, the US has about the worst combined fiscal/current account deficit in the G7. The chart at the bottom of this page, from lynalden.com shows the 2018 values for Current Account and Trade balances for a number of major economies, as a percentage of their GDP. It’s not a handsome group.

Both the trade and current account deficits are negative for most of them. In terms of G7 economies, the US has the worst combined Current/Trade deficit at 6% of GDP annually. You may be surprised to note that the Current/Trade balance for the Euro zone is much better than the US, thanks to a large Trade surplus. Much of that is generated by Germany. Indeed, this chart explains Germanys defense of the Euro. It’s combined Trade/Current Account surplus is so large it’s currency would be skyrocketing if it still used the Deutschmark.

Because the current account deficit is cumulative, the overall international investment position of the US has continued to worsen. The US has gone from being an international creditor to an international debtor, and the scale if its debt keeps increasing. That means it’s getting harder every year to reverse the current account position as the US borrows ever more abroad to cover its trade and fiscal deficits. Interest outflows keep growing and investment inflows shrinking. Something has to give.

The US has to borrow overseas, as private domestic demand for Treasury bonds isn’t high enough to fund the twin deficits. In the past, whenever the US Dollar got too high, offshore demand for US government debt diminished. It’s not clear why. Maybe the higher dollar made raising enough foreign funds difficult, or perhaps buyers started worrying about the USD dropping after they bought when it got too expensive. Whatever the reason, foreign holdings of US Treasuries have been declining, forcing the US to find new, domestic, buyers.

Last year, the US Fed stopped its quantitative tightening program, due to concerns about Dollar liquidity. Then came the repo market. Since September, the Fed’s balance sheet has expanded by over $400 billion, mainly due to repo market transactions.

The Fed maintains this “isn’t QE” because these are very short duration transactions but, cumulatively, the total Fed balance sheet keeps expanding. The “QE/no QE” debate is just semantics.

What do these transactions look like? Mostly, its Primary Dealers, banks that also take part in Treasury auctions, in the repo market. The Fed buys bonds, usually Treasuries, from these banks and pays for them in newly printed Dollars. That injects money into the system, helps hold down interest rates in the repo market and, not coincidentally, effectively helps fund the US fiscal deficit. To put the series of transactions in their simplest form, the US is effectively monetizing its deficit with a lot of these transactions.

The chart below illustrates the problem for the Primary Dealer US banks. They’ve got to buy Treasuries when they’re auctioned-that is their commitment as Primary Dealers. They also need to hold minimum cash balances as a percentage of assets under Basel II bank regulations. Cash balances fell to the minimum mandated level by late 2019- the horizontal black line on the chart. That’s when the trouble started.

These banks are so stuffed with Treasuries that they didn’t have excess cash reserves to lend into the repo market. Hence the blow up back in September and the need for the Fed to inject cash by buying Treasuries. The point, however, is that this isn’t really a “repo market issue”, that’s just where it reared its head. It’s a “too many Treasuries and not enough buyers” problem.

It will be tough for the Treasury to attract more offshore buyers unless the USD weakens, or interest rates rise enough to make them irresistible. Or a big drop in the federal deficit reduces the supply of Treasuries itself.

I doubt we’ll see interest rates move up significantly. I don’t think the economy could handle it and it would be self-defeating anyway, as the government deficit would explode because of interest expenses. And that’s not even taking into account the fact that President Trump would be freaking out daily.

Based on recent history and political expediency, I’d say the odds of significant budget deficit reductions are slim and none. That’s especially true going into an election year. There’s just no way we’re going to see spending restraint or tax increases in the next couple of years. Indeed, the supply of Treasuries will keep growing even if the US economy grows too. If there is any sort of significant slowdown or recession the Federal deficit will explode and so will the new supply of Treasures. Not an easy fix.

Barring new haven demand for US Treasuries, odds are the Fed will have to keep sopping up excess supply. That means expanding its balance sheet and, in so doing, effectively increasing the US money supply.

That brings us (finally!) to the “money shot” chart that appears above. It compares changes in the size of the Fed balance sheet and the US Dollar Index. To make it readable and allow me to match the scales, I generated a chart that tracks annual percentage changes.

The chart shows a strong inverse correlation between changes in the size of the Fed balance sheet and the value of the USD. This is unsurprising as most transactions that expand the Fed balance sheet also expand the money supply.

It’s impossible to tell how long the repo market transactions will continue but, after three months, they aren’t feeling very “temporary”. To me, it increasingly looks like these market operations are “debt monetization in drag”.

I don’t know if that’s the Fed’s real intent or just a side effect. It doesn’t really matter if the funding and money printing continues at scale. Even if the repo market calms completely, the odds are good we see some sort of “new QE” start up. Whatever official reason is given for it; I think it will happen mainly to soak up the excess supply of Treasuries fiscal deficits are creating.

I don’t blame the FOMC if they’re being disingenuous about it. That’s their job after all. If you’re a central banker, the LAST thing you’re going to say is “our government is having trouble finding buyers for its debt”, especially if its true.

With no prospect of lower deficits and apparent continued reduction in offshore Treasury holdings, this could develop into long-term sustained trend. I don’t expect it to move in a straight line, markets never do. A severe escalation in Mideast tensions or the start of a serious recession could both generate safe-haven Treasury buying. Money flows from that would take the pressure off the Fed and would be US Dollar supportive too.

That said, it seems the US has reached the point where a substantial increase in its central bank’s balance sheet is inevitable. Both Japan and the Eurozone have gotten there before the Fed, but it looks like it won’t be immune.

The Eurozone at least has a “Twin surplus” to help cushion things. And Japan, considered a basket case economically, had an extremely deep pool of domestic savings (far deeper than the US) to draw on. Until very recently, Japan also ran massive Current Account surpluses thanks to decades of heavy investments overseas by Japanese entities. Those advantages allowed the ECB and especially the BoJ to massively expand their balance sheets without generating a huge run up in interest rates or currency collapse.

I don’t know how far the US Fed can expand its balance sheet before bond yields start getting away from it. I think pretty far though. Having the world’s reserve currency is a massive advantage. There is huge built in demand for US Dollars and US denominated debt. That gives the Fed some runway if it must keep buying US Treasuries.

Assuming a run on yields doesn’t spoil the party, continued balance sheet and money supply expansion should put increasing downward pressure on the US Dollar. I don’t know if we’ll see a move as large as the mid-2000s but a move down to the low 80s for the USD Index over the course of two or three years wouldn’t be surprising.

It won’t be a straight-line move. A recession could derail things, though the bear market on Wall St that would generate would support bullion. Currency markets tend to be self-correcting over extended periods. If the USD Index falls enough and there is a bump in US real interest rates offshore demand for Treasuries should increase again.

The bottom line is that this is, and will continue to be, a very dynamic system. Even so, I think we’ve reached a major inflection point for the US currency. The 2000s were pretty good for the gold market and gold stocks. We started from a much lower base of $300/oz on the gold price. Starting at a $1200-1300 base this time, I think a price above $2000/oz is a real possibility over the next year or two.

It’s not hard to extrapolate prices higher than that, but I’m not looking or hoping for those. I prefer to see a longer, steadier move that brings traders along rather than freaking them out.

This prediction isn’t a sure thing. Predictions never are. But I think the probabilities now favor an extended bull run in the gold price. Assuming stock markets don’t blow up (though I still expect that correction), gold stocks should put in a leveraged performance much more impressive than the bullion price itself.

