Posted by AGORACOM
at 8:59 AM on Tuesday, April 14th, 2020
Sponsor: Affinity Metals Corp. (TSX-V: AFF) is a Canadian mineral exploration company building a strong portfolio of mineral projects in North America. The Corporation’s flagship property is the drill ready Regal Property near Revelstoke, BC where Affinity Metals is making preparations for a spring drill program to test two large Z-TEM anomalies. Click Here for More Info
By the mid-6th century BC, Darius the Great was ‘King of Kings’, ruling over the vast Achaemenid Empire.
By that time, gold and silver had already been in use by earlier civilizations for thousands of years.
There are cuneiform tablets that are nearly 4,000 years old from ancient Sumeria which record commercial transactions made in gold and silver.And subsequent civilizations – the Babylonians, Egyptians, Lydians, etc. all used gold or silver in commerce.But Darius had a unique idea. He borrowed the idea of minting gold and silver coins from the Lydians… but then established a fixed exchange rate between the two metals.
Darius decreed that one gold “daric†was worth 13.5 silver coins– one of the first examples in history of a fixed, bimetallic standard.
His idea caught on. And for thousands of years afterward, later civilizations established a fixed gold/silver ratio.
In ancient Greece during the age of Pericles, gold was valued at 14x silver. In ancient Rome, Julius Caesar valued gold at 12x silver.
It remained this way for centuries.
Even in the earliest days of the United States, eighteen centuries after Caesar, The Coinage Act of 1792 established a ratio of 15:1.
(According to the law, one US dollar is supposed to be 24.1 grams of silver, or 1.6 grams of gold. So those pieces of paper in your wallet are not dollars– they are technically “Federal Reserve Notesâ€.)
In modern times there is no longer a fixed ratio between gold and silver, though its long-term average over the last several decades has been between 50:1 and 80:1.
This is a lot higher than in ancient times… but the circumstances are obviously different.
Today, gold is still widely used as a reserve by central banks and governments around the world. And investors still buy gold as a hedge against inflation and uncertainty.
Silver, on the other hand, has countless industrial applications; it’s a critical component in everything from mobile phones to automobiles to solar panels.
Like gold, silver is also a hedge against inflation and uncertainty.
But silver’s demand fundamentals are more heavily influenced by overall economic health. If the economy is in recession, silver prices can fall because there’s less demand from industry.
Gold, on the other hand, doesn’t follow that pattern. In 5 out of the last 6 recessions, in fact, gold has increased in price.
That’s why recessions, and extreme turmoil, can lead to a massive spike in the gold/silver ratio. Gold goes up, and silver stays flat (or falls).
Just prior to World War II as Hitler launched his invasion of Poland, the ratio spiked to 98:1.
In 1991 as the first Gulf War began, the ratio again reached 100:1.
Today we’re back again in that territory; as of this morning, the ratio is 110:1, and it’s been as high as 120 or more in recent weeks
Now, there are very few things about this pandemic that we can be certain about.
Things that were unthinkable even a month ago are now part of our daily lives. And so as I’ve written over and over again, EVERY possible scenario is on the table right now.
But one thing that does seem very clear is that central banks around the world are going to print an extraordinary amount of money.
Many of them already have.
The Federal Reserve in the US, for example, has already expanded its balance sheet to SIX TRILLION DOLLARS.
That’s a nearly 50% increase from last month. And they’re just getting started.
Why does something so mundane as a central bank balance sheet even matter?
Because a rising balance sheet means they’re conjuring trillions of dollars out of thin air to bail everyone out.
This is the way they solve problems: they print money and debase the currency, something that policymakers have been doing for thousands of years.
But you can only get away with doing that a limited number of times before the currency starts to lose value.
We don’t know how long it will last, how much destruction it will cause, or what the world will look like once this is over.
But we can be pretty sure that central banks are going to print a ridiculous amount of money, and that governments will go into a ridiculous amount of debt.
They’ve told us this much. And they’ve already started to do it. So this seems pretty obvious.
The price of gold is up significantly over the last several months, and since the start of this crisis.
But the price of silver has declined… leading to a record-high gold/silver ratio.
This ratio may stay elevated for a while, or even go higher.
But in the past, the ratio has always returned to more traditional levels. Always. Even when the world was facing Adolf Hitler or the Great Depression.
So it stands to reason that, if they keep printing money (which they already are), and the ratio eventually returns to its historical range, the price of silver could really skyrocket.
We’ll spend some time this week talking about some interesting ways to take advantage of this.
Posted by AGORACOM
at 4:04 PM on Monday, April 13th, 2020
Sponsor: Affinity Metals Corp. (TSX-V: AFF) is a Canadian mineral exploration company building a strong portfolio of mineral projects in North America. The Corporation’s flagship property is the drill ready Regal Property near Revelstoke, BC where Affinity Metals is making preparations for a spring drill program to test two large Z-TEM anomalies. Click Here for More Info
The gaping price differential between spot gold and gold futures that has been plaguing the paper gold markets in London and New York for the last three weeks shows no signs of abating and is continuing to flare up.
