Gold and crypto have been called ‘inflation-proof’ investments—so far in 2022, neither seems to be a great hedge Published Fri, Sep 23 2022 https://www.cnbc.com/2022/09/23/why-gold-and-cryptocurrencies-arent-inflation-proof-investments.html damircudic | Getty Gold and cryptocurrencies are often lumped together as inflation-proof investments, but with prices rising at their fastest pace in decades, neither asset has performed well amid rising inflation in 2022. Bitcoin, the world’s most popular digital coin, is down nearly 71% from its all-time high of $65,000 in November, as of Sept. 23. And gold prices were also down nearly 20% as of Friday, from their recent March peak. Cryptocurrencies are often referred to as “digital gold” since, like gold, they’re speculative investments that can theoretically be used as currency. Plus, the supply of gold and cryptocurrencies like bitcoin is much more restricted than that of the U.S. dollar, which can be easily increased by the Federal Reserve. In theory, such scarcity should make these assets more resistant to rising inflation. But with prices rising at their fastest pace in decades, that hasn’t been the case. Prices for cryptocurrencies took a beating earlier this year, after the Federal Reserve started raising interest rates to combat inflation. The price of bitcoin has dropped to nearly a third of its early pandemic peak and was just above $18,000 as of Sept. 23. “I believe that the rise in crypto prior to this year was due to the extremely low interest rates, making risk assets attractive,” says David Haas, a certified financial planner (CFP) at Cereus Financial Advisors. “People can borrow with little to no interest and invest in crypto and other assets. As interest rates rise, this liquidity disappears and suddenly the demand for [these] assets goes away.” Haas says that the value of these assets might stabilize and improve later in a recession, when the Fed either lowers or stops raising interest rates. And historically, gold has a mixed track record as a hedge on inflation. “Gold seems to protect purchasing power over a long period of time — say, 100-plus years — but provides very little protection against inflation in the short term,” says Kevin Lum, a CFP and founder of Foundry Financial. One big factor in gold’s performance has been the strength of the U.S. dollar, which hit its highest point in two decades this week. With the economic slowdown in China and Europe, investors have flocked to the dollar, which is considered a safe haven during times of global economic uncertainty. However, gold investments don’t tend to perform well when the dollar is strong. Asked why gold has a reputation as an inflation hedge, Lum replies that recency bias might be a factor. “Between 1972 and 1980, gold went from $38 an ounce to over $600. To anyone who lived through that period in history, you’d forever be convinced that gold is the ultimate hedge against inflation.” Gold prices during that time were the result of an asset bubble related to the end of the gold standard in the U.S., he says. Since that time, gold has proven to be an unreliable hedge against inflation.
From the get go of 2008 crash, Gold and S&P 500 are at about par. Should we dip into recession, that will definitely diverge.
What are you talking about? In 2010, Gold was up only about 60% (yeah, only). In 2022, it's up more than 150% Oh, you mean 2012. That's why timing is all important in trading. Still, unless you got in at 2012, it would have been a good bet.
The Gold Market’s Great Migration Sends Bullion Rushing East Western investors are dumping gold in response to rising rates. A gold store in the Dubai Gold Souk in Deira. Photographer: Yui Mok/PA Images By Eddie Spence and Sing Yee Ong 9 October 2022 https://www.bloomberg.com/news/arti...ng-price-lures-asian-buyers?srnd=premium-asia There’s a global migration underway in the gold market, as western investors dump bullion while Asian buyers take advantage of a tumbling price to snap up cheap jewelry and bars. Rising rates that make gold less attractive as an investment mean that large volumes of metal are being drawn out of vaults in financial centers like New York and heading east to meet demand in Shanghai’s gold market or Istanbul’s Grand Bazaar. In fact, it can’t move fast enough. Logistical issues combined with quirks of the market are making it difficult for traders to get enough bullion where it’s wanted. As a result, gold and silver are selling at unusually large premiums over the global benchmark price in some Asian markets. “The incentive to hold gold is a lot lower. It’s going from west to east now,” said Joseph Stefans, head of trading at MKS PAMP SA, a gold refining and trading firm. “We are trying to keep up as best we can.” Gold items displayed in the window of a jewelry shop inside the Grand Bazaar in Istanbul, Turkey. Photographer: Nicole Tung/Bloomberg The rotation of metal around the world is part of a gold-market cycle that has repeated for decades: when investors retreat and prices drop, Asian buying picks up and precious metals flow east — helping to put a floor on the gold price during times of weakness. Then, when gold eventually rallies again, much of it returns to sit in bank vaults beneath the streets of New York, London and Zurich. Since peaking in March, gold prices have