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SWOT Analysis: Chinese and Russian Banks Increase Gold Purchases

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SWOT Analysis: Chinese and Russian Banks Increase Gold Purchases

Strengths

    • The best performing precious metal for the week was platinum, up 6.11 percent and finishing the month up 11 percent. Palladium, however, was even stronger, surging 17 percent for the month. Both metals have benefited from better auto sales in China and concerns over potential labor strikes in South Africa.
    • Energy and mining investment has collapsed to its lowest level in nearly 15 years, according to Macquarie Research, and appears to have hit bottom. This could be a sign that it is due for a rotation upwards with the recent strength in precious metal prices.

Energy and Mining Investment Has Likely Bottomed

    • In addition, healthy inflation has returned, according to the core PCE price index, which increased at a pace of 1.9 percent annualized in the first half of the year. Private sector wages and salaries also increased 2.6 percent over the last year.

GLD Oil Is Moving From An Inflation Headwind to Tailwind

  • Platts reported that both Chinese and Russian banks increased their gold purchases during the month of June, after they had both slowed their gold purchases in May. Russia added around 18 metric tons, and China added around 15 metric tons. China is now the sixth-largest holder of gold reserves, and Russia is the seventh-largest. The two countries have accounted for over 95 percent of total central bank purchases of gold in the last two years, in their efforts to diversify away from foreign currency.

Weaknesses

    • The worst performing precious metal for the week was gold, although still positive, up 2.16 percent. Most of the gains came after the Federal Open Market Committee (FOMC) meeting, as the U.S. durable goods orders dropped 4 percent in June, more than expected and the most since August 2014. Gross domestic product rose at an annualized rate of just 1.2 percent last quarter, while forecasts had called for a 2.5 percent increase.
    • Gold showed some weakness in trading sessions earlier in the week, related to rising speculation that the Fed will raise rates sometime this year. In addition, the Bloomberg Dollar Spot Index gained for three weeks in a row, and purchases in gold-backed exchange-traded funds have backed off from their three-year high earlier in the month.
  • Anti-corruption measures in China have taken a toll on gold jewelry consumption, with demand falling 17.4 percent compared to last year. Meanwhile, the investment-related demand for gold has picked up, with gold bar and coin purchases up 25.3 percent and 17.3 percent, respectively. China’s Ministry of Industry and Information Technology estimates that the country’s gold consumption will increase to 1,200 tonnes by 2020 from 986 tonnes in 2015.

Opportunities

    • The chief investment officer of TD Asset Management, Bruce Cooper, has shifted to a “maximum overweight” allocation to gold for its portfolios. The firm oversees more than $230 billion. Cooper is watching for Germany to shift away from its austerity approach and notes that if Hillary Clinton and the Democrats win the election and unveil fiscal stimulus, inflation could pick up in the global economy.
    • Amid the gold rally this year, Barrick Gold Corp. plans to continue its plans to sell off peripheral assets, starting with its share in the Australian Kalgoorlie Super Pit. Barrick reported that it made $968 million in debt repayments this year, nearly half of the target amount. Gold producers have had a mixed quarter for earnings as Newmont Mining and Agnico Eagle Mines beat estimates while Goldcorp and Kinross Gold missed. In fact, Agnico Eagle’s CEO, Sean Boyd, is optimistic for the future, stating that it’s not too late for investors to participate in this rally. Boyd cited the “tremendous amount of debt in the system,” along with strong demand from China and India.
  • Klondex Mines’ planned acquisition of the Hollister asset looks like a positive move for the mining company. The Hollister location has historically produced high grades of around 30 grams per metric ton of gold, and since the location is in direct proximity with the Midas Mill, there are several Klondex team members who have direct experience there. Klondex’s announced $100 million financing to fund the acquisition was met with three times the demand for the shares. Klondex released its second-quarter production results for the Fire Creek and Midas mines, exceeding analyst expectation. In addition, the Hollister and True North acquisition, completed earlier this year, significantly raises its production growth.

Threats

    • SkyBridge Capital, a firm which profited from gold during the surge in 2010 and 2011, now puts forth a cautious outlook for gold. A senior portfolio manager at the investment firm states that bullion’s rally could be hindered if the Fed decides to raise rates more quickly than expected, even though the fundamentals for gold are supportive. SkyBridge managed $12.6 billion as of May 31 and does not have any exposure to gold and precious metals currently.
    • Macquarie Research published a report this week with the outlook that fiscal policy will result in “financial repression for decades.” The firm calls the low rate policies an “implicit tax on savings” leading to weak consumption, and in turn, lack of investment by companies and stagnant wage growth. In addition there is a lot of pressure on entitlement programs such as pension funding.
  • BofAML notes that funding ratios for the top 100 corporate defined benefit pension plans are at all-time lows, due to the flattening of the yield curve, amidst the 70 percent rally in the S&P 500 Index and $400 billion in contributions. Pensions may switch to more funding through debt instruments (liability driven investing). A higher allocation to fixed income will likely lead to lower returns for pension plans, more equity outflows and more slow growth.