There will be consolidations and corrections along the way, but I think there will be many gold explorers and developers that rack up share price gains in the hundreds of percent. That doesn’t mean buying blindly and never trading. We still need to adjust when a stock gets overweight and manage risk around major exploration campaigns. The last few weeks has been a lot more fun in the resource space. I don’t think the fun’s over yet. Enjoy the ride.

Like any good contrarian, a 10-year bull market makes me alert of signs of potential trouble. As noted at the start of this editorial, I’m expecting continues floods of liquidity. That may simply overwhelm everything else for a while and allow Wall St to keep rallying, come what may.

That said, a couple of data points recently got my attention. One is more of a sentiment indicator, seen in the chart below. More than one wag has joked that the Fed need only worry about Wall St, since the stock market is the economy now. Turns out there is more than a bit of truth to that.

The chart shows the US Leading Indicator reading with the level of the stock market (which is a component of the official Leading Indicator) removed. As you can see, without Wall St, the indicator implies zero growth going forward. I’m mainly showing it as evidence of just how surreal things have become.

The chart above is something to keep an eye on going forward. It shows weekly State unemployment claims for several major sectors of the economy. What’s interesting about this chart is that claims have been climbing rapidly over the past few weeks. Doubly interesting is that the increase in claims is broad, both within and across several sectors of the economy.

I take the monthly Non-Farm Payroll number less seriously than most, because it’s a backward-looking indicator. This move in unemployment claims looks increasingly like a trend though. It’s now at its highest level since the Financial Crisis.

It’s not in the danger zone-yet. But its climbing fast. We may need to start paying more attention to those payroll numbers. If the chart below isn’t a statistical fluke, we may start seeing negative surprises in the NFP soon. That won’t hurt the gold price either.

Source and Thanks: https://www.hraadvisory.com/golds-big-picture

American Creek Resources $AMK.ca: Invitation to Vancouver Resource Investment Conference and AME Roundup in Vancouver $TUD.ca $SII.ca $GTT.ca $AFF.ca $SEA.ca $SA $PVG.ca $AOT.ca

Posted by AGORACOM-Eric at 9:37 AM on Friday, January 17th, 2020

Cardston, Alberta–(January 17, 2020) – American Creek Resources Ltd. (TSXV: AMK) (OTC Pink: ACKRF) (“American Creek”) (“the Corporation”) would like to cordially invite you to visit us at Booth #435 at the Vancouver Resource Investment Conference (VRIC) to be held at the Vancouver Convention Centre West (1055 Canada Place, Vancouver) on Sunday January 19th – Monday January 20th, 2020.

The Vancouver Resource Investment Conference has been the bellwether of the junior mining market for the last twenty-five years. It is the number one source of information for investment trends and ideas, covering all aspects of the natural resource industry. Each year, the VRIC hosts over 60 keynote speakers, 350 exhibiting companies and 9000 investors.



Roundup held in Convention Center with sails and VRIC held in Convention Center with grass.

To view an enhanced version of this graphic, please visit:
https://orders.newsfilecorp.com/files/682/51600_35b68eb1546ea859_001full.jpg

We also invite you to visit us on Wednesday January 22nd and Thursday January 23rd at Booth #1024, in the Core Shack at the Association for Mineral Exploration (AME) Roundup’s 37th annual conference held at the Vancouver Convention Centre East, under the sails of Canada Place.

With this year’s theme “Lens on Discovery” American Creek was selected to display core from the past producing high-grade Dunwell Mine. A maiden drill program was started in late 2019 with assays pending. The company will also be discussing advancements on its JV Treaty Creek project along with the Gold Hill project located in SE British Columbia.

AME is the lead association for the mineral exploration and development industry based in British Columbia. Established in 1912, AME represents, advocates, protects and promotes the interests of thousands of members who are engaged in mineral exploration and development in B.C. and throughout the world.

AME’s annual Mineral Exploration Roundup conference brings together more than 6,500 people annually to share innovative ideas, generate new connections and create collaborative solutions related to mineral exploration and development. It is a space where mineral explorers, industry professionals and leaders go to network and is a driving force for mineral exploration in Western Canada and the North and South American Cordillera.

For further information please contact Kelvin Burton at: Phone: 403 752-4040 or Email: [email protected]. Information relating to the Corporation is available on its website at www.americancreek.com

Historic Gold Bull Market Cycles Chart SPONSOR: American Creek Resources $AMK.ca $TUD.ca $SII.ca $GTT.ca $AFF.ca $SEA.ca $SA $PVG.ca $AOT.ca

Posted by AGORACOM-Eric at 11:47 AM on Thursday, January 16th, 2020

SPONSOR: American Creek owns a 20% Carried Interest to Production at the Treaty Creek Project in the Golden Triangle. 2019’s first hole averaged of 0.683 g/t Au over 780m in a vertical intercept. The Treaty Creek property is located in the same hydrothermal system as the Pretivm and Seabridge’s KSM deposits. Click Here for More Info

https://pbs.twimg.com/media/EOU-2brX4AEhgL8?format=jpg&name=small

About American Creek

American Creek is a Canadian mineral exploration company with a strong portfolio of gold and silver properties in British Columbia. Three of those properties are located in the prolific “Golden Triangle”; the Treaty Creek and Electrum joint venture projects with Tudor Gold/Walter Storm as well as the 100% owned past producing Dunwell Mine.

More information about the Treaty Creek Project can be found here: https://americancreek.com/index.php/projects/treaty-creek/home

An exploration program is ongoing on American Creek’s 100% owned Dunwell Mine property located near Stewart. More information can be found here: https://americancreek.com/index.php/projects/dunwell-mine

The Corporation also holds the Gold Hill, Austruck-Bonanza, Ample Goldmax, Silver Side, and Glitter King properties located in other prospective areas of the province.

For further information please contact Kelvin Burton at: Phone: 403 752-4040 or Email: [email protected]. Information relating to the Corporation is available on its website at www.americancreek.com

Source: https://twitter.com/CEOTechnician/s/1217448382580563968?s=20

12-Year Breakout in Mining Stocks Relative to Gold – SPONSOR: American Creek Resources $AMK.ca $TUD.ca $SII.ca $GTT.ca $AFF.ca $SEA.ca $SA $PVG.ca $AOT.ca

Posted by AGORACOM-Eric at 7:40 PM on Monday, January 13th, 2020

SPONSOR: American Creek owns a 20% Carried Interest to Production at the Treaty Creek Project in the Golden Triangle. 2019’s first hole averaged of 0.683 g/t Au over 780m in a vertical intercept. The Treaty Creek property is located in the same hydrothermal system as the Pretivm and Seabridge’s KSM deposits.

Excerpts from Crescat Capitals November Newsletter:

Precious Metals

Precious metals are poised to benefit from what we consider to be the best macro set up we’ve seen in our careers. The stars are all aligning. We believe strongly that this time monetary policy will come at a cost. Look in the chart below at how the new wave of global money printing just initiated by the Fed in response to the Treasury market funding crisis is highly likely to pull depressed gold prices up with it.

The imbalance between historically depressed commodity prices relative to record overvalued US stocks remains at the core of our macro views. On the long side, we believe strongly commodities offer tremendous upside potential on many fronts. Precious metals remain our favorite. We view gold as the ultimate haven asset to likely outperform in an environment of either a downturn in the business cycle, rising global currency wars, implosion of fiat currencies backed by record indebted government, or even a full-blown inflationary set up. These scenarios are all possible. Our base case is that governments and central banks will keep their pedals to the metal to attempt to fend off credit implosion or to mop up after one has already occurred until inflation becomes a persistent problem.