tumbled 18% as the Federal Reserve’s aggressive rate hikes caused mass liquidation by financial investors. More than 527 tons of gold has poured out of New York and London vaults that back the two biggest Western markets since the end of April, according to data from the CME Group Inc. and London Bullion Market Association. At the same time, shipments are rising into big Asian gold consumers like China, whose imports hit a four-year high in August. Gold Flows East Asia has net-imported gold from the West since April Source: Swiss Federal Customs Administration Note: Data shows net-imports from Switzerland from May to August While plenty of gold is heading east, it’s still not enough to meet demand. Gold in Dubai and Istanbul or on the Shanghai Gold Exchange has traded at multi-year premiums to the London benchmark in recent weeks, according to MKS PAMP — a sign that buying is outstripping imports. “Demand typically picks up when prices fall,” said Philip Klapwijk, managing director of Hong Kong-based consultant Precious Metals Insights Ltd. “Buyers want to source metal at the lower price and in the local physical market in question there may not be sufficient metal available when the price falls, so the local premium increases.” Gold in Thailand is also trading at a premium to London prices, due to a lack of supply and weakness in the local currency, according to Jitti Tangsithpakdi, the president of Thailand’s Gold Traders Association. In India, it is silver that is seeing big premiums. The differential has soared recently to $1, more than triple the usual level, according to consultancy Metals Focus Ltd. “Right now the demand for silver is huge as traders restock,” said Chirag Sheth, the firm’s principal consultant in Mumbai. “Premiums could remain elevated during the festival season that concludes with Diwali.” Analysts say that much of the precious metals feeding Asia’s appetite is coming out of vaults run by CME Group, which back the Comex futures market in New York. Market dislocations early in the pandemic drove a massive surge in prices there, forcing banks to build large stockpiles to cover their futures positions. In recent months gold has traded at a discount on the Comex compared to London, and those inventories are now being drawn down to meet Asian demand. However, it can be slow going, partly because Asian buyers tend to prefer one-kilogram bars over larger sizes. To fill a standard shipment box of 25 kg of gold, physical traders must take delivery of multiple Comex gold futures, often backed by bullion in different warehouses. Traders say they are facing other logistical challenges as well, which are contributing to the high Asian premiums. “Getting stuff on boats or on planes is a bit harder than it used to be,” said MKS PAMP’s Stefans. “It’s really just a classic example of demand far out-pacing supply.” — With assistance by Swansy Afonso, Suttinee Yuvejwattana and Masumi Suga
The Shania Twain link to Newcrest’s $24.4b takeover offer Peter Ker Resources reporter Feb 10, 2023 https://www.afr.com/companies/minin...wcrest-s-24-4b-takeover-offer-20230209-p5cj7p To understand why the world’s biggest gold miner Newmont is willing to pay $24.4 billion to acquire Australia’s gold champion Newcrest, you need to understand what’s going on in the home town of Canadian songstress Shania Twain. The people of Timmins, Ontario were so proud of their homegrown superstar they built a tourist attraction on the edge of town called the Shania Twain Centre, where visitors could inspect memorabilia and awards collected over a career that sold tens of millions of albums. Shania Twain comes from Timmins, Ontario, where Newmont runs an old mining province. But Ontario’s other tourist attractions, like Niagara Falls, proved to be bigger drawcards and the Shania Twain Centre was shut in 2013 after 12 years in business. If a fan of Ms Twain were to make a pilgrimage to the site today, they would find a giant hole in the ground called the “Hollinger Pit” where Newmont extracts relatively small volumes of low grade gold ores. Hollinger produces only a fraction of the gold volumes dug up at other Newmont mines in Australia, Nevada and Africa, and is among the highest cost mines in Newmont’s global portfolio. But Newmont persists at Hollinger to bolster the viability of a nearby mining district called Porcupine, which after 113 years of digging, is cheaper to keep open as a marginal business than to shut and start the expensive process of rehabilitating the landscape. “They run the mine to not reclaim it,” said American mining analyst John Tumazos of the old diggings around Timmins. Delays to the project Newmont’s mature portfolio of assets is not entirely devoid of growth options. But modelling published this week by BMO Capital Markets’ Toronto-based analyst, Jackie Przybylowski, put the growth challenge in stark contrast; Newmont’s production of gold and copper was due to peak at around 7 million “gold equivalent” ounces in 2024 or 2025 and then decline reasonably steeply. The growth options within Newmont’s portfolio have proven harder to develop than expected. The best example is in Peru, where the Yanacocha mine has finished digging up all the gold bearing “oxide” ore that inspired its development, leaving Newmont to ponder whether to spend $2 billion retrofitting