Frank Holmes
CEO and Chief Investment Officer
U.S. Global Investors

 

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

Disclaimer© 2010 Junior Gold ReportJunior Gold Report’ Newsletter: Junior Gold Report’s Newsletter is published as a copyright publication of Junior Gold Report (JGR). No Guarantee as to Content: Although JGR attempts to research thoroughly and present information based on sources we believe to be reliable, there are no guarantees as to the accuracy or completeness of the information contained herein. Any statements expressed are subject to change without notice. JGR, its associates, authors, and affiliates are not responsible for errors or omissions. Consideration for Services: JGR, it’s editor, affiliates, associates, partners, family members, or contractors may have an interest or position in featured, written-up companies, as well as sponsored companies which compensate JGR. JGR has been paid by the company written up. Thus, multiple conflicts of interests exist. Therefore, information provided herewithin should not be construed as a financial analysis but rather as an advertisement. The author’s views and opinions regarding the companies featured in reports are his own views and are based on information that he has researched independently and has received, which the author assumes to be reliable. No Offer to Sell Securities: JGR is not a registered investment advisor. JGR is intended for informational, educational and research purposes only. It is not to be considered as investment advice. Subscribers are encouraged to conduct their own research and due diligence, and consult with their own independent financial and tax advisors with respect to any investment opportunity. No statement or expression of any opinions contained in this report constitutes an offer to buy or sell the shares of the companies mentioned herein. Links: JGR may contain links to related websites for stock quotes, charts, etc. JGR is not responsible for the content of or the privacy practices of these sites. Release of Liability: By reading JGR, you agree to hold Junior Gold Report its associates, sponsors, affiliates, and partners harmless and to completely release them from any and all liabilities due to any and all losses, damages, or injuries (financial or otherwise) that may be incurred.

Forward Looking Statements
Except for statements of historical fact, certain information contained herein constitutes forward-looking statements. Forward looking statements are usually identified by our use of certain terminology, including “will”, “believes”, “may”, “expects”, “should”, “seeks”, “anticipates”, “has potential to”, or “intends’ or by discussions of strategy, forward looking numbers or intentions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results or achievements to be materially different from any future results or achievements expressed or implied by such forward-looking statements. Forward-looking statements are statements that are not historical facts, and include but are not limited to, estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to the effectiveness of the Company’s business model; future operations, products and services; the impact of regulatory initiatives on the Company’s operations; the size of and opportunities related to the market for the Company’s products; general industry and macroeconomic growth rates; expectations related to possible joint and/or strategic ventures and statements regarding future performance. Junior Gold Report does not take responsibility for accuracy of forward looking statements and advises the reader to perform own due diligence on forward looking numbers or statements.

Bullion Investors: Stop Waiting for Bargains or Get Left Behind!

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Bullion Investors: Stop Waiting for Bargains or Get Left Behind!

After years of buying based on progressively lower metal prices, bullion investors find themselves facing a dynamic that has been missing for a while: higher prices. That leaves them in a bit of a quandary, and many are sitting on their hands.

Investors need to feel like they are getting a bargain – that prices can head much higher still. Many aren’t “feeling” it in the bullion markets. Now that silver has made a run back to $20/oz and gold is once again at $1,350/oz, the metals don’t seem cheap. Some investors are even grabbing the opportunity to sell.

The U.S. Mint finally caught up with orders for the silver American Eagle. Dealers are no longer faced with rationing by the dysfunctional government mint. And premiums for bellwether 90% silver U.S. coin bags are falling. For the first time in years, there is more than enough being sold back into dealer stocks.

That makes now a good time to take a look at the landscape and decide whether metals are topping out here – or if today’s prices still represent a bargain.

We can start with economic growth and what that implies for Federal Reserve policy. Last week’s report on second quarter GDP missed expectations by a mile – coming in at just 1.2%, and the anemic growth numbers in the prior two quarters were revised downward. The Wall Street Journalcharacterized the “recovery” in the U.S. as the “weakest of the post-World War II era.”

The author also points out that, at 7 years, this “recovery” is getting long in the tooth.

This reality doesn’t jibe with comments from the Fed. It’s an awkward time for our central bankers. They promoted wildly unpopular bank bailouts and programs to buy Wall Street’s most toxic and fraudulent loans. They printed trillions to monetize Treasury debt. They pushed interest rates down to zero, which has decimated seniors and others who depend on interest income.

They told us these measures were absolutely essential to returning the U.S. economy to solid footing. But this pathetic “recovery” is all they have to show for it.