The gold and silver mining industry is precisely where we see one of the greatest ways to express this investment thesis. These stocks have been in a severe bear market from 2011 to 2015 and have been formed a strong base over the last four years. They are offer and incredibly attractive deep-value opportunity and appear to be just starting to break out this year. We have done a deep dive in this sector and met with over 40 different management teams this year. Combining that work with our proprietary equity models, we are finding some of the greatest free-cash-flow growth and value opportunities in the market today unrivaled by any other industry. We have also found undervalued high-quality exploration assets that will make excellent buyout candidates.

We recently point out this 12-year breakout in mining stocks relative to gold now looks as solid as a rock. In our view, this is just the beginning of a major bull market for this entire industry. We encourage investors to consider our new Crescat Precious Metals SMA strategy which is performing extremely well this year.

Zero Discounting for Inflation Risk Today

With historic Federal debt relative to GDP and large deficits into the future as far as the eye can see, if the global financial markets cannot absorb the increase in Treasury debt, the Fed will be forced to monetize it even more. The problem is that the Fed’s panic money printing at this point in the economic cycle may hasten the unwinding of the imbalances it is so desperate to maintain because it has perversely fed the last-gasp melt up of speculation in already record over-valued and extended equity and corporate credit markets. It is reminiscent of when the Fed injected emergency cash into the repo market at the peak of the tech bubble at the end of 1999 to fend off a potential Y2K computer glitch that led to that market and business cycle top.
After 40 years of declining inflation expectations in the US, there is a major disconnect today between portfolio positioning, valuation, and economic reality. Too much of the investment world is long the “risk parity” trade to one degree or another, long stocks paired with leveraged long bonds, a strategy that has back-tested great over the last 40 years, but one that would be a disaster in a secular rising inflation environment.

With historic Federal debt relative to GDP and large deficits into the future as far as the eye can see, rising long-term inflation, and the hidden tax thereon, is the default, bi-partisan plan for the US government’s future funding regardless of who is in the White House and Congress after the 2020 elections. The market could start discounting this sooner rather than later.
The Fed’s excessive money printing may only reinforce the unraveling of financial asset imbalances today as it leads to rising inflation expectations and thereby a sell-off in today’s highly over-valued long duration assets including Treasury bonds and US equities, particularly insanely overvalued growth stocks. We believe we are in the vicinity of a major US stock market and business cycle peak.

Source:”Running Hot”

Courtesy of Crescat Capital: https://www.crescat.net/running-hot/

Thanks to

Kevin C. Smith, CFA
Chief Investment Officer

Tavi Costa
Portfolio Manager

Gold’s Outlook for 2020 – SPONSOR: American Creek Resources $AMK.ca $TUD.ca $SII.ca $GTT.ca $AFF.ca $SEA.ca $SA $PVG.ca $AOT.ca

Posted by AGORACOM-Eric at 2:20 PM on Friday, January 10th, 2020

This article is an overview of the economic conditions that will drive the gold price in 2020 and beyond. The turn of the credit cycle, the effect on government deficits and how they are to be financed are addressed.

In the absence of foreign demand for new US Treasuries and of a rise in the savings rate the US budget deficit can only be financed by monetary inflation. This is bound to lead to higher bond yields as the dollar’s falling purchasing power accelerates due to the sheer quantity of new dollars entering circulation. The relationship between rising bond yields and the gold price is also discussed.

It may turn out that the recent extraordinary events on Comex, with the expansion of open interest failing to suppress the gold price, are an early recognition in some quarters of the US Government’s debt trap.

The strains leading to a crisis for fiat currencies are emerging into plain sight.

Introduction

In 2019, priced in dollars gold rose 18.3% and silver by 15.1%. Or rather, and this is the more relevant way of putting it, priced in gold the dollar fell 15.5% and in silver 13%. This is because the story of 2019, as it will be in 2020, was of the re-emergence of fiat currency debasement. Particularly in the last quarter, the Fed began aggressively injecting new money into a surprisingly illiquid banking system through repurchase agreements, whereby banks’ reserves at the Fed are credited with cash loaned in return for T-bills and coupon-bearing Treasuries as collateral. Furthermore, the ECB restarted quantitative easing in November, and the Bank of Japan stands ready to ease policy further “if the momentum towards its 2% inflation target comes under threat” (Kuroda – 26 December).

The Bank of Japan is still buying bonds, but at a pace which is expected to fall beneath redemptions of its existing holdings. Therefore, we enter 2020 with money supply being expanded by two, possibly all three of the major western central banks. Besides liquidity problems, the central bankers’ nightmare is the threat that the global economy will slide into recession, though no one will confess it openly because it would be an admission of policy failure. And policy makers are also terrified that if bankers get wind of a declining economy, they will withdraw loan facilities from businesses and make things much worse.

Of the latter concern central banks have good cause. A combination of the turn of the credit cycle towards its regular crisis phase and Trump’s tariff war has already hit international trade badly, with exporting economies such as Germany already in recession and important trade indicators, such as the Baltic dry index collapsing. No doubt, President Trump’s most recent announcement that a trade deal with China is ready for signing is driven by an understanding in some quarters of the White House that over trade policy, Trump is turning out to be the turkey who voted for Christmas. But we have heard this story several times before: a forthcoming agreement announced only to be scrapped or suspended at the last moment.

The subject which will begin to dominate monetary policy in 2020 is who will fund escalating government deficits. At the moment it is on few investors’ radar, but it is bound to dawn on markets that a growing budget deficit in America will be financed almost entirely by monetary inflation, a funding policy equally adopted in other jurisdictions. Furthermore, Christine Lagarde, the new ECB president, has stated her desire for the ECB’s quantitative easing to be extended from government financing to financing environmental projects as well.

2020 is shaping up to be the year that all pretence of respect for money’s role as a store of value is abandoned in favour of using it as a means of government funding without raising taxes. 2020 will then be the year when currencies begin to be visibly trashed in the hands of their long-suffering users.

Gold in the context of distorted markets

At the core of current market distortions is a combination of interest rate suppression and banking regulation. It is unnecessary to belabour the point about interest rates, because minimal and even negative rates have demonstrably failed to stimulate anything other than asset prices into bubble territory. But there is a woeful lack of appreciation about the general direction of monetary policy and where it is headed.

The stated intention is the opposite of reality, which is not to rescue the economy: while important, from a bureaucrat’s point of view that is not the greatest priority. It is to ensure that governments are never short of funds. Inflationary financing guarantees the government will always be able to spend, and government-licenced banks exist to ensure the government always has access to credit.

Unbeknown to the public, the government licences the banks to conduct their business in a way which for an unlicensed organisation is legally fraudulent. The banks create credit or through their participation in QE they facilitate the creation of base money out of thin air which is added to their reserves. It transfers wealth from unsuspecting members of the public to the government, crony capitalists, financial speculators and consumers living beyond their means. The government conspires with its macroeconomists to supress the evidence of rising prices by manipulating the inflation statistics. So successful has this scheme of deception been, that by fuelling GDP, monetary debasement is presented as economic growth, with very few in financial mainstream understanding the deceit.

The government monopoly of issuing money, and through their regulators controlling the expansion of credit, was bound to lead to progressively greater abuse of monetary trust. And now, in this last credit cycle, the consumer who is also the producer has had his income and savings so depleted by continuing monetary debasement that he can no longer generate the taxes to balance his government’s books later in the credit cycle.

