Newmont

Newmont dinged support last week. I've always believed that at some point, a dollar-positive currency crisis would benefit gold because at some point, people will assume what is happening to the euro, yen, yuan and so on will spread into the U.S. dollar. Or some fraction will prefer gold to the dollar.

If going with GDX or some other fund, use the 52-week low for a stop.

Note that gold has a very open chasm should it drop to the downside. But if I'm wrong about the downside, then miners are probably bottoming here on currency risk.

Gold

If it wasn't for the gold and silver price rising, and having better looking charts, I'd say buying here is bottom-fishing and borderline knife catching. There's still risk that miners get pummeled in a sell-off. Gold, unlike silver, might have made a higher low compared to the March 2020 low.

 

Trade Time

I don't know if the rally will end with a burst of bullishness or if it will lose steam and end with a consolidation pattern, but as I've said in recent posts, now is the time to be window shopping as a bear. Have targets ready in case the bear swiftly resumes.

I come into today with long yen, short oil, long gold miners (in addition to shorter term GDX and GDXJ, I have been adding NEM Nov 55 calls) and short Apple, plus a lot of cash. I will be looking to either day trade the market or buy TLT/ZB on weakness.

For yen, I want to see if we start getting some deflationary signals in the market. I you click the yen tag, you can see the gap between the yen and the spread between US and Japanese long-term govt bonds. If there is deflation that drives interest rates lower, the yen can theoretically return to form as a deflation winner. If inflation will kill the market, then the yen's run could peter out this month. Additionally, this relationship need not hold longer-term because it wasn't this strong in the past. The relationship between the bond spread and yen was tight this year because the move in bonds dominated financial markets.

I've talked about the oil analog before. A strong analog would have seen oil drop last week. Instead, it popped to $101, and now WTI tagged a $93 handle. As I'm typing, CL has reversed $8.39 per barrel from Friday high to Monday low. The waterfall decline starts below $90 per barrel.

Apple was mainly a tactical play on a market pullback. I could be out of it this morning. I will likely take a short position for the next leg down in the bear market though. I have it because I'm mostly in cash with little equity exposure either way right now.

I'm out of most TLT calls, but I think gold miners offer similar exposure here. I expect gold will rally with ZB, though it probably won't be step-for-step on most days.

Added More Gold Miners, But...

Look at the tops in 2011-2013 and 2020-2022. Look at the break of support. April 2013 and July 2022....

Wrecked Miners

Deflation is coming and gold miners will probably be smashed in the first leg of it, unless investors have learned their lessons and accumulate gold in anticipation of an eventual central bank reversal. I'm still holding some of these, and haven't initiated positions in others yet such as AMX and BNCH, both of which are breaking down too after losing support.

SMI has been one of my few winners, but it has pulled back quite a bit, as I expected following that run.

Monster Hit at Lion One

CEO.ca:Lion One Discovers Major New Gold Feeder Structure - 20.86 G/t Au over 75.9 Meters at Depth Beneath the Current Resource at Tuvatu, Fiji

the discovery of a major new feeder structure at its Tuvatu Alkaline Gold Project in Fiji. Hole TUG-141, targeting a complex network of high-grade structures called the 500 Zone, has encountered the longest high-grade intercept yet recorded at Tuvatu, 20.86 g/t Au over 75.9m, including 43.62 g/t Au over 30.0m which includes 90.35 g/t Au over 7.2m. The new discovery is located at depth beneath the current resource fully within the permit boundaries of the Tuvatu mining lease.

The blue horizontal should hold as support with this news and quite possible a new breakout begins. This is my top undervalued+conservative near-producer pick. GCM is my conservative+producer pick.

Aurania Finds Lost City of Gold

Aurania and Metron Find Lost City of Gold in Ecuador

Aurania Resources Ltd. (TSXV: ARU) (OTCBQ: AUIAF) (FSE: 20Q) ("Aurania" of the "Company") is pleased to report that through a collaboration with Metron Incorporated ("Metron") of Reston, Virginia, USA, the "lost city" of Logroño de los Caballeros has been found in Ecuador. The site considered to be the ancient gold camp is not on Aurania's concession block, but is downstream, and is exclusively alluvial (placer) gold. No archaeology has been found. Aurania is now on the hunt to find Logroño's source of gold within its Lost Cities - Cutucu Project ("Project") in southeastern Ecuador. The location of Logroño, as inferred by Metron, is supported by a multitude of historical documents as well as geological information collected by Aurania and the increased presence of artisanal miners in the area. Logroño de los Caballeros was one of seven historic mining areas operating during the time of the Spanish conquistadors in the land that became Ecuador. Its geographic location and that of a second site, Sevilla del Oro, have been lost over time. Aurania's Project is partly based, and is named on the premise, that the two lost cities would be within Aurania's large concession package.