the processing plant to harvest the remaining, copper-rich “sulfide” ores at the site. The geological switch has proved difficult and Newmont delayed the project for more studies in September. Bank of America’s Lawson Winder reckons deferral of the Yanacocha sulfides project might have been the final straw that convinced Newmont to move on Newcrest. “Uncertainty around the timeline to develop the Yanacocha Sulphides, and the gap that an extended delay would leave in the [Newmont] gold production profile, likely serves as part of the motivation for this more transformative M&A,” he said. Negative cash flow On Przybylowski’s modelling, acquisition of Newcrest would boost Newmont’s production in 2025 by 30 to 40 per cent to about 10 million ounces; thanks largely to existing Newcrest mines like Cadia in NSW and Lihir in Papua New Guinea. It would be 2034 before the combined group’s production falls back to the 7 million ounces mark that shaped as Newmont’s peak production under a stand-alone scenario. Newcrest meanwhile is arguably filled with growth options for its own good. If Canada’s Red Chris, Western Australia’s Havieron, Ecuador’s SolGold and PNG’s Wafi-Golpu were to all proceed to plan, their development would be almost simultaneous, putting a big strain on Newcrest’s cash flows. Barrenjoey analyst Dan Morgan estimates Newcrest would need to spend $US8.5 billion building its growth projects over the next five years and the big spend would leave the company with negative cashflow in the 2024 and 2025 financial years. Tumazos reckons the cost could be even higher given many of Newcrest’s partners in those projects – particularly Harmony Gold at Wafi Golpu at Imperial Metals at Red Chris – would struggle to fund their share of construction costs. “There are seven potential projects within Newcrest and if all of them were pursued it might take $US10 billion of capital,” he said. $US10 billion would be a lot for Newmont too, but it is better equipped to unlock the likes of Red Chris than Newcrest. The fact Red Chris, Wafi-Golpu and Newcrest’s Ecuadorian assets have a strong copper component, besides gold, only adds to the appeal amid forecasts for a shortage of copper in the decades ahead. Tumazos says Newmont cannot expect the good people of Timmins to lose all their town icons just to keep extending the life of marginal mines like Hollinger. “On the other side of the [Hollinger] pit is the McIntyre Arena, it is a hockey stadium and a number of members of the NHL [National Ice Hockey League] hall of fame are from Timmins,” he says. “They could take out the Shania Twain visitor centre, but they can’t take out the hockey arena.”
You all trade funnymentals on metals? Only one am long is Silver. Gold, Plat, Copper are shorts to add. Nice spreads long Silver/short ... Risk too high trading Palladium since Open interest so low, it better when it is very low.
Trapped miners in east Congo tumble out of rubble intact in viral video Reuters | March 27, 2023 | 10:12 am Intelligence Africa Gold https://www.mining.com/web/trapped-miners-in-east-congo-tumble-out-of-rubble-intact-in-viral-video/ A mine in eastern Congo (Photo by Sasha Lezhnev. Courtesy: ENOUGH Project/Flickr CC BY-NC-ND 2.0) A video showing nine Congolese miners unexpectedly popping out of a collapsed gold mine and tumbling down a steep slope as onlookers cry out in joy has gone viral in Democratic Republic of Congo, a rare happy ending to an all-too-common story. Mining accidents are rife in the giant Central African country, especially at small, artisanal sites such as the one in South Kivu province that collapsed on Saturday following heavy rain. The video shows a man precariously perched on the side of a steep slope of rubble, frantically digging with a spade while a group of other men stand in a large circle around him, watching. All of a sudden, a miner pops out of the rubble and slides down the slope, borne by his own momentum, as the onlookers break out in cheers of surprise and delight. The rescuer is then seen redoubling his efforts, forsaking the spade to dig through the rubble with his bare hands. Another miner soon appears, then another, and within two minutes a total of nine men have come out alive and well. Reuters has verified the video, which was widely shared on social media. A lack of safety procedures and proper equipment are at the root of frequent tunnel collapses at Congolese mines, in which miners are trapped underground with slim chances of survival. Two miners died in a similar incident at a nearby informal digging site in early March. Against that backdrop, hopes were dim as rescue efforts began after Saturday’s incident. “We quickly mobilized people to clear the rubble that was blocking the entrance. It was on the morning of this Saturday… that they managed to save these nine souls,” local civil society representative Crispin Kayuka told Reuters via telephone. (By Sonia Rolley; Editing by Sofia Christensen, Estelle Shirbon and Sharon Singleton)
weekly chart below. A weekly close above $1963 increases chances for a test of recent highs around the $2078 - IMO
GDXJ kissed off a multi-year bear channel. Lined up nicely to what the FEDs are expected to continue doing. A fat pitch. Size small, no stops. A global crisis and a rush to the dollar is your biggest thing to worry about.