The problem is not new. America has not had a budget surplus since 2001. The last credit cycle in the run up to the Lehman crisis did not deliver a budget surplus, nor has the current cycle. Instead, following the Lehman crisis we saw a marked acceleration of monetary inflation, and Figure 2 shows how dollar fiat money has expanded above its long-term trend since then.

In recent years, the Fed’s attempt to return to monetary normality by reducing its balance sheet has failed miserably. After a brief pause, the fiat money quantity has begun to grow at a pace not seen since the immediate aftermath of the Lehman crisis itself and is back in record territory. Figure 1 is updated to 1 November, since when FMQ will have increased even more.

In order to communicate effectively the background for the relationship between gold and fiat currencies in 2020 it is necessary to put the situation as plainly as possible. We enter the new decade with the highest levels of monetary ignorance imaginable. It is a systemic issue of not realising the emperor has no clothes. Consequently, markets have probably become more distorted than we have ever seen in the recorded history of money and credit, as widespread negative interest rates and negative-yielding bonds attest. In our attempt to divine the future, it leaves us with two problems: assessing when the tension between wishful thinking in financial markets and market reality will crash the system, and the degree of chaos that will ensue.

The timing is impossible to predict with certainty because we cannot know the future. But, if the characteristics of past credit cycles are a guide, it will be marked with a financial and systemic crisis in one or more large banks. Liquidity strains suggest that event is close, even within months and possibly weeks. If so, banks will be bailed, of that we can be certain. It will require central banks to create yet more money, additional to that required to finance escalating government budget deficits. Monetary chaos promises to be greater than anything seen heretofore, and it will engulf all western welfare-dependent economies and those that trade with them.

We have established that between keeping governments financed, bailing out banks and perhaps investing in renewable green energy, the issuance of new money in 2020 will in all probability be unprecedented, greater than anything seen so far. It will lead to a feature of the crisis, which may have already started, and that is an increase in borrowing costs forced by markets onto central banks and their governments. The yield on 10-year US Treasuries is already on the rise, as shown in Figure 3.


Assuming no significant increase in the rate of savings and despite all attempts to suppress the evidence, the acceleration in the rate of monetary inflation will eventually lead to runaway increases in the general level of prices measured in dollars. As Milton Friedman put it, inflation [of prices] is always and everywhere a monetary phenomenon.

Through QE, central banks believe they can contain the cost of government funding by setting rates. What they do not seem to realise is that while to a borrower interest is a cost to set against income, to a lender it reflects time-preference, which is the difference between current possession, in this case of cash dollars, and possession at a future date. Unless and until the Fed realises and addresses the time preference problem, the dollar will lose purchasing power. Not only will it be sold in the foreign exchanges, but depositors will move to minimise their balances and creditors their ownership of debt.

If, as it appears in Figure 3, dollar bond yields are beginning a rising trend, the inexorable pull of time preference is already beginning to apply and further rises in bond yields will imperil government financing. The Congressional Budget Office assumes the average interest rate on debt held by the public will be 2.5% for the next three years, and that net interest in fiscal 2020 will be $390bn, being about 38% of the projected deficit of $1,008bn. Combining the additional consequences for government finances of a recession with higher bond yields than the CBO expects will be disastrous.

Clearly, in these circumstances the Fed will do everything in its power to stop markets setting the cost of government borrowing. But we have been here before. The similarities between the situation for the dollar today and the deterioration of British government finances in the early to mid-1970s are remarkable. They resulted in multiple funding crises and an eventual bail-out from the IMF. Except today there can be no IMF bail-out for the US and the dollar, because the bailor gets its currency from the bailee.

Nearly fifty years ago, in the UK gold rose from under £15 per ounce in 1970 to £80 in December 1974. The peak of the credit cycle was at the end of 1971, when the 10-year gilt yield to maturity was 7%. By December 1974, the stock market had crashed, a banking crisis had followed, price inflation was well into double figures and the 10-year gilt yield to maturity had risen to over 16%.

History rhymes, as they say. But for historians the parallels between the outlook for the dollar and US Treasury funding costs at the beginning of 2020, and what transpired for the British economy following the Barbour boom of 1970-71 are too close to ignore. It is the same background for the relationship between gold and fiat currencies for 2020 and the few years that follow.

Gold and rising interest rates

Received investment wisdom is that rising interest rates are bad for the gold price, because gold has no yield. Yet experience repeatedly contradicts it. Anyone who remembers investing in UK gilts at a 7% yield in December 1971 only to see prices collapse to a yield of over 16%, while gold rose from under £15 to £80 to the ounce over the three years following should attest otherwise.

Part of the error is to believe that gold has no yield. This is only true of gold held as cash and for non-monetary usage. As money, it is loaned and borrowed, just like any other form of money. Monetary gold has its own time preference, as do government currencies. In the absence of state intervention, time preferences for gold and government currencies are set by their respective users, bearing in mind the characteristics special to each. It is not a subject for simple arbitrage, selling gold and buying government money to gain the interest differential, because the spread reflects important differences which cannot be ignored. It is like shorting Swiss francs and buying dollars in the belief there is no currency risk.

The principal variable between the time preferences of gold and a government currency is the difference between an established form of money derived from the collective preferences of its users, for which there is no issuer risk, and state-issued currency which becomes an instrument of funding by means of its debasement.

The time preference of gold will obviously vary depending on lending risk, which is in addition to an originary rate, but it is considerably more stable than the time preference of a fiat currency. Gold’s interest rate stability is illustrated in Figure 4, which covers the period of the gold standard from the Bank Charter Act of 1844 to before the First World War, during which time the gold standard was properly implemented. With the exception of uncontrolled bank credit, sterling operated as a gold substitute.


Admittedly, due to problems created by the cycle of bank credit, these year-end values conceal some significant fluctuations, such as at the time of the Overend Gurney collapse in 1866 when borrowing rates spiked to 10%. The depression following the Barings crisis of 1890 stalled credit demand which is evident from the chart. However, wholesale borrowing rates, which were effectively the cost of borrowing in gold, were otherwise remarkably stable, varying between 2-3½%. Some of this variation can be ascribed to changing perceptions of general borrower risk and some to changes in industrial investment demand, related to the cycle of bank credit.

Compare this with dollar interest rates since 1971, when the dollar had suspended the remaining fig-leaf of gold backing, which is shown in Figure 5 for the decade following.


In February 1972 the Fed Funds rate was 3.29%, rising eventually to over 19% in January 1981. At the same time gold rose from $46 to a high of $843 at the morning fix on 21 January 1980. Taking gold’s originary interest rate as approximately 2% it required a 17% interest rate penalty to dissuade people from hoarding gold and to hold onto dollars instead.

In 1971, US Government debt stood at 35% of GDP and in 1981 it stood at 31%. The US Government ran a budget surplus over the decade sufficient to absorb the rising interest cost on its T-bill obligations and any new Treasury funding. America enters 2020 with a debt to GDP ratio of over 100%. Higher interest rates are therefore not a policy option and the US Government, and the dollar, are ensnared in a debt trap from which the dollar is unlikely to recover.

The seeds of the dollar’s destruction were sown over fifty years ago, when the London gold pool was formed, whereby central banks committed to help the US maintain the price at $35, being forced to do so because the US could no longer supress the gold price on its own. And with good reason: Figure 6 shows how the last fifty years have eroded the purchasing power of the four major currencies since the gold pool failed.