It is cannot be totally ruled out that Fed officials could be right, that, after 7 years of tepid growth, the U.S. economy will finally lift off. That the Fed will finally normalize interest rates and no more stimulus will be necessary. There are market observers out there who still believe this to be possible.

We don’t buy it. Even if, by some miracle, our stimulus-addicted economy can find a way to grow during withdrawals of stimulus, Congress can no longer live without the Fed’s magic money machine.

Highest Probability Bet Is Lower Interest Rates, Higher Gold Prices

The Congressional Budget Office is projecting the federal government will rack up another $9.4 trillion in debt in 10 years. That may be wishful thinking. They have a history of underestimating how much programs will cost. Normalizing interest rates 3-4% higher than they are currently will lead to crushing public and private debt service payments and send the economy off a cliff.

leftbehind

And no, electing Donald Trump as president won’t solve this problem either.

We suggest it would be wiser to bet on negative interest rates, or helicopter money, or both. That means the dollar has much further to fall and gold and silver prices are just getting started on their journey north.

Bullion investors should also consider that, despite the rise in prices, the value proposition for gold and silver is quite compelling. Speculative interest in gold and silver futures is near all-time highs. Same for ownership in metals ETFs. Heavy speculative inflows in recent weeks may be cause for concern about precious metals markets overheating near-term. But by comparison, the bond and stock markets have been overheating for years.

The “smart” money is dumping stocks and looking for alternative assets given that equity prices are so high with so little in the way of profits to support them. Large investors aren’t buying Janet Yellen’s assurances about recovery, and they are increasingly uncomfortable with price to earnings valuations at the current levels.

Want to know something else institutional investors don’t love? A 1.5% yield on a 10-year Treasury note. They may be buying bonds – perhaps because they anticipate yields are going even lower or even negative – but the lower yields go, the more attractive metals become. No one has to sacrifice much interest to hold metals instead of cash or bonds.

Many hedge fund managers, including some who previously hated gold, are looking in consternation at inflated stock prices and epic low yields in the bond market and saying, why not? At least gold and silver are among the best performing assets of the year, and prices are still nowhere near all-time highs like bonds and equities.

There is certainly nothing wrong with bargain hunting. Bullion investors just need to remember that when prices are in an uptrend, finding a bargain means not waiting too long to buy.

Clint Siegner MME

Clint Siegner is a Director at Money Metals Exchange, the national precious metals company named 2015 “Dealer of the Year” in the United States by an independent global ratings group. A graduate of Linfield College in Oregon, Siegner puts his experience in business management along with his passion for personal liberty, limited government, and honest money into the development of Money Metals’ brand and reach. This includes writing extensively on the bullion markets and their intersection with policy and world affairs.

Disclaimer© 2010 Junior Gold ReportJunior Gold Report’ Newsletter: Junior Gold Report’s Newsletter is published as a copyright publication of Junior Gold Report (JGR). No Guarantee as to Content: Although JGR attempts to research thoroughly and present information based on sources we believe to be reliable, there are no guarantees as to the accuracy or completeness of the information contained herein. Any statements expressed are subject to change without notice. JGR, its associates, authors, and affiliates are not responsible for errors or omissions. Consideration for Services: JGR, it’s editor, affiliates, associates, partners, family members, or contractors may have an interest or position in featured, written-up companies, as well as sponsored companies which compensate JGR. JGR has been paid by the company written up. Thus, multiple conflicts of interests exist. Therefore, information provided herewithin should not be construed as a financial analysis but rather as an advertisement. The author’s views and opinions regarding the companies featured in reports are his own views and are based on information that he has researched independently and has received, which the author assumes to be reliable. No Offer to Sell Securities: JGR is not a registered investment advisor. JGR is intended for informational, educational and research purposes only. It is not to be considered as investment advice. Subscribers are encouraged to conduct their own research and due diligence, and consult with their own independent financial and tax advisors with respect to any investment opportunity. No statement or expression of any opinions contained in this report constitutes an offer to buy or sell the shares of the companies mentioned herein. Links: JGR may contain links to related websites for stock quotes, charts, etc. JGR is not responsible for the content of or the privacy practices of these sites. Release of Liability: By reading JGR, you agree to hold Junior Gold Report its associates, sponsors, affiliates, and partners harmless and to completely release them from any and all liabilities due to any and all losses, damages, or injuries (financial or otherwise) that may be incurred.

Forward Looking Statements
Except for statements of historical fact, certain information contained herein constitutes forward-looking statements. Forward looking statements are usually identified by our use of certain terminology, including “will”, “believes”, “may”, “expects”, “should”, “seeks”, “anticipates”, “has potential to”, or “intends’ or by discussions of strategy, forward looking numbers or intentions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results or achievements to be materially different from any future results or achievements expressed or implied by such forward-looking statements. Forward-looking statements are statements that are not historical facts, and include but are not limited to, estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to the effectiveness of the Company’s business model; future operations, products and services; the impact of regulatory initiatives on the Company’s operations; the size of and opportunities related to the market for the Company’s products; general industry and macroeconomic growth rates; expectations related to possible joint and/or strategic ventures and statements regarding future performance. Junior Gold Report does not take responsibility for accuracy of forward looking statements and advises the reader to perform own due diligence on forward looking numbers or statements.