Off the Beaten Path: Based Miners

SMI has already broken out, posting simply as an update. Not an area I'd be chasing.

I still like Maritime Resources. I believe the stock is caught in a "doom loop" where investors are selling because they expect dilution. As the price drops, the dilution becomes larger, more investors sell and so on. I pray they do not fund the mine down at these levels, but instead wait for either strong drill results or a rebound in the gold price. If either of those situations unfold, then it will flip into a virtuous cycle where the value of the mine rises, the stock price rises, the needed dilution falls. I also expect there will be a "goldilocks" window opening for all gold mining stocks, similar to spring 2020, where energy prices are down, labor and material supplies for mine construction will be available and the gold price will be high. Navigating this opportunity will separate many winners from losers.

Positioned Short, Thinking Long

My plan for today is to sell what I expect will be a rip and buy Monday puts. I'm going to be going through all the junior mining charts and preparing stink bids.

QQQ vs GDX

Kinross Shareholders Should Purge Management

Kinross: Kinross to suspend Russian operations

Kinross Gold Corporation (TSX:K; NYSE:KGC) (“Kinross” and the “Company”) is deeply concerned about the loss of life and destruction in Ukraine and wishes to express its sympathy and support for the people who are suffering because of this tragic situation.

The Company today is announcing a donation of $1,000,000 to the Canadian Red Cross Ukraine Humanitarian Crisis Appeal to assist those people most in need. Kinross is hopeful for a peaceful and diplomatic solution in Ukraine.

The Company is suspending all activities at its Udinsk development project. The Company is also in the process of suspending operations at its Kupol mine, with the focus on the safety and well-being of its more than 2,000 employees and in recognition of its obligations to manage and mitigate the mine's environmental impact on an ongoing basis.

The Company intends to adhere to all sanctions and legal restrictions that have, or will be, announced by relevant governments.

Everyone who signed off on this decision should be fired from the company. Donating to the Red Cross is fine, but shutting the mine is not acceptable behavior. Companies should not be invovled in politics. If management wants to virtue signal, they should have resigned en masse and said they cannot in good conscience work for a company operating in Russia. Instead, they have trashed the value of their Russian assets. I doubt the courts would be amenable, but I'd love to see a shareholder lawsuit target all of the management and board with personal lawsuits to clawback any future losses.

With this management, the company is done in Russia. They will be lucky to sell the mine at a good price because they cannot go back to normal. This mine will probably be targeted for environmental or labor violations. It is an impaired asset under current Kinross management and every potential buyer knows it.

That said, I wouldn't sell today. "The market" doesn't think ahead like that. They will restart the mine as soon as there's a permanent ceasefire or peace agreement because at that point, they will be in clear violation of their legal obligations to shareholders. Plus I expect gold will rebound. Longer-term though, I wouldn't stick around. Plenty of other mining stocks with better upside.

Companies should stick to doing business and not play politics. I don't think the management is necessarily "woke" in their beliefs, but their behavior is "woke" in the sense of destroying corporate value in pursuit of political or ideological goals, or in this case the moral vanity of the management.

At this point, many companies are engaged in reckless ideological games. BigTech is cruising for complete destruction with their political interference in elections and violating fundamental rights such as freedom of speech. Disney has no trouble doing business with autocratic and repressive regimes, but they go all out against a bill protecting children from sexual abuse in Florida. Many major companies are beyond saving if the political winds suddenly change because they have thrown caution to the wind and expressly chosen one side over another. Managements will be crucified by their shareholders if unrecoverable losses start piling up. Lest it be forgotten, or if you didn't know:

Long-Term Capital Management did business with nearly everyone important on Wall Street. Indeed, much of LTCM's capital was composed of funds from the same financial professionals with whom it traded. As LTCM teetered, Wall Street feared that Long-Term's failure could cause a chain reaction in numerous markets, causing catastrophic losses throughout the financial system.