 

Over the last fifty years, the yen has lost over 92%, the dollar 97.6%, the euro (and its earlier components 98.2% and sterling the most at 98.7%. And now we are about to embark on the greatest increase of global monetary inflation ever seen.

The market for physical gold

In recent years, demand for physical gold has been strong. Chinese and Indian private sector buyers have to date respectively accumulated an estimated 17,000 tonnes (based on deliveries from Shanghai Gold Exchange vaults) and about 24,000 tonnes (according to WGC Director Somasundaram PR quoted in India’s Financial Express last May).

It is generally thought that higher prices for gold will deter future demand from these sources, with the vast bulk of it being categorised as simply jewellery. But this is a western view based on a belief in objective values for government currencies and subjective prices for gold. It ignores the fact that for Asians, it is gold that has the objective value. In Asia gold jewellery is acquired as a store of value to avoid the depreciation of government currency, hoarded as a central component of a family’s long-term wealth accumulation.

Therefore, there is no certainty higher prices will compromise Asian demand. Indeed, demand has not been undermined in India with the price rising from R300 to the ounce to over R100,000 today since the London gold pool failed, and that’s despite all the government disincentives and even bans from buying gold.

Additionally, since 2008 central banks have accumulated over 4,400 tonnes to increase their official reserves to 34,500 tonnes. The central banks most active in the gold market are Asian, and increasingly the East and Central Europeans.

There are two threads to this development. First there is a geopolitical element, with Russia replacing reserve dollars for gold, and China having deliberately moved to control global physical delivery markets. And second, there is evidence of concern amongst the Europeans that the dollar’s role as the reserve currency is either being compromised or no longer fit for a changed world. Furthermore, the rising power of Asia’s two hegemons continues to drive over two-thirds of the world’s population away from the dollar towards gold.

Goldmoney estimates there are roughly 180,000 tonnes of gold above ground, much of which cannot be categorised as monetary: monetary not as defined for the purposes of customs reporting, but in the wider sense to include all bars, coins and pure gold jewellery accumulated for its long-term wealth benefits through good and bad times. Annual mine production adds 3,000-3,500 tonnes, giving a stock to flow ratio of over 50 times. Put another way, the annual increase in the gold quantity is similar to the growth in the world’s population, imparting great stability as a medium of exchange.

These qualities stand in contrast to the increasingly certain acceleration of fiat currency debasement over the next few years. Anyone prepared to stand back from the financial coalface can easily see where the relationship between gold and fiat currencies is going. Most of the world’s population is moving away from the established fiat regime towards gold as a store of value, their own fiat currencies lacking sufficient credibility to act as a dollar alternative. And financial markets immersed in the fiat regime have very little physical gold in possession. Instead, where it is now perceived that there is a risk of missing out on a rise in the gold price, investors have begun accumulating in greater quantities the paper alternatives to physical gold: ETFs, futures, options, forward contracts and mining shares.

Paper markets

From the US Government’s point of view, gold as a rival to the dollar must be quashed, and the primary purpose of futures options and forwards is to expand artificial supply to keep the price from rising. In a wider context, the ability to print synthetic commodities out of thin air is a means of suppressing prices generally and we must not be distracted by claims that derivatives improve liquidity: they only improve liquidity at lower prices.

When the dollar price of gold found a major turning point on 17 December 2015, open interest on Comex stood at 393,000 contacts. The year-end figure today is nearly double that at 786,422 contracts, representing an increase of paper supply equivalent to 1,224 tonnes. But that is not all. Not only are there other regulated derivative exchanges with gold contracts, but also there are unregulated over the counter markets. According to the Bank for International Settlements from end-2015 unregulated OTC contracts (principally London forward contracts) expanded by the equivalent of 2,450 tonnes by last June, taken at contemporary prices. And we must not forget the unknown quantity of bank liabilities to customers’ unallocated accounts which probably involve an additional few thousand tonnes.

In recent months, the paper suppression regime has stepped up a gear, evidenced by Comex’s open interest rising. This is illustrated in Figure 7.


There are two notable features in the chart. First, the rising gold price has seen increasing paper supply, which we would expect from a market designed to keep a lid on prices. Secondly instead of declining with the gold price, open interest continued to rise following the price peak in early September while the gold price declined by about $100. This tells us that the price suppression scheme has run into trouble, with large buyers taking the opportunity to increase their positions at lower prices.

In the past, bullion banks have been able to put a lid on prices by creating Comex contracts out of thin air. The recent expansion of open interest has failed to achieve this objective, and it is worth noting that the quantity of gold in Comex vaults eligible for delivery and pledged is only 2% of the 2,446-tonne short position. In London, there are only 3,052 tonnes in LBMA vaults (excluding the Bank of England), which includes an unknown quantity of ETF and custodial gold. Physical liquidity for the forward market in London is therefore likely to be very small relative to forward deliveries. And of course, the bullion banks in London and elsewhare do not have the metal to cover their obligations to unallocated account holders, which is an additional consideration.

Clearly, there is not the gold available in the system to legitimise derivative paper. It now appears that paper gold markets could be drifting into systemic difficulties with bullion banks squeezed by a rising gold price, short positions and unallocated accounts.

There are mechanisms to counter these systemic risks, such as the ability to declare force majeure on Comex, and standard unallocated account contracts which permit a bullion bank to deliver cash equivalents to bullion obligations. But the triggering of any such escape from physical gold obligations could exacerbate a buying panic, driving prices even higher. It leads to the conclusion that any rescue of the bullion market system is destined to fail.

A two-step future for the gold price

It has been evident for some time that the world of fiat currencies has been drifting into ever greater difficulties of far greater magnitude than can be contained by spinning a few thousand tonnes of gold back and forth on Comex and in London. That appears to be the lesson to be drawn from the inability of a massive increase in open interest on Comex to contain a rising gold price.

It will take a substantial upward shift in the gold price to appraise western financial markets of this reality. In combination with systemic strains increasing, a gold price of over $2,000 may do the trick. Professional investors will have found themselves wrongfooted; underinvested in ETFs, gold mines and regulated derivatives, in which case their gold demand is likely to drive one or more bullion houses into considerable difficulties. We might call this the first step in a two-step monetary future.

The extent to which gold prices rise could be substantial, but assuming the immediate crisis itself passes, banks having been bailed in or out, and QE accelerated in an attempt to put a lid on government bond yields, then the gold price might be deemed to have risen too far, and due for a correction. But then there will be the prospect of an accelerating loss of purchasing power for fiat currencies as a result of the monetary inflation, and that will drive the second step as investors realise that what they are seeing is not a rising gold price but a fiat currency collapse.

The high levels of government debt today in the three major jurisdictions appear to almost guarantee this outcome. The amounts involved are so large that today’s paper gold suppression scheme is likely to be too small in comparison and cannot stop it happening. The effect on currency purchasing powers will then be beyond question. Monetary authorities will be clueless in their response, because they have all bought into a form of economics that puts what will happen beyond their understanding.

As noted above, the path to a final crisis for fiat currencies might have already started, with the failure by the establishment to suppress the gold price through the creation of an extra 100,000 Comex contracts. If not, then any success by the monetary authorities to reassert control is likely to be temporary.

Perhaps we are already beginning to see the fiat currency system beginning to unravel, in which case those that insist gold is not money will find themselves impoverished.