In essence, the contango phenomenon we are seeing is one of gold futures prices trading far above spot gold prices, a sign of liquidity problems in the London gold market and a signal that something is completely broken between the world‘s two predominant “gold price discovery” trading venues – which both, by the way, trade paper gold. As a reminder, London LBMA trades unallocated gold over the counter (OTC), a form of synthetic fractional gold derivative. The vast quantities of unallocated gold which are traded in London are then netted and cleared in an electronic clearing engine called Aurum by 5 LBMA bullion banks that comprices London Precious Metals Clearing Limited (LPMCL), namely JP Morgan, HSBC, UBS, Scotia, and ICBC Standard Bank). Allocation of physical gold is a totally separate process beyond clearing in Aurum
COMEX trades predominantly cash-settled gold futures contracts on exchange and facilitates the trading of these contracts bilaterally. COMEX futures are 99.9% cash-settled and even those that result in delivery really result in warehouse warrants changing hands but the gold staying in the New York vaults of JP Morgan, HSBC and Scotia.
That the wide-open spread continues to persist is even more remarkable, despite the best efforts of the London Bullion Market Association (LBMA), CME Group (operator of COMEX) and the powerful London-New York bullion bank syndicate to throw all they have at the problem.
At the time of writing, spot gold was trading at US$ 1696 against US$ 1753 for the front-month (most actively traded) COMEX gold futures contract, a $36 spread with futures over 3.44% over spot. The spread we‘re referring to can be seen in the below 3-day chart, which plots June 2020 gold futures (red and green line) against spot XAUUSD (blue line) from 6 April to 8 April. Notice that over this time the futures price has stayed far above spot, and more importantly, it has persistently done so.
3 day chart of COMEX gold futures price (June 2020) versus LBMA spot gold price, 6 – 9 April 2020. Source:Â www.barchart.com
The spot-futures spread blow out that has been running into its third week now can vividly be seen by zooming out and looking at a similar chart but this time from 24 March until 9 April, the first day that the price spread between London and New York gaped open. Notice the big gaps between futures and spot over 24-25 March, the persistence of the gap over the remainder of the week, and the subsequent re-explosion of the divergence since early April, particularly over the last few days.
Its instructive to review a short timeline of some of the events which have contributed to this ongoing saga over the last three weeks, because it shows that no matter what the LBMA and CME do, the spread between London and COMEX continues to stay out there.
Week 1
23 March – COMEX gold futures (April contract) begin trading noticeably above LBMA bullion bank spot gold prices.
24 March – Spreads between COMEX futures and London spot blew out to $100 at one point during the day, while bid – ask spreads within London spot widened substantially.
24 March – Rumors in the gold market suggested that bullion banks that were required to deliver physical gold for COMEX Exchange for Physical (EFP) transactions failed to do so, suffered losses and exited the market, and that this caused the Spread between COMEX and London to widen substantially.
The bullion bank controlled LBMA releases its first control statement, deflecting attention away from London, saying it will help (essentially collude with) the CME-COMEX in the gold market – The official language is that the LBMA “is working closely with COMEX and other key stakeholders to ensure the efficient running of the global gold market.”
Note – Who are these other key stakeholders, what do they mean by efficient running, and what gives them the right to think they can “run“ the global gold market?
24 March – LBMA and its bullion banks pressure CME to launch a gold futures contract with a deliverable clause in London 400 oz gold bars.
24 March – At end of day, CME announces the launch of a new gold futures contract that can theoretically deliver 400 oz bars, 100 oz bars and kg bars but that uses a fractional paper concept called Accumulated Certificates of Exchange (ACEs) to divide 400 oz deliverable bars into 100 oz bars, and that critically includes all refiner brands on the LBMA Good Delivery List (current and former Good Delivery refiners). This contract will be called 4GC (See here and here).
30 March – CME published its daily gold vault stocks report (for Friday 27 March) with a new category for “400 oz AND eligible brands”, but with all vaults showing zero stocks of 400 oz gold bars. And notably, that the JP Morgan vault in New York had zero holdings.
30 March – When Bullionstar draws attention to this new CME vault report, in “COMEX can’t find a 400 oz bar for its new 400 oz gold futures contract“, the CME then deletes the new report from its website on the morning of 31 March, and replaces it intra-day with a report which reverted to the original version.
1 April – LBMA and CME publish an unprecedented second control statement titled “LBMA and CME group comment on healthy gold stocks in New York and Londonâ€, saying that “CME Group and LBMA..will continue to coordinate efforts as market circumstances evolveâ€. See “LBMA and COMEX try to Reassure the Market – Twice in One Week“ for background.
Note – If LBMA and CME are trading gold bars, why would they need to coordinate efforts, and more importantly, coordinate efforts to what end?
LBMA disingenuously refers to 8326 tonnes of gold in London, a figure that is from 3 months ago, and nearly all of this total tonnage is central bank gold, gold held in ETFs, and allocated gold held by other investors. The real float of physical gold in the london LBMA gold vaults controlled by the LBMA bullion banks is less than 1000 tonnes and some estimates from sources in the bullion banks say it could be between 300 and 500 tonnes.
In the same statement, CME refers to 9.2 million ozs ( 287 tonnes) of gold held in its approved vaults, with irrelevant claims that 5.6 million ozs of this is eligible gold. Eligible gold is gold which just happens to be in the form that satisfies the deliverable unit of the contracts (1 kg bars or 100 oz bars). The rest of this figure is registered gold, which already has warehouse warrants attached.
2 April – The spread between COMEX gold futures prices and London spot gold prices starts to gap up strongly again.
Rest of week – CME Group releases publicly a PowerPoint slide presentation titled “Precious Metals Physical Delivery Processâ€, which includes the new 4GC contract and explains how to get an electronic warrant if standing for delivery of COMEX gold futures contracts, but that explains nothing about withdrawing gold from the COMEX vaults.