Major Lithium Acquisition

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Major Lithium Acquisition

Yesterday, Equitorial Exploration Corp. announced the acquisition of the Little Nahanni Pegmatite Group (LNPG) Lithium Project from Strategic Metals Ltd. This property hosts the rare but highly prolific pegmatite-type LCT (LithiumCesium-Tantalum), which the world’s largest active lithium mine, Greenbushes in Australia, is also hosting (at an average grade of 2.8% Li2O). LNPG’s best rock samples from spodumene-bearing pegmatites assayed between 1.74% and 3.77% Li2O. Channel samples returned up to 1.59% Li2O across 10 m.

 

To read the full report, please click this link:  Major Lithium Acquisition

Disclaimer© 2010 Junior Gold ReportJunior Gold Report’ Newsletter: Junior Gold Report’s Newsletter is published as a copyright publication of Junior Gold Report (JGR). No Guarantee as to Content: Although JGR attempts to research thoroughly and present information based on sources we believe to be reliable, there are no guarantees as to the accuracy or completeness of the information contained herein. Any statements expressed are subject to change without notice. JGR, its associates, authors, and affiliates are not responsible for errors or omissions. Consideration for Services: JGR, it’s editor, affiliates, associates, partners, family members, or contractors may have an interest or position in featured, written-up companies, as well as sponsored companies which compensate JGR. JGR has been paid by the company written up. Thus, multiple conflicts of interests exist. Therefore, information provided herewithin should not be construed as a financial analysis but rather as an advertisement. The author’s views and opinions regarding the companies featured in reports are his own views and are based on information that he has researched independently and has received, which the author assumes to be reliable. No Offer to Sell Securities: JGR is not a registered investment advisor. JGR is intended for informational, educational and research purposes only. It is not to be considered as investment advice. Subscribers are encouraged to conduct their own research and due diligence, and consult with their own independent financial and tax advisors with respect to any investment opportunity. No statement or expression of any opinions contained in this report constitutes an offer to buy or sell the shares of the companies mentioned herein. Links: JGR may contain links to related websites for stock quotes, charts, etc. JGR is not responsible for the content of or the privacy practices of these sites. Release of Liability: By reading JGR, you agree to hold Junior Gold Report its associates, sponsors, affiliates, and partners harmless and to completely release them from any and all liabilities due to any and all losses, damages, or injuries (financial or otherwise) that may be incurred.

Forward Looking Statements
Except for statements of historical fact, certain information contained herein constitutes forward-looking statements. Forward looking statements are usually identified by our use of certain terminology, including “will”, “believes”, “may”, “expects”, “should”, “seeks”, “anticipates”, “has potential to”, or “intends’ or by discussions of strategy, forward looking numbers or intentions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results or achievements to be materially different from any future results or achievements expressed or implied by such forward-looking statements. Forward-looking statements are statements that are not historical facts, and include but are not limited to, estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to the effectiveness of the Company’s business model; future operations, products and services; the impact of regulatory initiatives on the Company’s operations; the size of and opportunities related to the market for the Company’s products; general industry and macroeconomic growth rates; expectations related to possible joint and/or strategic ventures and statements regarding future performance. Junior Gold Report does not take responsibility for accuracy of forward looking statements and advises the reader to perform own due diligence on forward looking numbers or statements.

Money Always Moves from Weak Hands into Strong Hands

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Money Always Moves from Weak Hands into Strong Hands

By  Bob Moriarty

Over the last 15 years I have come to realize just how much disinformation and simply bad information there is available to readers of financial matters. Much of what you watch and hear is simply wrong. People wonder why they consistently lose money and it’s simple. The best-informed investor is the most profitable investor. But that’s not in terms of quantity of investing information; it has far more to do with quality of investing material. Listen for the signal and learn to ignore the noise.

If you reduce investing to the financial atom level, it really has to do with money flow. Money always flows from weak hands into strong hands. That’s something you should have learned in kindergarten. The smart money buys at bottoms and sells at tops. The dumb money sells at bottoms and buys at tops. I’ve heard that 70-90% of investors lose money and if the number is accurate, that’s why.

So anytime you make an investment, forget location, management and balance sheet. Look to see what the smart money is doing and what the weak hands are up to. Do the opposite of what the dumb money is doing. That makes you the smart money automatically.