Source: Goldmoney Insights

https://www.goldmoney.com/research/goldmoney-insights/gold-s-outlook-for-2020

Gold-Backed ETF Holdings Hit All-Time High in 2019 SPONSOR: American Creek Resources $AMK.ca $TUD.ca $SII.ca $GTT.ca $AFF.ca $SEA.ca $SA $PVG.ca $AOT.ca

Posted by AGORACOM-Eric at 5:48 PM on Thursday, January 9th, 2020

American Creek owns a 20% Carried Interest to Production at the Treaty Creek Project in the Golden Triangle. 2019’s first hole averaged 0.683 g/t Au over 780m in a vertical intercept. The Treaty Creek property is located in the same hydrothermal system as the Pretivm and Seabridge’s KSM deposits.

https://www.mining.com/wp-content/uploads/2016/03/bank-vault-gold-900.jpg
Low-cost gold-backed ETFs in the US have seen positive flows for 18 of the past 19 months

Global gold-backed exchange-traded funds (ETFs) and similar products had $19.2 billion or 400 tonnes of net inflows in 2019 after holdings rebounded in December, the World Gold Council (WGC) reports. In the fourth quarter, ETF holdings reached an all-time high of 2,900 tonnes.

Overall, gold-backed assets under management (AUM) grew by 37% in dollar terms during the year owing to positive demand and an 18.4% increase in the gold price.

From a regional perspective, North American funds led the way with inflows of 206 tonnes ($10.1 billion, 14.4% AUM). SPDR Gold Shares – the world’s biggest gold ETF—and iShares Gold Trust accounted for nearly half of last year’s inflows.

Low-cost gold-backed ETFs in the US have seen positive flows for 18 of the past 19 months and increased their collective holdings by 60%, according to the latest WGC data.

Elsewhere, holdings in European funds increased by 188 tonnes ($8.8 billion, 13.6%), while funds listed in Asia were nearly flat, recording an outflow of 0.1 tonnes ($12 million, 0.3%). The remaining regions had combined inflows of 6.3 tonnes ($311 million, 16.3%).

Looking ahead, WGC analysts said that they expect investor demand to remain robust through 2020.

“The strength of gold was mainly the byproduct of a dovish shift in monetary policy. Our research indicates that a shift from a hawkish or neutral stance to a dovish one has historically led gold to outperform,” a WGC analyst said.

About American Creek

American Creek is a Canadian mineral exploration company with a strong portfolio of gold and silver properties in British Columbia. Three of those properties are located in the prolific “Golden Triangle”; the Treaty Creek and Electrum joint venture projects with Tudor Gold/Walter Storm as well as the 100% owned past producing Dunwell Mine.

More information about the Treaty Creek Project can be found here: https://americancreek.com/index.php/projects/treaty-creek/home

An exploration program is ongoing on American Creek’s 100% owned Dunwell Mine property located near Stewart. More information can be found here: https://americancreek.com/index.php/projects/dunwell-mine

The Corporation also holds the Gold Hill, Austruck-Bonanza, Ample Goldmax, Silver Side, and Glitter King properties located in other prospective areas of the province.

For further information please contact Kelvin Burton at: Phone: 403 752-4040 or Email: [email protected]. Information relating to the Corporation is available on its website at www.americancreek.com

Source: https://www.mining.com/gold-backed-etf-holdings-grew-14-in-2019/

American Creek Resources $AMK.ca Recognises 2019 as a Major Turning Point; Looks Forward to Major Developments in 2020 $TUD.ca $SII.ca $GTT.ca $AFF.ca $SEA.ca $SA $PVG.ca $AOT.ca

Posted by AGORACOM-Eric at 9:35 AM on Tuesday, January 7th, 2020
  • American Creek has strengthened its position both financially and strategically
  • Treaty Creek will be advancing in a major way
  • Eric Sprott made two separate investments of $1,000,000 making Mr. Sprott the largest external investor in Treaty Creek

American Creek Resources Ltd. (TSXV: AMK) (OTC Pink: ACKRF) (“American Creek”) (“the Corporation”) is pleased to report that 2019 was a pivotal year for the company which is now positioned to take full advantage of the precious metals bull run that many experts believe we are only in the early stages of, even though gold hit a 7 year high of $1,580 this week. Looking back, on the first day of trading in 2019 AMK closed at $0.03 and on the last day of trading in 2019 AMK closed at $0.09 representing a significant annual increase. Management envisions positive developments to continue in 2020 through the geological advancements of its properties including the potential for a world class resource on the Treaty Creek JV project located in the “Golden Triangle” of Northwestern British Columbia.

Darren Blaney, CEO of American Creek stated: “This past year was a significant turning point for the company and will be the catalyst for more exciting developments in 2020. The company has strengthened its position both financially and strategically and is poised to benefit from not only a strengthening gold and silver market but also from the investment community becoming more aware of the company’s projects and potential. The Treaty Creek project will be advancing in a major way and several of our other projects including the Dunwell and Gold Hill will also be the focus of attention this year. We very much look forward to 2020 and wish all of our shareholders the very best this upcoming year!”

Cannot view this image? Visit: https://orders.newsfilecorp.com/files/682/51189_2c4af78684226b7e_001.jpg



Image of the Goldstorm Zone found along the base of this hill at Treaty Creek.

To view an enhanced version of this image, please visit:
https://orders.newsfilecorp.com/files/682/51189_2c4af78684226b7e_001full.jpg

Financial Position

The company raised over $3.3 million in 2019 through common and flow-through shares along with the exercise of warrants. Through these events the company was able to strengthen existing alliances and create a number of new highly strategic relationships bringing strength, credibility and future increased exposure to American Creek.

Of note, Canadian billionaire Eric Sprott made two separate investments of $1,000,000 into American Creek as well as an additional $8,400,000 investment in our JV partner Tudor Gold for the development of the Treaty Creek property. This makes Mr. Sprott the largest external investor in Treaty Creek. He recently stated that he is “very excited about the opportunity there as the project has a great shot at having 20 million ounces.”

Geological Position

TREATY CREEK

The 2019 drilling at Treaty Creek was very successful and produced some of the most significant gold intercepts in the exploration industry. The focus has been on the gold enriched Goldstorm Zone which is on trend with, and part of, the same geological system as Seabridge Gold’s neighboring KSM deposits. With approximately one billion tonnes of gold enriched rock identified (potential for a resource calculation in 2020), the Goldstorm has potential to become a world class gold deposit. The 2019 drilling was designed to define a gold deposit with the potential of being open pit mined. The upcoming 2020 drilling is designed to significantly expand the deposit as the system is open to the north, the east and at depth.

The Treaty Creek Project is a joint venture with Tudor Gold owning 3/5th and acting as project operator. American Creek and Teuton Resources each have a 1/5th interest in the project. American Creek and Teuton are both fully carried until such time as a Production Notice is issued, at which time they are required to contribute their respective 20% share of development costs. Until such time, Tudor is required to fund all exploration and development costs while both American Creek and Teuton have “free rides”.

DUNWELL MINE

A maiden drill program was initiated in 2019 on the 100% owned Dunwell Mine project located in the heart of the Golden Triangle a few kilometers outside of Stewart, BC. This past producing high grade mine (gold, silver, lead, zinc) holds tremendous potential and may have the best logistics found in the Golden Triangle. Assays from the program are currently pending.

GOLD HILL AND OTHER PROJECTS

The Gold Hill property is believed to contain the principle source lode for Canada’s fourth largest placer deposit located downstream (Wild Horse River Gold Rush) which produced over 48 tonnes gold (and is still producing). Work is planned for 2020 which will advance this highly prospective project.

American Creek also holds several other high potential projects in other prospective areas of BC such as the Austruck-Bonanza, Ample Goldmax, Silver Side, and Glitter King.