The COMEX presentation also features a slide discussing the COMEX New York approved vaults but unbelievably instead of showing photos of one of its approved New York vaults, this slide contains photos of a HSBC gold vault in London showing gold bars belonging to the exchange traded fund, the SPDR Gold Trust (GLD). This GLD gold has nothing to do with COMEX gold vaults in New York (or does it?).
COMEX presentation slide uses photos of a HSBC gold vault in London featuring SPDR Gold Trust gold bars
6 April – The spread between the COMEX June gold futures contract and the LBMA spot gold price blows out again very widely to over $80 at one point in the day.
6 April – CME adds back the category “Enhanced Delivery (400 oz AND eligible brands)” to its New York daily vault report. Of the 9 vaults on the report, 5 have 0 holdings in this 400 oz category, 2 (Brinks & Loomis) have a combined 2 tonnes, HSBC claims 21.5 tonnes, JP Morgan appears for the second time, claiming 126.8 tonnes. The first time being 30 January when JP Morgan was listed as having zero tonnes of 400 oz bars.
Note – “400 oz AND Eligible Brands” will be the subject of another article soon, but for now it means as follows. For the new 4GC contract, CME added all LBMA Good Delivery gold bar Brands (Current and Former) as Eligible brands. That’s 68 brands from the existing GC100 contract + 71 brands from the LBMA current Good Delivery List + another 113 LBMA former Good Delivery List As another aside, where did the JP Morgan New York vault suddenly get 126.8 tonnes of gold suddenly to add to Eligible category for the COMEX 4 GC contract? Was this 126.8 tonnes of gold suddenly shipped in to the JP Morgan vault from London? Hardly. Were 126.8 of London Good Delivery gold bars already sitting in its New York vault. Probably not as its London and not New York which is the center of 400 oz gold bar storage. Was there some type of gold swap involved between London and New York. Possibly.
Another intriguing possibility is that now that former LBMA Good Delivery List gold bars are eligible for the new 400 oz contract, that JP Morgan borrowed Old US Assay Office gold bars from the New York Fed (their two gold vaults are beside each other), and then added these to the Eligible category for the new 4GC gold contract.
Root Cause of Spot vs Futures Gold Price Discrepancy
So what is the cause of this dislocation in pricing between the lower ‘spot’ price and the higher ‘futures’ price, i.e. between the London LBMA gold spot market and the New York COMEX gold futures market? The answer in general is that the problem is with the spot price. And where is the spot price? London.
Ironically, the LBMA bullion banks are trying to shift the attention away from London, when London is exactly where the problem is. The spot price problem appears to be due to liquidity problems of the LBMA market makers in London where they are suspicious of trading with each other. This is despite the fact that these LBMA market makers are obliged to constantly make a market and offer two way price quotations to each other. These market makers are BNP Paribas, Citibank, Goldman Sachs, HSBC, ICBC Standard, JP Morgan Chase, Merrill Lynch, Morgan Stanley, Standard Chartered, Bank of Nova Scotia, Toronto-Dominion and UBS.
The spot price problem has nothing to do with air travel cancellations or shipments of 100 oz gold bars from London to New York. These market makers do not make markets in physical gold. The unit of trading in London is not real gold anyway, its unallocated gold or gold credit which is issued by a bullion bank and which has counterparty risk.
Something has spooked these market makers and caused a drop in liquidity in the London market. These banks, which normally trade with each other, now do not want to trade with each other due to heightened counterparty risk. Unallocated trading volumes in the London gold market have fallen over the last three weeks. See chart below.LBMA – Unallocated gold trading volumes, week-to-week, last 4 weeks to 5th April. Source: www.lbma-i.com
Likewise, according to Bloomberg, COMEX gold futures trading volume last week was 80.6 million ounces, a 72% drop compared to the end of February. From the same Bloomberg article, there is an intriguing and obviously dramatic quote from commodities broker Marex Spectron, saying:
“You have a bunch of shell-shocked market makers who are literally hiding under their desks and do not and possibly can not make markets in any size, shape or form,†said David Govett, head of precious metals trading at Marex Spectron. “Hence we have the lack of liquidity, the small volumes and the wide spreads.â€
Marex is a broker for EFPs, so maybe the LBMA market makers are not answering calls. Then they are failing in their duty and obligations as market makers. But why would market makers not want to trade and how does this relate to EFP spreads? If banks suffered EFP problems and then the EFP spread between London and New York blew up, and then they use the excuse that the EFP spread is too large for them to make a market in spot because they don’t want to take on risk, then that’s just circular logic and a pathetic excuse. But what causes LBMA market makers to become shell shocked and literally hide under their desks?
Could it be that the gold trading activities of some of these LBMA bullion banks have blown up and they have ceased their market making activities, but have not publicly stated this, and covered it up? Stranger things have happened. All the while, as trading volumes continue to fall in the paper gold markets of London and New York, the opposite is the case in physical gold markets, where BullionStar and other bullion dealers – those that continue to have inventory – see unprecedented demand and increasing trading volumes.