Nowhere is this truer than with commodities. The amount of disinformation is absurd. No matter if you worship at the house of God the Father, God the Son and God the Holy Gold, metals are an investment first and a religion last. Those who claim gold and silver are religions have no more credibility than any other TV Bible Thumpers. They want your money and they want you ignorant. Ignorant people can never grow rich.

So when you hear about gold derivative time bombs, naked short selling, bullion banks and Comex defaults, you know that you are listening to the scammers. There is no such thing and they know it.

If you take a gander at the numbers for derivatives from the BIS, you can easily see that interest rate derivatives totaled $384 trillion at the end of December 2015 while gold derivatives only totaled $286 billion. While $286 billion sounds like a big number, compared to interest rate derivatives, gold is less that 2/3 of 1%.

In other words, a “Bullion Bank” front running interest rates by 1 basis point would have to manipulate gold by $13.40 an ounce to accomplish the same thing. And that just doesn’t happen. One basis point is tiny and $13.40 moves in gold are far larger in context. In short, banks don’t give a damn about the price of gold or silver. Why should they with interest rate derivatives being 134 times bigger than gold derivatives?

Let’s take a look at the COTs and see what they tell us. As I said before, anyone talking about Bullion Banks being short gold doesn’t know what they are talking about. The CFTC reports producer merchant or processor/users. Those are the commercials not Bullion Banks.

Mining companies are commercials as are jewelry manufacturers. While mining companies naturally want the price of a commodity to go up, manufacturers want prices to go down. So the producer/merchant or commercials are actually net neutral. One side gains as prices go up, the other side gains as prices go down. The main function of the commercials is to take the other side of the trade when speculators enter the market. Remember, commodities are a zero sum game. There are no naked short sellers. For every purchaser there is an equal and opposite seller.

This is extremely important to understand. Commercials rarely drive the market; speculators drive the price. Lots of people are constantly talking about how short the commercials are when in fact it is the speculators going long that determines what markets do.

How do we know this just by looking at facts? Well, if the market is going up and commercials are getting shorter, they can’t possibly be driving the market. After all, how do you make prices go up by selling anything? You can’t.

Lets look at what actually happens as money flows from weak hands into strong hands or from dumb money to the smart money. Gold hit about $1047 in the middle of December 2015. Go back to what you learned when you started kindergarten. Who buys at lows? That’s right, as prices go down the smart money buys, the dumb money sells. As prices go down the buyers are smarter and smarter, the sellers are dumber and dumber. If you walk into your Corvette dealer and he quotes you $70,000 for your dream car and you tell him, “No, I want to wait until prices go up before I buy.” He will automatically know he is dealing with the dumb money. Smart money buys on sale, dumb money buys after prices go up. That’s just as true of Corvettes as gold.

Examine what you have done as an investor at lows. Are you buying or selling? That will tell you if you are the smart money or the dumb money. In late December of 2015 the COTs were more favorable for gold and silver than they had been since 2001. The number of contracts was down and the weak hands were selling with both fists. The strong hands or smart money was buying.

If all you know is that money flows from weak hands into strong hands or the dumb money gives the smart money everything they own, you know everything you need to know to invest. You don’t have to worry about Deutsche Bank or the IMF or what the Yen is doing. All that information is noise, not signal. When the weak hands go to record short positions, you are going to have at least a very strong rally. And people who know how to interpret the COTs told us exactly that.

“The Commitments of Traders numbers are more favorable for gold than replaced then they have been for 14 years, going all the way back to 2001. Silver is not quite as positive but still positive. We are perfectly positioned for a bull phase even if you believe gold and silver are in some kind of permanent bear market.”

We are in the opposite sort of market today. As speculators increased their long positions to a record in both gold and silver those buying have gotten weaker and weaker. Those shorting have gotten stronger and stronger. You will hear tales about how the shorts are getting hurt to the tune of billions of dollars but how could that possibly happen? The shorts are the strong hands at tops. The longs are the weak hands at tops.

Eventually some external event will take place that all the parrots will blame for a drop in the price of gold. Of course, it will have nothing to do with the drop. It’s the longs getting weaker and weaker until some total twit decides that he needs to buy gold at the very top. “If it’s gone from $1047 to say $1400, it must be safe to buy”, he thinks.

When that day comes, the scammers will start screeching about how gold and silver are manipulated and the prices are being suppressed. But all that is happening is that once more the weak hands or dumb money has delivered the profits to the strong hands and smart money.

If you want to profit in your investments, you have to educate yourself and learn to ignore the experts, the gurus and all the other fools. Do some education and learn to make your own investment decisions. I believe we are in the midst of what will eventually be the biggest boom in gold and silver in history. In 1980 it was the bulls that lost money. In April of 2011 when silver almost touched $50 an ounce, the manipulation/conspiracy clowns were telling people to buy. Some people were warning investors about the dangers of investing at tops.