Marketing

American Creek will be going to great lengths in 2020 to increase the Corporation’s exposure and recognition. Near future events including attending many conferences including the Vancouver Resource Investment Conference (Vancouver), AME Roundup (Vancouver), Red Cloud (Toronto), Raise Capital (Toronto), and the Prospectors and Developers Association of Canada (PDAC) convention (Toronto).

About American Creek

American Creek is a Canadian mineral exploration company with a strong portfolio of gold and silver properties in British Columbia. Three of those properties are located in the prolific “Golden Triangle”; the Treaty Creek and Electrum joint venture projects with Tudor Gold/Walter Storm as well as the 100% owned past producing Dunwell Mine.

More information about the Treaty Creek Project can be found here: https://americancreek.com/index.php/projects/treaty-creek/home

An exploration program is ongoing on American Creek’s 100% owned Dunwell Mine property located near Stewart. More information can be found here: https://americancreek.com/index.php/projects/dunwell-mine

The Corporation also holds the Gold Hill, Austruck-Bonanza, Ample Goldmax, Silver Side, and Glitter King properties located in other prospective areas of the province.

For further information please contact Kelvin Burton at: Phone: 403 752-4040 or Email: [email protected]. Information relating to the Corporation is available on its website at www.americancreek.com

American Creek Resources $AMK.ca – Gold Poised To Test Resistance From 2011-2013 As US/Iran Rhetoric Escalates $TUD.ca $SII.ca $GTT.ca $AFF.ca $SEA.ca $SA $PVG.ca $AOT.ca

Posted by AGORACOM-Eric at 3:28 PM on Monday, January 6th, 2020

American Creek owns a 20% Carried Interest to Production at the Treaty Creek Project in the Golden Triangle. 2019’s first hole averaged of 0.683 g/t Au over 780m in a vertical intercept. The Treaty Creek property is located in the same hydrothermal system as the Pretivm and Seabridge’s KSM deposits.

Welcome to 2020, a year in which the President of the United States conducts war via his Twitter account:

Regardless of how you feel about President Trump or the US/Iran situation, the fact is that things escalated a great deal over the weekend after a US airstrike eliminated Iranian General Suleimani on Thursday night in Baghdad. 

This dangerous escalation of posturing between the mightiest military on the planet and a country of more than 80 million people which also happens to possess formidable conventional and unconventional military capabilities could have potentially far reaching financial market implications. 

With Middle East equity indices already down between 3% and 5% I fully expect S&P futures to open lower Sunday night. Gold futures and crude oil futures could also rise sharply in thin Sunday night trading as scared short sellers are forced to close out losing positions.

My interest is in gold in particular.  Turning to the monthly chart we can see that gold ended last week right at previous support from 2011-2013:

Gold (Monthly)

There is layer of resistance stretching from the September 2019 peak at $1565 to the April 2013 high at $1604.30. If gold gaps higher into the teeth of this resistance it should make for an interesting week of trading which is likely to be characterized by higher volatility and higher trading volumes. Gold sentiment is running hot after a more than $100 rally over the span of five weeks. In addition, positioning among gold futures traders is also at an extreme with commercial traders (producers, swap dealers, etc.) in gold futures holding their largest net notional short position on record (more than US$50 billion):

Technically speaking, gold is getting a bit overheated on shorter time frames (daily, hourly, etc.). However, on the weekly and monthly charts the gold party could be just getting started after a 6+ year bottoming process that only transitioned into a nascent uptrend six months ago. 

Nobody knows how the US/Iran situation is going to unfold, but one thing is for sure and that is that it’s a scary situation which has the potential to get a lot worse before it gets better. If there was ever a time to own gold it would be now, and perhaps that is why we should take standard sentiment/technical indicators with a grain of salt.  Judging by the massive commercial short position in gold futures the yellow metal is in the midst of a massive short squeeze – short squeezes can often reach crazy extremes before experiencing a reversal (only once the most leveraged short players have been forced to cover at the highs).  This may be what is about to unfold in gold. 

Source: https://ceo.ca/@goldfinger/gold-poised-to-test-resistance-from-2011-2013-as-usiran-rhetoric-escalates

American Creek $AMK.ca Congratulates Treaty Creek JV Partner Tudor Gold on Receiving a Further $2,900,000 in Exploration Funding from Eric Sprott $TUD.ca $SII.ca $GTT.ca $AFF.ca $SEA.ca $SA $PVG.ca $AOT.ca

Posted by AGORACOM-Eric at 9:20 AM on Tuesday, December 31st, 2019
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Cardston, Alberta–(December 31, 2019) – American Creek Resources Ltd. (TSXV: AMK) (OTC Pink: ACKRF) (“American Creek”) (“the Corporation”) is pleased to report that Canadian billionaire Eric Sprott has invested an additional $2,900,000 in our JV partner Tudor Gold for the upcoming 2020 drill program on Treaty Creek, located in the “Golden Triangle” of Northwestern British Columbia.

The 2019 drilling at Treaty Creek was very successful and produced some of the most significant gold intercepts in the exploration industry. The focus has been on the gold enriched Goldstorm Zone which is on trend with Seabridge Gold’s Iron Cap Zone located approximately five kilometers to the southwest. Drilling was designed to define a gold deposit with the potential of being open pit mined.

The Treaty Creek Project is a joint venture with Tudor Gold owning 3/5th and acting as project operator. American Creek and Teuton Resources each have a 1/5th interest in the project. American Creek and Teuton are both fully carried until such time as a Production Notice is issued, at which time they are required to contribute their respective 20% share of development costs. Until such time, Tudor is required to fund all exploration and development costs while both American Creek and Teuton have “free rides”.

Darren Blaney, CEO of American Creek stated: “Mr. Sprott has now made multiple significant investments in Tudor Gold in 2019 for the development of the Treaty Creek property. On December 13, 2019 Mr. Sprott stated: “Treaty Creek has a great shot at having 20 million ounces, the holes are so deep, they have a thousand-meter holes that are running close to a gram a ton and it’s wide open, so I’m very excited about the opportunity there”. He continues to put his money where his mouth is and has given another huge endorsement to the Treaty Creek project with this latest significant injection of cash. He also made two prior $1,000,000 investments in American Creek earlier in 2019.”

The Treaty Creek Project lies in the same hydrothermal system as Pretium’s Brucejack mine and Seabridge’s KSM deposits however, the Treaty Creek project has far better logistics.



Image of Sulphurets Hydrothermal System

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Sprott Weekly Roundup

On December 27, 2019 Sprotts “Weekly Roundup” show hosted Bob Thompson, Senior Vice President of Raymond James in Vancouver who does an excellent job at describing where we are on the “Mining Clock” along with other valuable insights into the precious metals industry.

We highly recommend you take a few minutes to listen:

About American Creek

American Creek is a Canadian mineral exploration company with a strong portfolio of gold and silver properties in British Columbia. Three of those properties are located in the prolific “Golden Triangle”; the Treaty Creek and Electrum joint venture projects with Tudor Gold/Walter Storm as well as the 100% owned past producing Dunwell Mine.

More information about the Treaty Creek Project can be found here: https://americancreek.com/index.php/projects/treaty-creek/home

An exploration program is ongoing on American Creek’s 100% owned Dunwell Mine property located near Stewart. More information can be found here: https://americancreek.com/index.php/projects/dunwell-mine

The Corporation also holds the Gold Hill, Austruck-Bonanza, Ample Goldmax, Silver Side, and Glitter King properties located in other prospective areas of the province.

