A BUYING OPPORTUNITY IN PRECIOUS METALS - 11. OKTOBER 20190 3 Min. geschätzte Lesezeit SHARE:
After a remarkable run over the past few months, gold and silver now appear to have entered a period of consolidation. Many speculators and short-term focused investors have sold their positions fearing a correction, while mainstream market commentators fuel these fears, with analyses that proclaim “the end of the road” for gold and silver.
Of course, nothing could be further from the truth. All the very serious concerns and the fundamental reasons that caused the metals to rise so aggressively in recent months are not only still intact, but they have grown, and spread, and find even more solid footing every time new data comes out of the Eurozone and the US. Recession fears among investors hit an all-time high in mid-September, according to a Bank of America Merrill Lynch survey, as 25% of those asked expect a recession to strike in the next 12 months. Even more worrying where the results of the survey released by Wilmington Trust at the end of last month: “About 61% of investors surveyed with a household income of $225,000 or more say that they would give up growth opportunity for downside protection. And among those who have an annual household income of $500,000 or more, 76% say they would make this trade-off.”
These concerns are more than justified. On the economic front, bad news continues to pile up. The trade war, as well as the numerous systemic vulnerabilities in all major economies, appear to be boiling over. In September, U.S. manufacturing activity tumbled to a more than 10-year low, according to the Institute for Supply Management, while growth in the services sector also sharply declined to the lowest point in 3 years. In August, German industrial orders fell by 0.6%, much lower than the expected 0.3% drop, while the economy shrank by 0.1% in the second quarter. This weakness is widely expected to continue and another contraction would put the country officially in recession territory. China’s industrial output grew at its slowest pace since 2002, while in the second quarter the world’s second largest economy grew at its slowest pace since the early 1990s.
In addition to the mounting recession fears, we’ve also seen central bankers cave to market and political pressure and commit to a decisive return to easing polices, which sets the stage for a very bullish period ahead for gold and silver. The Fed, following its historic rate cut in July, the first since 2008, has firmly continued on the cheap credit path. The central bank continues to hint at further cuts, while the markets are essentially taking them for granted. On September 12, the outgoing ECB President Draghi unveiled an aggressive easing package, in a last-ditch attempt to stave off the Eurozone recession that has arguably already begun. The central bank cut interest rates further below zero, to minus 0.5% from minus 0.4%, and revived its massive asset purchasing program. Starting in November, it will be buying $22 billion worth of debt every month, “for as long as necessary”. The ECB also changed its guidance on interest rates. They are now projected to remain at present or lower levels, until the outlook for inflation “robustly” converges to the bank’s target, close to 2%. Given the fact that this target has not been met even after years of extreme measures to revive inflation, it is safe to assume that what that this guidance really means is that negative interest rates are the new normal. This severely increases the risks for the economy. As James Grant accurately put it, “negative interest rates are unsustainable and once investors decide to stop paying for the privilege of holding government debt, a banking crisis could result”.
It is, therefore, clear that trouble lies ahead in the economy and in the markets. When we rationally and calmly assess the facts, the interest rate environment, the widespread economic weakness and the intense volatility in equity markets all point to a precious metals rally. The long-term picture and the fundamentals are exceptionally positive for gold and silver, that have already shown strength and once again confirmed their value as safe havens. In this context, the short-term fluctuations we see can be interpreted as the last hopes of short-sighted investors, who still believe that rate cuts will suffice to reverse the vast economic weakness we see across the board or that a slightly positive tweet by President Trump can mean the end of the trade war. This approach is, of course, based on sheer belief and wishful thinking, as it denies the facts and the data we’ve been seeing for months.
Thus, allowing irrational fear or unfounded hopes to dictate investment strategy now would be a serious mistake. A correction is a normal and healthy part of a sound bull market. It creates the foundation by driving out and replacing weak hands with strong hands. There will be moment in the not-so-distant future when mainstream investors will finally understand that they can find the strongest downside protection, at an honest zero interest, with a tremendous upside potential by buying physical gold and silver. Unlike the rest of their options now, physical precious metals carry no default and no counterparty risk. That’s a massive advantage over leveraged debt securities that can be printed out of thin air. The same can be said for their honest zero interest rate, as in today’s negative interest rate environment, the storage and insurance fees for physical gold are more attractive than negative-yielding bonds or the negative interest that is increasingly charged for cash deposits in the bank. Thus, for the prudent investor, who is familiar with monetary history, with economic cycles and with the virtues of a low time preference, moments like this present a rare buying opportunity. And in this case specifically, current price levels might be one of the few remaining opportunities to enter the market at such an attractive price level.