“The daily bullish consensus on silver is 96% as of Wednesday the 20th of April. On January 21st of 1980, the very day of the top, the bullish consensus was 94%. How many of the silver uberbulls are suggesting that maybe the record high bullish consensus is suggesting a very dangerous time to start buying? The answer is damned few because they have an agenda and their agenda doesn’t involve them knowing what they are talking about. As long as they tell investors what they want to hear, they will be very popular.”

When you get tired of being the dumb money, go to Amazon and spend $6.49 and learn what not to do and how to actually become the smart money. It’s called Nobody Knows Anything. It’s the cheapest good financial advice you will ever read.

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Full Article: Money Always Moves from Weak Hands into Strong Hands

Bob Moriarty
President: 321gold

Best Gold & Silver Forecasters Revise 2016 Targets Sharply Higher after 26% and 45% Gains to Date

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Best Gold & Silver Forecasters Revise 2016 Targets Sharply Higher after 26% and 45% Gains to Date

GOLD and SILVER prices rose against a falling US Dollar after the Bank of Japan announced smaller-than-expected policy stimulus Friday and more analysts revised their forecasts sharply higher following this year’s 26% and 45% gains to date.

Gold slipped versus the Euro and Yen however, erasing the last of this month’s earlier gains to match Dollar and Sterling prices with no change for July – only the third month to miss a substantial rise in 2016 so far.

Major government bond yields eased lower as world stock markets flatlined.

More than $10 trillion of bonds issued by developed-world governments and corporations now offer new buyers an annual yield below zero, according to Reuters.

“The relationship between the opportunity cost of holding gold and interest rates has become ever more apparent,” says Bernard Dahdah, precious metals analyst at French investment and bullion bank Natixis, revising his 2016 full-year forecast 31% higher from $970 to $1275 per ounce.

Winner of the London Bullion Market Association’s 2015 gold forecast survey, and previously forecasting a drop below $1000 by April this year, Dahdah now says “the [2016] Fed rate hike won’t happen until at least December.”

The UK’s Brexit referendum result, Dahdah adds, makes “the future of the European project and the economic stability of the region…of great concern.”

“The likelihood of a US recession in the next three years is becoming very high,” writes Rene Hochreiter, mining analyst at Sieberana Research in Johannesburg and winner of last year’s LBMA silver price forecast.

Hochreiter was in January more bearish on gold’s 2016 low-point than Dahdah, predicting a drop to $850 per ounce sometime this year.

The metal bottomed to date at $1077 on 5th January, the second trading day of 2016 – almost $100 above the average low-end forecast of the 31 analysts then submitting entries to  the LBMA’s 2016 Forecast Survey.

“If Britain can exit the EU,” Hochreiter now says, “then Trump could very well become [US] President…certain to cause a massive rise in US debt…and a fall in US share prices.”

The resulting “weaker Dollar will, without doubt, mean a stronger silver (and gold) price,” he adds, raising his full-year daily average silver forecast 27% from $13.40 per ounce to $17.10.

Touching $20.47 earlier this month, silver has now risen above the most bullish top-price forecast from January’s LBMA survey ($19.50 from Philip Newman at consultancy Metals Focus) and averaged more so far in 2016 at $16.39 than all but one full-year forecast ( $17.50 from Joni Teves at Swiss bank UBS).

Gold’s year-to-date average of $1237.35 meantime comes above all 31 forecasters’ full-year predictions from January.

London’s peak 2016 gold benchmark of $1366.25 on Wednesday 6 July means it has beaten all but one top-range forecast ($1375 from Martin Murenbeeld at Dundee Economics).

Failing to cut deposit rates for Japanese banks deeper below zero today, the Bank of Japan did say it’s doubling quantitative easing money-creation to buy exchange-traded trust funds holding Japanese assets, raising its spend on ETFs to the equivalent of $58 billion per year, and also increase its lending of US Dollars.

The US Federal Reserve this week held its key interest rate unchanged from December’s solitary hike to 0.50%.

“After years of declines, silver prices made significant gains in the first half,” says a note from bullion market-making bank HSBC, raising its 2016 average price forecast from $15.90 to $18.00 per ounce.

“Our expectation of gold strength is supportive [for silver], as are an accommodative Fed policy, negative interest rates, and geopolitical risks.”