For further information please contact Kelvin Burton at: Phone: 403 752-4040 or Email: [email protected]. Information relating to the Corporation is available on its website at www.americancreek.com

American Creek $AMK.ca Announces the Discovery of a Copper-Silver Horizon Significantly Enriching the Grades at Treaty Creek Located in the Golden Triangle $TUD.ca $SII.ca $GTT.ca $AFF.ca $SEA.ca $SA $PVG.ca $AOT.ca

Posted by AGORACOM-Eric at 9:56 AM on Thursday, December 19th, 2019

American Creek Resources (TSXV: AMK) (OTC Pink: ACKRF) (the “Corporation” or “American Creek”) is pleased to announce its partner Tudor Gold has concluded the interpretation of a copper-silver mineralized zone, the ‘CS 600 Horizon’, within the Goldstorm Zone. Composite grades for drill holes GS19-42, 47, 48, 49, 52 and CB18-39 were re-calculated utilizing the copper and silver grades obtained from the 2019 drill-hole program. These holes are located in the northeastern-most area of the project. The copper and silver mineralization contributed greatly to increasing the gold equivalent content of all drill holes that cut the new copper-rich ‘CS 600 Horizon’.

  • The largest increase in gold equivalent content to the ‘300 Horizon’ was from GS19-42. The gold-only grade previously reported for the 370.5 m interval was 1.097 gpt Au. After adding the copper-silver mineralization, the gold metal equivalent content has increased to 1.275 gpt Au Eq over the same 370.5 metre interval. This was due mainly to the elevated silver grades.
  • Copper grades were very consistent within the ‘CS 600 Horizon’. Grades ranged from approximately 0.16% Cu to 0.34% Cu over intervals of 69m to 151.5m in holes GS19-42, 47, 48, 49 and 52. These intercepts led to the largest gold equivalent increases within the Goldstorm System.
  • Silver grades averaged as high as 10 gpt within both the ‘300 Horizon’ and the ‘CS 600 Horizon’ and the metal appears to occur throughout the entire Goldstorm System.

Vice President of Project Development, Ken Konkin P.Geo. comments: “The newly discovered copper-rich ‘CS 600 Horizon’ is a very important feature of the Goldstorm System. The presence of copper and silver mineralization gives this discovery a true polymetallic nature yet it remains a gold-dominant project. Copper grades appear to be increasing with depth within the ‘CS 600 Horizon’. In the following weeks our technical team will continue to examine the rest of the drill holes to re-compute the gold-equivalent grades to include copper and silver throughout the entire system.”

Table l provides gold equivalent composites from five drill holes completed on three sections that cut the ‘300 Horizon’ and the ‘CS 600 Horizon’ within the Goldstorm System. Although the sixth hole in this table (CB18-39) did not intersect the ‘CS 600 Horizon’, the Au Eq composite increased the grade of the intercept by over 11% within the ‘300 Horizon’. Sections attached demonstrate that the copper pulse is un-like the main gold mineralization within the ‘300 Horizon’ as the ‘CS 600 Horizon’ appears to be dipping sub-parallel to the main Treaty Thrust Fault (TTF1) shown in section 111+00 NE. The Company’s Press Release dated October 24th provides the drill collar data including drill hole location, elevation, inclination, azimuth and drill hole length.

Table l: Gold Equivalent Composites GS19-42, 47, 48, 49,52 and CB18-39

To view an enhanced version of Table I, please visit:
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* All assay grades are uncut and intervals reflect drilled intercept lengths. True widths of the mineralization have not been determined. HQ and NQ2 diameter core samples were sawn in half and typically sampled at standard 1.5m intervals.

**Prices used to calculate the AuEq metal content are: Gold $1322/oz, Ag: $15.91/oz, Cu: $2.86/lb. All metals are reported in USD and calculations do not consider metal recoveries.

The goal is to design a diamond drill hole program that will fast-track the exploration program for 2020 with the objective to begin the Mineral Resource Estimate work at the end of the 2020 field season. Tudor hopes to accomplish as much drilling needed to bring a Measured and Indicated Mineral Resource Estimate forward as quickly as possible.

Walter Storm, President and CEO, stated: “These new gold equivalents are extremely encouraging as our technical team continues to take positive steps advancing Tudor Gold’s flagship Treaty Creek Au-Ag-Cu project. During the following months our geologist and engineers will continue to work with the geological model and begin to prepare the diamond drill hole proposal for 2020 .”

Darren Blaney, President and CEO of American Creek, stated: “The Goldstorm deposit on Treaty Creek continues to amaze us. Its scale has grown exponentially over the last two years to close to a billion tonnes and these recent calculations are giving us a more accurate indication of the grades within the system. The focus has been on the 300 zone as it’s a gold enriched area just below the surface giving it great potential to be open pitted, and now we’re starting to see the tremendous potential at depth in the CS 600 zone. The Goldstorm is open at depth and to the north and east which is where these pulses of copper and silver are becoming more concentrated. With power and the highway only 20km down the valley, and the deposit increasing in size exponentially, the Goldstorm truly has the potential to be a world class deposit.”

The Treaty Creek Project is a Joint Venture with Tudor Gold owning 3/5th and acting as operator. American Creek and Teuton Resources each have a 1/5th interest in the project. American Creek and Teuton are both fully carried until such time as a Production Notice is issued, at which time they are required to contribute their respective 20% share of development costs. Until such time, Tudor is required to fund all exploration and development costs while both American Creek and Teuton have “free rides”.

The Treaty Creek Project lies in the same hydrothermal system as Pretium’s Brucejack mine and Seabridge’s KSM deposits with far better logistics.



Map 1

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QA/QC

Drill core samples were prepared at MSA Labs’ Preparation Laboratory in Terrace, BC and assayed at MSA Labs’ Geochemical Laboratory in Langley, BC. Analytical accuracy and precision are monitored by the submission of blanks, certified standards and duplicate samples inserted at regular intervals into the sample stream by Tudor Gold personnel. MSA Laboratories quality system complies with the requirements for the International Standards ISO 17025 and ISO 9001. MSA Labs is independent of the Company.

Qualified Person

The Qualified Person for this news release for the purposes of National Instrument 43-101 is the Company’s Vice President of Project Development, Ken Konkin, P.Geo. He has read and approved the scientific and technical information that forms the basis for the disclosure contained in this news release.


Figure 1: Goldstorm Zone Section 111+00 NE

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Figure 2: Goldstorm Zone Section 112+50 NE

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Figure 3: Goldstorm Zone Section 114+00 NE

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About American Creek

American Creek is a Canadian junior mineral exploration company with a strong portfolio of gold and silver properties in British Columbia. Three of those properties are located in the prolific “Golden Triangle”; the Treaty Creek and Electrum joint venture projects with Tudor Gold/Walter Storm as well as the 100% owned past producing Dunwell Mine.

More information about the Treaty Creek Project can be found here: https://americancreek.com/index.php/projects/treaty-creek/home

An exploration program is ongoing on American Creek’s 100% owned Dunwell Mine property located near Stewart B.C.. More information can be found here: https://americancreek.com/index.php/projects/dunwell-mine

The Corporation also holds the Gold Hill, Austruck-Bonanza, Ample Goldmax, Silver Side, and Glitter King properties located in other prospective areas of the province.

For further information please contact Kelvin Burton at: Phone: 403 752-4040 or Email: [email protected]. Information relating to the Corporation is available on its website at www.americancreek.com