Posted by AGORACOM
at 8:26 AM on Wednesday, March 25th, 2020
Loncor has acquired an additional 5.04% interest in its subsidiary Adumbi Mining
Adumbi holds six exploitation licences in the Ngayu Greenstone Belt including the Imbo exploitation licence, where an Inferred Mineral Resource of 1.675 million ounces of gold (20.78 million tonnes grading 2.5 g/t Au
TORONTO, March 25, 2020 (GLOBE NEWSWIRE) — Loncor Resources Inc. (“Loncor” or the “Company“) (TSX: “LN”; OTCQB: “LONCF”) announces that it has acquired an additional 5.04% interest in its subsidiary Adumbi Mining SARL (“Adumbi Holdcoâ€) pursuant to a private transaction with one of the former minority shareholders of Adumbi Holdco.  This acquisition increases Loncor’s interest in Adumbi Holdco from 71.25% to 76.29%. “Loncor continues to consolidate its dominant position in the Ngayu Goldbelt. Over the next twelve months we intend to drill the Adumbi gold deposit and several other highly prospective areas of the Imbo license,†said Founder and CEO, Arnold Kondrat.
Adumbi
Holdco, which recently changed its name from KGL Somituri SARL, holds
six exploitation licences in the Ngayu Greenstone Belt including the
Imbo exploitation licence, where an Inferred Mineral Resource of 1.675
million ounces of gold (20.78 million tonnes grading 2.5 g/t Au,) was
outlined in January 2014 by independent consultants Roscoe Postle
Associates Inc on three separate deposits, Adumbi, Kitenge and Manzako.
76.29% of this gold resource is now attributable to Loncor.
About Loncor Resources Inc. Loncor
is a Canadian gold exploration company focussed on the Ngayu Greenstone
Belt in the Democratic Republic of the Congo (the “DRCâ€).
The Loncor team has over two decades of experience of operating in the
DRC. Ngayu has numerous positive indicators based on the geology,
artisanal activity, encouraging drill results and an existing gold
resource base. The area is 200 kilometres southwest of the Kibali gold
mine, which is operated by Barrick Gold (Congo) SARL (“Barrickâ€).
In 2019, Kibali produced record gold production of 814,000 ounces at
“all-in sustaining costs†of US$693/oz. Barrick has highlighted the
Ngayu Greenstone Belt as an area of particular exploration interest and
is moving towards earning 65% of any discovery in 1,894 km2 of Loncor
ground that they are exploring. As per the joint venture agreement
signed in January 2016, Barrick manages and funds exploration on the
said ground at the Ngayu project until the completion of a
pre-feasibility study on any gold discovery meeting the investment
criteria of Barrick. In a recent announcement Barrick highlighted six
prospective drill targets and are moving towards confirmation drilling
in 2020. Subject to the DRC’s free carried interest requirements,
Barrick would earn 65% of any discovery with Loncor holding the balance
of 35%. Loncor will be required, from that point forward, to fund its
pro-rata share in respect of the discovery in order to maintain its 35%
interest or be diluted.
In
addition to the Barrick JV, certain parcels of land within the Ngayu
project surrounding and including the Makapela and Adumbi deposits have
been retained by Loncor and do not form part of the joint venture with
Barrick. Barrick has certain pre-emptive rights over the Makapela
deposit. Loncor’s Makapela deposit (which is 100%-owned by Loncor) has
an Indicated Mineral Resource of 614,200 ounces of gold (2.20 million
tonnes grading 8.66 g/t Au) and an Inferred Mineral Resource of 549,600
ounces of gold (3.22 million tonnes grading 5.30 g/t Au). Adumbi and
two neighbouring deposits hold an Inferred Mineral Resource of 1.675
million ounces of gold (20.78 million tonnes grading 2.5 g/t Au), with
76.29% of this resource being attributable to Loncor via its 76.29%
interest.
Resolute
Mining Limited (ASX/LSE: “RSG”) owns 25% of the outstanding shares of
Loncor and holds a pre-emptive right to maintain its pro rata equity
ownership interest in Loncor following the completion by Loncor of any
proposed equity offering.
Additional information with respect to Loncor and its projects can be found on Loncor’s website at www.loncor.com.
Qualified Person Peter
N. Cowley, who is President of Loncor and a “qualified person” as such
term is defined in National Instrument 43-101, has reviewed and approved
the technical information in this press release.
Technical Reports Certain
additional information with respect to the Company’s Ngayu project is
contained in the technical report of Venmyn Rand (Pty) Ltd dated May 29,
2012 and entitled “Updated National Instrument 43-101 Independent
Technical Report on the Ngayu Gold Project, Orientale Province,
Democratic Republic of the Congo”. A copy of the said report can be
obtained from SEDAR at www.sedar.com and EDGAR at www.sec.gov.
Posted by AGORACOM
at 3:02 PM on Wednesday, March 11th, 2020
Sponsor: Loncor, a Canadian gold explorer controlling over 2,400,000 high grade ounces outside of a Barrick JV. The Ngayu JV property is 200km southwest of the Kibali gold mine, operated by Barrick, which produced 800,000 ounces of gold in 2018. Barrick manages and funds exploration at the Ngayu project until the completion of a pre-feasibility study on any gold discovery meeting their Tier One investment criteria. Newmont $NGT$NEM owns 7.8%, Resolute $RSG owns 27% Click Here for More Info
Maurice Jackson of Proven and Probable speaks to Bob Moriarty of
321gold about his thoughts on the current financial markets and
investment opportunity
Excerpt:
Maurice Jackson:……Staying in the Southern Hemisphere, let’s visit the Congo, where you just introduced Loncor Resources (TSX:LN). Sir, who is Loncor Resources, and what is the opportunity they present to the market?
Bob Moriarty: Here’s what’s absolutely amazing, I’m
glad you brought that up. Loncor Resources approached me, I had never
even heard a whisper of the name, I had no clue as to who they were. I
went looking into it, they have an incredibly massive land position, in
the Democratic Republic of Congo, the DRC.