Adrian Ash runs the research desk at BullionVault, the physical gold and silver market for private investors online. Formerly head of editorial at London’s top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and is now a regular contributor to many leading analysis sites including Forbes and a regular guest on BBC national and international radio and television news. Adrian’s views on the gold markethave been sought by the Financial Times and Economist magazine in London; CNBC, Bloomberg and TheStreet.com in New York; Germany’s Der Stern and FT Deutschland; Italy’s Il Sole 24 Ore, and many other respected finance publications.See the full archive of Adrian Ash articles on GoldNews, or get more fromAdrian Ash on Google+

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Full Article: Best Gold & Silver Forecasters Revise 2016 Targets Sharply Higher after 26% and 45% Gains to Date

Disclaimer© 2010 Junior Gold ReportJunior Gold Report’ Newsletter: Junior Gold Report’s Newsletter is published as a copyright publication of Junior Gold Report (JGR). No Guarantee as to Content: Although JGR attempts to research thoroughly and present information based on sources we believe to be reliable, there are no guarantees as to the accuracy or completeness of the information contained herein. Any statements expressed are subject to change without notice. JGR, its associates, authors, and affiliates are not responsible for errors or omissions. Consideration for Services: JGR, it’s editor, affiliates, associates, partners, family members, or contractors may have an interest or position in featured, written-up companies, as well as sponsored companies which compensate JGR. JGR has been paid by the company written up. Thus, multiple conflicts of interests exist. Therefore, information provided herewithin should not be construed as a financial analysis but rather as an advertisement. The author’s views and opinions regarding the companies featured in reports are his own views and are based on information that he has researched independently and has received, which the author assumes to be reliable. No Offer to Sell Securities: JGR is not a registered investment advisor. JGR is intended for informational, educational and research purposes only. It is not to be considered as investment advice. Subscribers are encouraged to conduct their own research and due diligence, and consult with their own independent financial and tax advisors with respect to any investment opportunity. No statement or expression of any opinions contained in this report constitutes an offer to buy or sell the shares of the companies mentioned herein. Links: JGR may contain links to related websites for stock quotes, charts, etc. JGR is not responsible for the content of or the privacy practices of these sites. Release of Liability: By reading JGR, you agree to hold Junior Gold Report its associates, sponsors, affiliates, and partners harmless and to completely release them from any and all liabilities due to any and all losses, damages, or injuries (financial or otherwise) that may be incurred.

Forward Looking Statements
Except for statements of historical fact, certain information contained herein constitutes forward-looking statements. Forward looking statements are usually identified by our use of certain terminology, including “will”, “believes”, “may”, “expects”, “should”, “seeks”, “anticipates”, “has potential to”, or “intends’ or by discussions of strategy, forward looking numbers or intentions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results or achievements to be materially different from any future results or achievements expressed or implied by such forward-looking statements. Forward-looking statements are statements that are not historical facts, and include but are not limited to, estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to the effectiveness of the Company’s business model; future operations, products and services; the impact of regulatory initiatives on the Company’s operations; the size of and opportunities related to the market for the Company’s products; general industry and macroeconomic growth rates; expectations related to possible joint and/or strategic ventures and statements regarding future performance. Junior Gold Report does not take responsibility for accuracy of forward looking statements and advises the reader to perform own due diligence on forward looking numbers or statements.

Gold’s $50 Billion M&A Spree Builds as Rally Boosts Values

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Gold’s $50 Billion M&A Spree Builds as Rally Boosts Values

A $50 billion gold-industry deals spree is extending into its third year, even as a surging bullion price makes sealing transactions and valuing mines more difficult.

Gold has regained its luster as investors seek havens from volatile markets and weak interest rates. While the metal is up about a quarter this year, the value of mergers and acquisitions has soared. The average paid in 133 transactions in the three months to June was $64 an ounce of gold equivalent in the ground, up from $36 in the first quarter of 2016, as buyers factor in better long-term price expectations, according to Bloomberg Intelligence.

“Companies are receptive to doing deals and there are sellers there, and naturally they are trying to get the prices up,” according to Liam Twigger, managing director of industry adviser PCF Capital Group Pty, which has acted in about 80 transactions over the past seven years and advised clients including Barrick Gold Corp. “There’s enough value in companies’ share prices, and enough capital’s been raised, to enable these deals to be done.”

Right Price

Barrick, the biggest producer, last week announced plans to sell its 50 percent share in Australia’s largest open-pit gold mine and joint owner Newmont Mining Corp. has signaled it would be willing to buy the stake at the right price. The stake may fetch as much as $1 billion, according to people familiar with the matter, while analyst valuations range from $400 million to about $1.5 billion.

Mergers and acquisitions and the metal’s surge this year after three straight annual declines will be major topics discussed by about 1,800 delegates, including executives from Newmont and AngloGold Ashanti Ltd., at the annual three-day Diggers and Dealers mining sector forum in the Western Australian town of Kalgoorlie.

Completed and pending gold sector deals totaled almost $9 billion in the first half, including Newmont’s $1.3 billion sale of Indonesian copper and gold assets to a local consortium and Centerra Gold Inc.’s $1.1 billion purchase of Thompson Creek Metals Co. Volumes rose in 2015 to $21 billion, the highest annual total since 2011.

