“I buy gold because I’m afraid it will go to $5,000. I buy it because I’m afraid it will go to $7,000.” — Rick Rule, investment strategist
Gold holds gains as non-miner blue chips weaken
GoviEx Uranium | Ivanhoe Electric | West Vault Mining | Reciprocal Gold Theory
TCRs, the thrust of “reciprocal gold theory” occurs when gold’s price pace starts to reciprocate blue-chips’ decades of peaks. See below please.
A record-high, choppy gold price of $2,380 is shedding $20 Wednesday. [Friday update: rising again in Asia to an all-time high of $2.406.]
Note: European Gold Forum has 20-minute video presentations from miners: Zürich. Some free right now -- see below please * for list and attendance figures.
Our banker in London, Simon Catt of Arlington Group, says, “Gold shares are only just waking up to record high gold prices. Newmont NEM, the world’s largest gold miner, today trades around $40 per share compared to $78.89 per share all-time highs in April 2022.”
Simon this morning explained the chart just below of the 1971 gold vs. the S&P 500 (and other markets): “Stocks and gold have done equally well in 50 years but perhaps what’s about to happen is gold is about to out-perform.”
I point out that part of gold’s respectable clutch on purchasing power stems from its low price in 1971, when then-President Nixon and his advisers closed the cashier’s window for exchanging USD for gold; this is when cross-currency trading began in force.
[Simon is hosting a free video check-in April 17. The Zoom will have Pierre Lassonde of roy-co Franco-Nevada; BRICs strategist Luke Gromen; resources investor Eric Sprott; two others. See details and sign up here please.]
I am expectant. The 2024 (since mid-October 2023 gains, actually) weekly gains in gold came as blue-chip indexes and the U.S. dollar kept marking new highs.
Days such as today-Wednesday are rare and I hope will become more common: when metals, and their attendant miner-co equities, mark gains as blue-chip investments decline. See please: The Calandra Report — White Hot (Gray) Metals
“Measured against stocks, gold has not budged in 50 years,” Simon tells us.
I point out also that USD today vs. the 6-currency basket of our major trading partners, the DXY, is rising smartly to its highest level since mid-November. Gold, and most commodities priced first in USD, as a rule falls when USD climbs.
The silver lining for gold holders is that the gold they (you, we, I) hold exchanges for record-high amounts of those currencies, the euro, yuan, Swiss franc, British pound, Japanese yen, Swedish krona. Let’s keep the “night lights” on.
Alas, as my Toronto contacts (one a broker, one a strategist, one a mining CEO and one a banker) chide me:
“Physical gold and silver are moving and the shares of the underlying, the equities, are virtually comatose. We have seen disconnects before between equities and commodity prices but what we see on the quote screen is as ever.”
The stock broker one adds his “biggest fear is take-unders.”
Oh, you mean something akin to Ontario’s Alamos Gold AGI’s getting Québec’s Orford Mining for a beggar’s price? (I received our AGI shares for ORM today-Wednesday and will be adding them to our Alamos pile here at home.)
Or the China-miner’s planned steal of a cash purchase of Osino Resources OSI OSIIF? (I own Namibia’s Osino.)
Back to the reciprocal gold thesis that Idaho strategist Peter G. Palmedo pioneered with the now-deceased global markets analyst Barton Biggs at least 22 years ago; ’tis a long time coming. (We have discussed this at length six or so times since 2021, TCRs.)
Peter runs a gold fund out of Sun Valley, Idaho, and he is the 44% owner of West Vault Mining WVM WMVDF. (I own WVM shares and have for years now.) The vault theme = the Nevada permitted and shovel-ready mine at West Vault’s Tonopah concession = figuratively the same as owning gold in the ground, just far cheaper than buying bullion.
Peter, a so-called quant, also chairs West Vault; another large stake the 68-year-old strategist has in the Sun Valley Gold Fund is Vista Gold VGZ.
As you know, TCRs, I enter investments when they are going down in price. This makes me unpopular on the family front … even when I am gifted, in commodity rallies such as this year’s (2024), with an occasional throwaway, of ‘Well, it’s about time.’
I continue to search for what professionals call deep-value and-or oversold titles. Mostly natural resources and shipping, such as DHT Maritime Holdings DHT, also owned here,
I just started a small stake, as discussed, in Metalla Royalty & Streaming MTA as I expect fund managers and other larger-than-le-hoi-polloi investors to start regarding the gold-silver-copper roy-co as capable of resuming what was through 2021 or so a populist ascent, powered by ordinary investors.
“We are going to grow from just under 4,000 (royalty) gold-equivalent ounces to 15,000 in the next five years,” CEO Brett Heath tells me from his home in Puerto Rico. I take these CEO statements with a grain of sand; still, guidance is guidance I guess in pub-co’s landscape.