Barrick Gold has several gold mines there, in the Greenstone Belt,
and across the border in Tanzania. Barrick Gold has some of their other
really giant mines. Loncor has, in their wholly owned properties,
resources of about 2.4 million ounces. They’ve got joint venture with
Barrack, on a big piece of their property, like 3000 square kilometers,
which is a really big project. Barrick is funding it to feasibility,
they’re paying everything. Barrick runs the project, and Barrick spends
the money. There are no particular limits on what Barrick can spend,
they can spend anything they want to. They’ve got a drill program that’s
literally starting right now.
If you look at any stock, you want to figure out what the basement
is, what is the lowest price the stock can go to? If you ignored the JV
with Barrick, which would be a foolish thing to do, but if you ignored
it, you’re buying ounces of gold, in the ground, for $19 an ounce, U.S.
So, I don’t think there’s any downside to it. Approximately 70% of
shares are in the top three or four shareholders. I think Loncor
Resources is a great stock, because if you like gold, and I think after
all of the things that I’ve said over the last 15 years, anybody who
doesn’t like gold right now is economically illiterate.
Maurice Jackson: You know, you said that lightly, $19 an ounce.
Bob Moriarty: Yeah, yeah. How can you go wrong? At the stage they’re operating, they should be getting $50 or $60 bucks an ounce.
Now, one of the things that we haven’t gotten into, and we need to
get into is, one, the T-bond, and, two, what I see happening to gold and
gold shares. The T-bond Daily Sentiment Index (DSI), on Friday, hit 98.
That is the highest rating I’ve seen, on the Daily Sentiment Indicator
for any commodity, ever. Therefore, the T-bond’s going to crash, it’s
probably going to take gold with it. Gold had a DSI of 96 a couple of
weeks ago.
Everybody hates it. They act like, “Oh my God, you say that gold’s
going down. My God, I hate you!” The corrections are perfectly normal,
and we’re going to have a correction in gold, and we’re going to have a
correction in palladium, and we’re going to have a correction in
rhodium. We’re going to go into the biggest financial crash in world
history, and most asset classes are going to get sold off. That’s not a
bad thing, that creates opportunity, but you’ve got to be flexible, and
hopefully liquid.
Now, I am not saying, “Go out and sell everything you’ve got.” Every
time I say we’re going to have a correction, “Oh my God, you told me to
sell everything.” Well, that’s not what I said, not at all. I said we’re
going to have a correction. At the end of the correction, gold and
silver and platinum are going to be a lot more valuable. We’re going to
do exactly what we did in 2008. A lot of stocks were down 70% or 80%.
Most of the big ones, the ones that I like, Lion One Metals, Novo Resources, Irving Resources, Barksdale Capital, these stocks are down 30 or 40% since the first of the year, when I said, “Beware of the stock market.”
I’m not saying something’s going to change on Monday with gold shares, gold shares have been going down for two months.
Maurice Jackson: You referenced Jake Bernstein’s work on the Daily Sentiment Index. What are the parameters that you referenced regarding buy and sell indicators?
Bob Moriarty: The DSI measures sentiment. Most
investor look at fundamentals, technicals, worry about the interest
rates, worry about the Fed. That’s all bull. People buy stocks because
of emotions, and they sell stocks because of emotions. If you can
measure those emotions accurately, you’d make a lot of money.
When 98 out of 100 people say something is going to go up, and it
doesn’t make any difference what it is, or what the fundamentals are, or
what the Fed does, or what the economy does, or what interest rates do,
when 98 out of 100 people say something is going to go up, the next
move is down. That is the highest number I’ve ever seen. Anything above
90 says the top is near, and anything below 10 says the bottom is near.
98 is such an extreme measure, that I’m perfectly comfortable saying
that, you and I are talking on Saturday, and on Monday, T-bonds are
going to go down.
Maurice Jackson: Mark the words, there. Which metals have your attention, and why?
Bob Moriarty: Silver and platinum, strange enough, you sent me some information (click here).
There was a fire, an explosion at a platinum processing place in South
Africa, and the real story is the price of platinum is so far below the
cost of production, they’ve got to shut production.
Nobody wants to admit this, everybody’s got their own pet theory, but
the fact is supply and demand does work. You cannot have the price of
any commodity below the cost of production for very long, or things are
going to happen. People are going to shut down production whether it’s
wheat, whether it’s gold, or anything else. The silver gold ratio got
above 100 to 1, that’s the highest it’s ever been. I think it got up to
102, intraday, a week ago. Silver was very cheap, relative to gold, but
that doesn’t mean silver couldn’t correct. I own a lot of silver, and I
own a lot of platinum, and a little bit of gold.
Posted by AGORACOM
at 11:09 AM on Thursday, March 5th, 2020
Sponsor: Loncor, a Canadian gold explorer controlling over 2,400,000 high grade ounces outside of a Barrick JV. The Ngayu JV property is 200km southwest of the Kibali gold mine, operated by Barrick, which produced 800,000 ounces of gold in 2018. Barrick manages and funds exploration at the Ngayu project until the completion of a pre-feasibility study on any gold discovery meeting their Tier One investment criteria. Newmont $NGT$NEM owns 7.8%, Resolute $RSG owns 27% Click Here for More Info
What if you gave a party and no one came? The Fed found themselves in that embarrassing position on Tuesday as they dumped a .5% drop in the Fed Funds rate onto a startled market. The market wasn’t startled at the interest rate decline, the market was startled because when the Fed spiked the punch one more time no one would drink the Kool Aid.