After LTCM failed to raise more money on its own, it became clear it was running out of options. On September 23, 1998, Goldman Sachs, AIG, and Berkshire Hathaway offered then to buy out the fund's partners for $250 million, to inject $3.75 billion and to operate LTCM within Goldman's own trading division. The offer was stunningly low to LTCM's partners because at the start of the year their firm had been worth $4.7 billion. Warren Buffett gave Meriwether less than one hour to accept the deal; the time lapsed before a deal could be worked out.[24]

Seeing no options left, the Federal Reserve Bank of New York organized a bailout of $3.625 billion by the major creditors to avoid a wider collapse in the financial markets.[25] The principal negotiator for LTCM was general counsel James G. Rickards.[26] The contributions from the various institutions were as follows:[27][28]

$300 million: Bankers Trust, Barclays, Chase, Credit Suisse First Boston, Deutsche Bank, Goldman Sachs, Merrill Lynch, J.P.Morgan, Morgan Stanley, Salomon Smith Barney, UBS

$125 million: Société Générale

$100 million: Paribas, Credit Agricole[29]

Bear Stearns and Lehman Brothers[29] declined to participate.

Copper Miner-Gold Miner Ratio

This one makes me a little more confident that gold-copper will resolve in gold's favor.

Hi Yo Silver, Away!

I view silver and gold in concert. I do believe the metals are attractive here, but there is an absolutely ugly monthly candle forming on gold, similar to the one forming in oil. With crude, I believe the top is in.

Silver has a similar monthly candle forming:

However:

Last month I posted The Low is In: Silver Joins Gold in a Breakout and I haven't changed my view. This looks like a healthy consolidation within the basing pattern. That silver is stronger is bullish. The target for gold from this 2-year base is $2500. The massive 11-year base, yet to be broken, points to $3000+ gold with a stretch target of $5000.

AMC Pays 400pc Premium for Gold Miner Stake

ZH: Hycroft Mining Shares Rocket After AMC Theaters Takes A 22% Stake

AMC wrote in a press release this morning that it is "buying 22% of Hycroft Mining Holding Corporation which holds the 71,000 acre Hycroft Mine in northern Nevada".

"Independent third-party studies confirm that the Hycroft Mine has some 15 million ounces of gold resources and some 600 million ounces of silver resources. In addition, AMC will receive an additional 23.4 million warrants in Hycroft at $1.07 per share," it told its shareholders.

AMC invested alongside of well known metals expert Eric Sprott: "We are joined in this investment by Eric Sprott, one of the world’s most acclaimed and most successful gold and silver investors, who is taking an equal 22% stake in Hycroft alongside us. His co-investment underscores our confidence that we have found a profound and unique opportunity for AMC."

AMC could have bought shares at 30 cents last week, but is paying nearly $1.20 per share in a private placement.

Buy Commodities, Not Equities

If problems like this keep popping up, commodities will do better than many producers because supplies will fall. Or own the lowest-cost miners.

Cyanide maker suspends Europe production as energy costs soar

The world’s largest maker of gold and silver mining material, sodium cyanide, has been forced to suspend production in Europe after Russia’s invasion of Ukraine sent energy prices soaring.

Czech group Draslovka said production of the chemical, which is used in the extraction of precious metals from ore, had become uneconomic in Europe, with gas prices in the region at 12 times the levels in the US, compared with just 1.5 times in 2020.

Shortages of supplies in markets reliant on Europe could be severe, the company said. It has 15 per cent of its production capacity in the region.

“We need to decrease production to a minimum for a temporary period and see what the free economy does,” said chief executive Pavel Bruzek. “The whole of Europe is in a similar situation.”

The entire process of globalization is being thrown in reverse.

The Low is In: Silver Joins Gold in a Breakout

Here is the ratio of SIL to GDX. I'm looking for this to turn higher, and that will ignite the primary engines on this bull move. Options on SIL are cheaper than GDX here assuming silver's higher volatility.

Cheap Mining Speculations that Became Cheaper

Still like these two.

On a Quest

Lithoquest will be cashed up from a private placement closing soon. Funding will go towards drilling their properties in Northewest Ontario. There are historical drill results in the area that suggest there's gold in them thar hills, but success will only come if they can zero in on targets and find it. They conducted LiDAR surveys followed uby airborne magentic surveys. Actual drills will go into the ground this year.

The chart has based and broken out. If it can hold the breakout and strikes gold, there could be considerable upside. The company has market cap of CAD14 million.

I am long.

Gold and Silver Miners Bottoming

As in December 2015, the first rate hike could well mark the bottom. The long-term picture looks bullish. Silver miners are still lagging. The possibility of a puke low is definitely in the cards, as the silver chart shows. I will be putting my buy list together and adding aggressively if silver sinks into the buy zone.

Gold Cycle

11-years