Newmont Goldcorp to Add Profitable Gold Production through Second Expansion at Tanami in Australia NEM | 1 hour ago DENVER Australia remains favorable mining jurisdiction with upside potential
Newmont Goldcorp Corporation (NYSE: NEM, TSX: NGT) (Newmont Goldcorp or the Company) announced today that its Board of Directors unanimously approved advancing the Tanami Expansion 2 project into the execution phase. The project is expected to exceed the Company’s required internal rate of return with profitable production and mine life extending beyond 2040.
Newmont Goldcorp geology team members at Tanami in Australia. (Photo: Business Wire)
“The approval of our second expansion project at Tanami in Australia will further improve costs and extend the life of this world class mine in a core Newmont Goldcorp jurisdiction,” said Tom Palmer, President and Chief Executive Officer. “Building on the success of the first expansion completed in 2017, Tanami Expansion 2 will provide a platform to further explore the area’s prolific mineral endowment and potentially extend the operation’s mine life beyond 2040. The Tanami district and Australia as a whole continue to offer significant value generating opportunities for our shareholders.”
The Tanami expansion project is anchored on the expansive Auron deposit, which was discovered in 2008, and is located stratigraphically beneath the original Callie orebody and, more recently, the follow up discoveries of Federation and Liberator. Tanami’s prolific orebodies are hosted by reactive stratigraphic units where high-grade gold mineralization is found at intersections with structural corridors. These predictable geologic features, combined with recent drilling results, provide a high degree of confidence in their continuity at depth.
The expansion includes construction of a 1,460 meter shaft, additional capacity in the processing plant, and supporting infrastructure to enable profitable recovery of ore at depth to 2,140 meters below surface. Additional information on the project will be provided with the Company’s long-term outlook in early December.
The advancement of Tanami Expansion 2 into the execution phase represents a new and significant milestone for the operation. Since mining commenced in 1986, Tanami has produced more than 10 million ounces of gold and, in 2018, the operation achieved record production of 505,000 ounces. Tanami is located 590 miles southwest of Darwin and 350 miles northwest of Alice Springs in Australia’s Northern Territory.
Newmont Goldcorp has the strongest and most sustainable portfolio of operations, projects and exploration prospects in the gold sector. These assets allow the Company to sequence profitable projects in its unmatched pipeline to sustain six to seven million ounces of steady gold production over a decades-long time horizon.
About Newmont Goldcorp
Newmont Goldcorp is the world’s leading gold company and a producer of copper, silver, zinc and lead. The Company’s world-class portfolio of assets, prospects and talent is anchored in favorable mining jurisdictions in North America, South America, Australia and Africa. Newmont Goldcorp is the only gold producer listed in the S&P 500 Index and is widely recognized for its principled environmental, social and governance practices. The Company is an industry leader in value creation, supported by robust safety standards, superior execution and technical proficiency. Newmont Goldcorp was founded in 1921 and has been publicly traded since 1925.
This release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbor created by such sections and other applicable laws. Such forward-looking statements may include, without limitation, estimates and expectations of internal rate of return, extension of mine life, project advancement and execution, geological continuity and mineral prospectively and endowment, growth potential, future cost and production impacts and other statements relating to future performance. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, such statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed or implied by the “forward-looking statements.” Risks relating to forward looking statements in regard to the Company’s business and future performance may include, but are not limited to, gold price volatility, currency fluctuations, increased production costs, variances in ore grade or recovery rates from those assumed in mining plans, variation in legal and economic feasibility of extraction, other operational risks, geotechnical, metallurgical and hydrological risks, political and community relations risk, and changes in governmental regulation and requirements. For a more detailed discussion of risks and other factors that might impact future looking statements, see Newmont Goldcorp’s Annual Report on Form 10-K for the year ended December 31, 2018 as well as Newmont Goldcorp’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 under the heading “Risk Factors” available on the SEC website or www.newmontgoldcorp.com. Investors are cautioned that drill results are not necessarily indicative of future reserves or production and should not rely upon expectations of prospective mineralization. For information regarding the Company’s reserves, see the Proven and Probable reserve tables prepared in compliance with the SEC’s Industry Guide 7 contained in the Annual Report on Form 8-K. The Company does not undertake any obligation to release publicly revisions to any “forward-looking statement,” including, without limitation, outlook to reflect events or circumstances after the date of this news release, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. Investors should not assume that any lack of update to a previously issued “forward-looking statement” constitutes a reaffirmation of that statement. Continued reliance on “forward-looking statements” is at investors' own risk.
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