I’ve said for months the Fed would stick another Band-Aid on a
fatally wounded financial system yet they would fail. I felt that way
because I spent almost two years fighting a useless and pointless war.
You see we are all raised to believe that governments are all
powerful. But if you watch a squadron of 27 B-52s each loaded with 117
bombs carpet sweep an area and your enemy armed only with a bolt action
rifle gets up and shoots back at you, you begin to understand that
government only think they are all powerful. There is always a limit to
power. The Fed just reached it.
The Fed found that out on March 3rd. And it wasn’t even a tiny virus
from a laboratory in Wuhan that defeated the Fed. It was a totally
dysfunctional financial system where outright frauds such as Tesla can
double in a week.
I’ll say it again. The Everything Bubble just burst, some because of
the virus, some because of an out of balance useless financial system
and a lot because of a now broken Just in Time manufacturing system
totally dependent on China.
The metals are going to be included for a period as the margin clerks
man their phones and whisper sweet words of doom to their clients.
Everything is going to get sold. We are going into a massive period of
deflation. At the end all those million dollar MacMansions will be going
for pennies on the dollar. Gold might be $500 an ounce but will buy ten
times what it does today. We have sailed off the edge of the known
world.
I cannot predict the price of gold; many believe in error that they
can. I can just say that after many trials and tribulations the world
will realize that an honest monetary system is the only cure to what
ails us. It will include a jubilee and a metals based currency.
So it would behoove investors to be looking around for production or near production stories.
Someone came to me a week ago with a compelling story of a company
effectively off the radar screens of investors. Part of the reason is
that the founder of Loncor Resources (LN-T) Arnold Kondrat owns 29% of
the shares. Resolute Mining owns another 27% and Newmont 7.6%. With 64%
of the shares in the strongest of strong hands, there hasn’t been all
that much inclination to tell their story.
Loncor operates in the DRC, the Democratic Republic of the Congo. The
company has such a massive land position that it’s fairly hard to
understand why they have been so far off the radar of investors.
Loncor has 43-101 gold ounces of over 2.4 million. To use USD
figures, at today’s stock price Loncor is worth $19 per ounce in the
ground of gold. That no doubt will tend to set a floor under the price.
At their stage of development they should be getting more like $50-$60
USD an ounce.
It’s pretty hard to fathom the incredible size of Loncor’s land
position in the DRC. They hold 3,534 square km in the Ngayu greenstone
belt with similar endowment and geology with the greenstone belt to
their east in Tanzania home to several big gold mines. Within their
Ngayu land position they have a joint venture with Barrick on 1,894
square km of the total property. Barrick has an active trenching and
ground sampling program and is preparing to drill some of the six drill
ready targets already identified. Drilling begins this month.
The JV with Barrick is interesting. First of all, Barrick knows the
greenstone belt with big mines both in the DRC and in Tanzania. Barrick
wants at least four million ounces and would prefer high grade. Barrick
funds and runs the exploration program across the 1,894 square km all
the way to completion of a pre-feasibility study.
The DRC has a 10% carried interest and Barrick will have 65% of the
remainder with Loncor getting the remaining 35% of what is left after
the DRC gets their cut. At that point Loncor pays their own way on their
piece of the pie.
In Loncor’s fact sheet
they mention something interesting. Loncor’s Ngayu Greenstone belt is
home to a 130 km BIF. (Banded Iron Formation) Readers with a really good
memory may recall me writing about BIF
before when I was talking about where the gold showed up in the Western
Australia Pilbara Basin, also near the giant iron projects of WA.
Basically the iron was dissolved in seawater. When single cell
cyanobacteria began to produce oxygen some 3 billion years or so ago, as
the chemistry of the water changed, the iron precipitated out of
solution. Quinton Hennigh came up with the theory years ago that that is
how the world’s biggest gold properties got their gold. Gold and BIF
are similar in age and where you find one, you almost always find the
other.
Loncor is cheap. Yes, they may get cheaper but I find them attractive
enough that I bought some shares in the open market. Investors are
probably going to find it difficult to pick up a large position. The
shares pretty much trade by appointment. With a Barrick JV and with gold
in the ground at $19 an ounce in USD I don’t expect them to remain
cheap for long.
Loncor is an advertiser. I own shares. That makes me biased. I don’t
share in your gains or losses so take some responsibility for your own
trading decisions. It’s your money after all.
Posted by AGORACOM-JC
at 4:32 PM on Friday, February 28th, 2020
AGORACOM Clients Attending PDAC 2020
THEREGAL PROJECT
B.C.’s Next Premier
Silver, Lead, Zinc, Copper Deposit?
Affinity Metals holds under option, a 100% interest in the Project, located within the northern end of the prolific Kootenay Arc, a highly prospective mineralized trend.
Treaty Creeks’ GOLDSTORM zone hosts a conceptual volume of ONE BILLION TONNES rock grading close to one gram per tonne gold and is open to the north, east, and at depth. Â
A major drill program is being planned for spring to develop a resource calculation. 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.
American Creek been selected to do a formal presentation at the conference. The presentation will be held on Tuesday, March 5 at 2:00PM in room #802
HPQ Silicon Resources designs, develops, manufactures and commercializes plasma base processes
The innovative PUREVAP “Quartz Reduction Reactors†(QRR), will permit the One Step transformation of Quartz (SiO2) into High Purity Silicon (Si) at prices that will promote considerable renewable energy potential.