I will have more this week from Brett, who examines the broader roy-co dynamic.
My two preferred and long-term royalty holdings are EMX Royalty EMX and Elemental-Altus Royalties ELE ELEMF. See trading notes below. +
Uranium is on my oversold list, again.
Some uranium comments:
“I think that the U-correction is over and that it was a very necessary process; things were getting overheated and overly speculative on a few hundred thousand pounds that took it up 15 bucks to the high (spot was $105 three or 4 weeks ago), says Bill Sheriff of enCore Energy EU and TCRs, NF NFUNF, both of them owned here at home.
Bill adds, “I expect a slow climb back to the highs unless Vladimir (Putin) cuts us off. In general a healthy market that will have more upside surprises than downside.”
Daniel Major of GoviEx Uranium GXU tells me this morning from London, “Spot U is in the high 80’s ($88.76/lb) and last long-term contract is reported at $80/lb, up from $75 at the previous month end. So the U market continues to look strong.”
He notes “still uncertainty on U.S. sanctions on Russian material. ”
As with other uranium execs, Daniel expects the “nuclear story” and attendant physical uranium and explorer/producer stock prices to continue their 3-year streak in choppy fashion. Microsoft and other tech-cos will keep developing and-or contracting SMRs — small modular reactors for projects that need power sooner rather than later. Why?
Marc Henderson of Laramide Resources LAM LMRXF just this morning tells me from Toronto:
“Artificial-intel developers are using tremendous amounts of electricity. Leading tech companies all getting on board small modular reactors, partly because their data centers are hardly green at the moment and AI is a voracious consumer of electricity.”
Marc points to this week’s WSJ quote from California-based chip-designer ARM”s CEO, René Haas: “By the end of the decade, AI data centers could consume as much as 20% to 25% of U.S. power requirements. Today that’s probably 4% or less.”
I own GoviEx, EU, NF, Laramide Resources, Skyharbor Uranium, CanAlaska Uranium; I am considering buying shares of F3 Uranium FCU FUUUF.
+ Trading Notes: Purchases in the past 5 or 6 days include more Banyan Gold BYN; more EMX Royalty; more Elemental-Altus Royalties ELE.
This morning, in order to purchase more Ivanhoe Electric IE and more DHT Maritime Holdings DHT, and to pay taxes (Marin County, California, property tax), I sold at a 22% or so short-term profit a small amount (less than $500 USD) of Western Copper & Gold WRN.
I also sold approx. $900 of holding-co Orecap Investment OCI ORFDF at break-even; Orecap is lightly traded and holds sizable stakes in QC Copper & Gold; American Eagle Gold; Awale Resources; Baselode Energy; two or three others.
As noted, last week I sold $1,400 USD of accelerating Ivanhoe Electric IE, of which we sown approximately $13,000 USD worth, all profitably since first purchase four months ago; and $750 of (also) accelerating uranium-co enCore Energy EU, whose shares I still own.
In the post-market Tuesday, looking to replace those $1,40 of shares in a separate family account, I was attempting in another family account to purchase Ivanhoe Electric shares; I got them. I added yet more IE Wednesday. So, even-steven, I believe.
As discussed, with the continued fervor for miners’ shares, I sold a $450 stake in short-term gainer Aztec Minerals AZT and I used the funds to start a small stake in Metalla Royalty & Streaming MTA.
I intend this week to sell a slice of accelerating Ivanhoe Mines IVN IVPAF: 1,000 shares of some approx. 80,000 shares held.
* European Gold Forum in Zürich: all videos are free as of Friday April 12.
Some 318 folks attended the yearly Denver Gold Group event this week.
Investors numbered 182 and company delegates 87, Executive Director Tim Wood weighs in. So, 48 companies in all with 4 late cancellations, among them Karora dur to Westgold M&A, and I-80 Gold IAU, due to an “upsized” financing. Meetings numbered 721 for the 3 days.
“Great energy despite equities lagging metal prices,” Tim says this evening.
These videos are available now, courtesy of the companies:
| Agnico-Eagle |
| Alamos Gold |
| Centerra Gold |
| Coeur Mining |
| Equinox Gold |
| Hecla Mining |
| Hycroft Mining |
| IAMGOLD |
| Metalla Royalty & Streaming |
| Osisko Development |
| Pan American Silver |
| Red 5 Limited |
| Royal Gold |
| Silver Mines Ltd. |
| Skeena Resources |
| Triple Flag |
| Wesdome |
— Thom Calandra
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Thom Calandra is a writer and an investor. Research and material are meant as editorial opinion. He is not a professional investment adviser. Please do not consider his reporting as a recommendation to buy or sell securities.