Bullion’s Gains

Bullion for immediate delivery was little changed at $1,350.63 an ounce at 2:08 p.m. in Sydney, according to Bloomberg generic pricing. It’s rallied 27 percent this year, rising 2.2 percent in July after back-to-back quarterly gains.

Gold Road Resources Ltd. is in talks with four parties over the potential sale of a stake in its Gruyere development project in Western Australia and will demand any deal reflects the higher bullion price, according to Chief Executive Officer Ian Murray.

“The cycle has turned,” Murray said in an interview in Kalgoorlie on Sunday. The Gruyere site is “a world-class deposit by any definition and if we get a transaction, it would command a premium price.”

Perth-based Doray Minerals Ltd. is hunting globally for potential deals to add more production, Managing Director Allan Kelly told reporters in Kalgoorlie. “It’s tough to find good value in the market at the moment,” Kelly said.“Things are either very well priced, or the projects are very old and tired.”

Valuations vary on Barrick and Newmont’s Super Pit in Kalgoorlie — a giant 3.5-kilometer (2 mile) long operation at a site where metal has been produced continuously since a late 19th century gold rush — not only because of price assumptions but also on views that exploration could extend the mine’s life beyond a slated close of 2030.

Barrick President Kelvin Dushnisky said the company would sell assets including the Super Pit — if it got a fair price, according to an interview last month. Likewise, Newmont’s Gary Goldberg said in July that it would like to acquire Barrick’s stake, if they could come to an agreement.

After mid-sized producers, including Northern Star Resources Ltd., completed a raft of mine acquisitions from larger rivals, activity is now likely to accelerate in company takeovers and asset deals among smaller companies, according to PCF Capital’s Twigger.

“That’s greased the wheels, and I’m confident that once we get through the Diggers and Dealers conference, we may well see a bunch of deals,” he said. “It’s like a mountain of champagne glasses, you pour champagne in the top row — and they are the producers — and it cascades over into the developers. The interest is going to be very strong going forward.”

Perth-based Northern Star said Monday it had agreed to sell its Plutonic asset in Australia to Billabong Gold Pty, to focus on its assets at Jundee, Paulsens and in Kalgoorlie.

Full Article: Gold’s $50 Billion M&A Spree Builds as Rally Boosts Values

Disclaimer© 2010 Junior Gold ReportJunior Gold Report’ Newsletter: Junior Gold Report’s Newsletter is published as a copyright publication of Junior Gold Report (JGR). No Guarantee as to Content: Although JGR attempts to research thoroughly and present information based on sources we believe to be reliable, there are no guarantees as to the accuracy or completeness of the information contained herein. Any statements expressed are subject to change without notice. JGR, its associates, authors, and affiliates are not responsible for errors or omissions. Consideration for Services: JGR, it’s editor, affiliates, associates, partners, family members, or contractors may have an interest or position in featured, written-up companies, as well as sponsored companies which compensate JGR. JGR has been paid by the company written up. Thus, multiple conflicts of interests exist. Therefore, information provided herewithin should not be construed as a financial analysis but rather as an advertisement. The author’s views and opinions regarding the companies featured in reports are his own views and are based on information that he has researched independently and has received, which the author assumes to be reliable. No Offer to Sell Securities: JGR is not a registered investment advisor. JGR is intended for informational, educational and research purposes only. It is not to be considered as investment advice. Subscribers are encouraged to conduct their own research and due diligence, and consult with their own independent financial and tax advisors with respect to any investment opportunity. No statement or expression of any opinions contained in this report constitutes an offer to buy or sell the shares of the companies mentioned herein. Links: JGR may contain links to related websites for stock quotes, charts, etc. JGR is not responsible for the content of or the privacy practices of these sites. Release of Liability: By reading JGR, you agree to hold Junior Gold Report its associates, sponsors, affiliates, and partners harmless and to completely release them from any and all liabilities due to any and all losses, damages, or injuries (financial or otherwise) that may be incurred.

Forward Looking Statements
Except for statements of historical fact, certain information contained herein constitutes forward-looking statements. Forward looking statements are usually identified by our use of certain terminology, including “will”, “believes”, “may”, “expects”, “should”, “seeks”, “anticipates”, “has potential to”, or “intends’ or by discussions of strategy, forward looking numbers or intentions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results or achievements to be materially different from any future results or achievements expressed or implied by such forward-looking statements. Forward-looking statements are statements that are not historical facts, and include but are not limited to, estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to the effectiveness of the Company’s business model; future operations, products and services; the impact of regulatory initiatives on the Company’s operations; the size of and opportunities related to the market for the Company’s products; general industry and macroeconomic growth rates; expectations related to possible joint and/or strategic ventures and statements regarding future performance. Junior Gold Report does not take responsibility for accuracy of forward looking statements and advises the reader to perform own due diligence on forward looking numbers or statements.

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