Lomiko hosts high-grade graphite at its La Loutre Property in Quebec. The company is working toward a Pre-Economic Assessment (PEA) that will increase its current indicated resource of 4.1 Mt of 6.5% Cg to over 10 Mt of 10%+ Cg in order to supply and develop graphite materials for the green economy.
Posted by AGORACOM
at 3:47 PM on Thursday, February 13th, 2020
Gold will outperform the S&P 500 Index in 2020. That’s one of several projections made by CLSA in its just-released “Global Surprises 2020†report.
The Hong Kong investment firm has an impressive track record when it comes to making market predictions—last year it had a 70 percent hit rate—so it may be prudent to take this one seriously.
CLSA’s
head of research Shaun Cochran: “If investors are concerned about the
role of liquidity in recent equity market strength… gold provides a
hedge that could perform across multiple scenarios.â€
Indeed, gold is one of the most liquid assets in the world with an average daily trading volume of more than $112 billion,
according to the World Gold Council (WGC). That far exceeds the Dow
Jones Industrial Average’s daily volume of approximately $23 billion.
The
yellow metal, Cochran adds, can be particularly useful in an era of
perpetually loose monetary policy: “[I]n the event that growth
disappoints the market’s expectations, gold is positively leveraged to
the inevitable policy response of lower rates and larger central bank
balance sheets.â€
As
I’ve pointed out many times before, gold has traded inversely with
government bond yields. The recent gold rally has largely been driven by
the growing pool of negative-yielding government debt around the world,
now standing at $13 trillion. Here in the U.S., the nominal yield on
the 10-year Treasury has remained positive, but when adjusted for
inflation, it’s recently turned negative, despite a strengthening
economy. What’s more, the Federal Reserve’s balance sheet has begun to
increase again. It now holds about 30 percent of outstanding Treasury
debt, up from about 10 percent prior to the financial crisis.
I
can’t say whether gold will beat the S&P this year or next, but
what I do know is that the yellow metal has been a wise long-term
investment. For the 20-year period through the end of 2019, gold crushed
the market two-to-one, returning 451.8 percent compared to the
S&P’s 223.6 percent. That comes out to a compound annual growth rate
(CAGR) of 8.78 percent for gold, 4.03 percent for the S&P.
Manufacturing Turnaround Has Begun
U.S.
manufacturers started 2020 on stronger footing, a welcome turnaround
after contracting for five straight months. January’s ISM manufacturing
purchasing manager’s index (PMI) clocked in at 50.9, indicating slight
growth. Up from 47.2 in December, this represents the biggest
month-over-month jump since August 2013, when the PMI increased to 55.4
from 50.9 in July.
This
may also mark the end of the recent manufacturing bear market, prompted
by the trade war between the U.S. and China. Although relations between
the world’s two biggest superpowers remain strained, to say the least,
we’ve seen improvements lately that hint at better days. Both sides
signed a “Phase One†agreement in mid-January, and last week, China
announced it would be cutting tariffs in half on as much as $75 billion
of U.S.-imported products.
The
coronavirus is a new development that has disrupted global trade, but
there’s reason to be optimistic, as the PMI makes clear.
To read my full comments on the coronavirus, and its impact on Chinese and Hong Kong stocks, click here!
The
Dow Jones Industrial Average is a price-weighted average of 30 blue
chip stocks that are generally leaders in their industry. The S&P
500 Stock Index is a widely recognized capitalization-weighted index of
500 common stock prices in U.S. companies. The Purchasing Manager’s
Index is an indicator of the economic health of the manufacturing
sector. The PMI index is based on five major indicators: new orders,
inventory levels, production, supplier deliveries and the employment
environment. Compound annual growth rate (CAGR) is a business and
investing specific term for the geometric progression ratio that
provides a constant rate of return over the time period.
All
opinions expressed and data provided are subject to change without
notice. Some of these opinions may not be appropriate to every investor.
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Investors does not endorse all information supplied by these websites
and is not responsible for their content.
U.S. Global Investors, Inc. is an investment adviser registered with the Securities and Exchange Commission (“SEC”). This does not mean that we are sponsored, recommended, or approved by the SEC, or that our abilities or qualifications in any respect have been passed upon by the SEC or any officer of the SEC. This commentary should not be considered a solicitation or offering of any investment product. Certain materials in this commentary may contain dated information. The information provided was current at the time of publication.
Posted by AGORACOM
at 7:16 PM on Tuesday, February 11th, 2020
Sponsor: Affinity Metals (TSX-V: AFF) a Canadian mineral exploration company building a strong portfolio of mineral projects in North America. The Corporation’s flagship property is the Drill ready Regal Property near Revelstoke, BC. Recent sampling encountered bonanza grade silver, zinc, and lead with many samples reaching assay over-limits. Click Here for More Info
A recent survey of central banks showing 54% of respondents expect global holdings to climb in the next 12 months.
A major gold-buying spree by central banks is likely to persist in the coming years, according to Australia & New Zealand Banking Group Ltd., which flagged the potential for further purchases by nations including China.
“In the current environment, where uncertainty in emerging-market
currencies is high, we see good reason for countries like Russia,
Turkey, Kazakhstan and China to continue to diversify their portfolios,â€
ANZ said in a note on Tuesday. Net buying by the sector is likely to
stay above 650 tons, it said.
Central-bank accumulation of bullion has emerged as a
increasingly important trend in the global market, offering additional
support for prices that have rallied to the highest level since 2013 on
rising demand. Authorities have been adding to reserves as growth slows,
trade and geopolitical tensions rise, and some nations seek to
diversify away from the dollar. Official purchases now account for about
10% of worldwide consumption, according to ANZ.
“The
People’s Bank of China holds nearly 1,936 tons of gold, which equates
to only 3% of its total foreign reserve holdings, giving the country
plenty of room to increase its allocation,†ANZ said. China’s central
bank expanded bullion reserves again in July, pressing on with a run that stretches back to December.
Spot gold traded at $1,531.45 an ounce on Tuesday after touching $1,555.07
on Monday, the highest in more than six years. The metal has surged 19%
this year as the trade war flared up, bond markets signaled that a U.S.
recession may be on the horizon, and the Federal Reserve cut rates.
‘Room to Run’
Central-bank
accumulation of gold “has further room to run,†Deutsche Bank AG said
in a report, citing factors including a gradual migration of reserve
assets away from the dollar. “The stability of central-bank demand
should help to bias gold prices higher over longer time frames.â€
Goldman
Sachs Group Inc. also put the spotlight on the same trend as the bank
outlined its bullish stance on gold this month. “Central banks in
emerging markets are buying gold,†Jeff Currie, global head of
commodities research, told Bloomberg Television. “Why? Because they
don’t want to own dollars with sanction risk, geopolitical risk,
trade-war risk out there.
Central banks added 374.1 tons in the first six months,
helping push total bullion demand to a three-year high, according to the
World Gold Council.
The trend is expected to continue, with a recent survey of central
banks showing 54% of respondents expect global holdings to climb in the
next 12 months.
Posted by AGORACOM
at 1:10 PM on Tuesday, February 11th, 2020
Sponsor: Loncor is a Canadian gold explorer that controls over 2,400,000 high grade ounces outside of a Barrick JV. The Ngayu JV property is 200km southwest of the Kibali gold mine, operated by Barrick, which produced 800,000 ounces of gold in 2018. Barrick manages and funds exploration at the Ngayu project until the completion of a pre-feasibility study on any gold discovery meeting the investment criteria of Barrick. Newmont $NGT$NEM owns 7.8%, Resolute $RSG owns 27% Click Here for More Info
The
Fed is trapped. If it stops adding money to the money supply, the
stock market will crash. It’s already extended the repo money printing
program twice. The first extension was to February and now it has
extended it again to April.
What
was billed as a temporary “liquidity problem†in the overnight repo
market is instead significant problems developing in the credit and
derivative markets to an extent that it appears to be putting Too Big To
Fail bank balance sheets in harm’s way. That’s my analysis – the
official narrative is that “there’s nothing to see thereâ€.
The
delinquency and default rates for below investment grade corporate
debt (junk bonds) and for subprime consumer debt are soaring. Privately funded credit,
leveraged bank loans, CLO’s and subprime asset-backed trusts (credit
cards, ABS, CMBS) are starting to melt down. The repo money printing
operations is a direct bail out of leveraged funds, mezzanine funds and
banks, which are loaded up on those subprime credit structures. Not
only that, but a not insignificant amount of OTC credit default
derivatives is “wrapped around†those finance vehicles, which further
accelerates the inevitable credit meltdown “Minsky Moment.â€
The
point here is that I am almost certain, and a growing number of
truth-seeking analysts are coming to the same conclusion, that by April
the Fed will once again extend and expand the repo operations. As Milton
Friedman said, “nothing is so permanent as a temporary government
program.â€
Gold
will sniff this out, just like it sniffed out the September repo
implementation at the beginning of June 2019. I think there’s a good
chance that gold will be trading above $1600 by this June, if not
sooner.
Eventually
the market will discover the junior exploration stocks and the share
prices will be off to the races. This is part of the reason Eric Sprott
continues to invest aggressively in the companies he considers to have
the highest probability of getting enough “wood on the ball to knock the
ball out of the park†(sorry, baseball is right around the corner).
Precious
metals mining stocks are exceptionally cheap relative to the price of
gold (and silver). Many of the junior exploration stocks have sold
down to historically cheap levels in the latest pullback in the
sector. As such, this is a good opportunity to add to existing
positions in these names or to start a new position.
Posted by AGORACOM
at 12:35 PM on Thursday, February 6th, 2020
Vancouver, British Columbia–(Newsfile Corp. – February 6, 2020) –
Affinity Metals Corp. (TSXV: AFF) (“the Corporation”) (“Affinity”) today
announced that it will be offering on a non-brokered private placement
basis (“the Offering”) up to 5,000,000 units (“Units”) at a price of
$0.20 per Unit for proceeds of $1,000,000 if the Offering is fully
subscribed.
Each Unit consists of one common share of the Corporation (“Common
Share”) and one non-transferrable Common Share purchase warrant
(“Warrant”). Each Warrant may be exercised for one additional Common
Share at a price of $0.30 for a period of 24 months from the closing
date of the Offering.
The securities will be offered to qualified purchasers in reliance
upon exemptions from prospectus and registration requirements of
applicable securities legislation.
Insiders may participate in the Offering. A finder’s fee in cash or
shares may be paid to arm’s length finders in relation to this Offering.
This private placement financing is subject to approval by the TSX
Venture Exchange.
About Affinity
Affinity is a Canadian mineral exploration company focused on
advancing the Regal polymetallic project located near Revelstoke,
British Columbia, Canada.
Information related to the Corporation and the Regal project can be found on the Corporation’s website at:
