Good afternoon
Mnuchin is said to prepare a 850 bill US$ stimuls package…from the US to Germany, France, Australia and everywhere else, governments prepare to spend big, and Central Banks have already done their part. As one of my clients is asking: Governments spending big / tax receipts falling through the floor….where does this end???
For now, analysts at Macquarie see the possibility of oil-price and virus- induced defaltion, which means, that interest rates would be positive again in real terms, and potentially, negative for gold. Sounds pervers, but might be right. Whether the above spending measures will be inflationary in the medium term, as the text book says, remains to be seen - it could well be, that the velocity of money spinning through the world could be reduced, countering inflationary aspects of the current moeny printing efforts. Gold mines as measured by the GDXJ are flying again today…GDXJ is trading at 30.7 in the moment, which is up an easy 56% from yesterday´s open at 19.70!!!!!!!!!!! crazy stuff…almost looks like somebody has been caught short, so rapid is the “normalisation” of the GDXJ!
Gold is having a pretty volatile day today…from slightly up at one stage during Asian trading, to down 30$ ( 1470 US$/oz ) by lunchtime in Europe, it´s recovering to 1491 US$ in the early US-morning…and 1526
The A$ has been very weak lately, as we all discovered in our portfolios…recent lows against Euro of 1,835 ( vs 1,61 only 4 weeks ago are hurting! ). But the currency has been weak against the US as well, currently trading just below 60ct. This has led to nickel trading at the highest since 20.1.2020 today, 20.100 A$/t, and gold remaining around 2560 A$/oz ( if it closes here, a new all time high ). But shortly, we will not know the actual pricing of base metals anymore - the LME plans for shut-down from the 23rd of March, for the first time since WW2!
How quickly things can change these days: The price of gold might shortly overtake the price of palladium!
Australian gold producers have recently fallen around 25% - litte West African has been holding up well at minus 20% , Evolution has been ok as well with minus 22% from the recent top. The outlyer of my holdings ( within advanced developers / producers ) has been Bellevue Gold. Hitting a high of 64ct just after our conference in late Feburary, it´s now trading at a paltry ( and stupid! ) 34ct…a great buy, as I believe. But all three names are cheap at current gold price / exchange rates!!! WAF should be at 65ct/ Evolution at 4.50 $…
West African - spoke to them today, about how they cope with the virus situation. They have not had issues so far - but they are prepared for corona reaching out to them, which at some stage, will happen I guess. WAF´s mine management has managed the Ebola outbreak, while working in Guinea a few years ago - I think corona is a walk in the park compared to the very deadly Ebola virus ( with a death rate of between 40-90% ) . Also, expats have agreed to work on longer rusters, substantially reducing people moving at the mine, which is great. I was decent enough ( unusual! ) not to ask - but the first gold pour can´t be far away!
Mincor/Panoramic - Andrew Forrest buying more here as well - another 6 mill to just under 14% of the company.. the broker, which bought all the PAN recently, continues to be the most active broker in the stock - so he is probably adding stock here as well. The nickel-consolditation story continues to be under steam! I think we might see a new substantial holder notice from Squadron on Wednesday, if my above assumption is right.
Genex - how crazy is this? They traded as low as 10ct today…closing at 10,5ct…some pretty large turnover today and yesterday. the stock is now valued at just their producing solar asset at Kidston…nothing in the price for teh second project, and certainly nothing for the main project, the pumped-hydro plant. Genex has an offtake from the State of Queensland for their solar farm - and the majority of the financing for pumped hydro is coming from government-agencies. So I cannot see too much risk here. But in case Energy Australia will sign a new offtake, I think the upside is substantial! The impact of corona on China has been reducing every day lately, and Hongkong did not have a big problem anyway…so I still see a very high chance of Energy Australia ( which is a subsidiary of a HK-based firm ) coming to the table.
In any case - have a good evening! As I am leaving ( early, at 4.30 pm ), the GDXJ is up by 62% from yesterday´s low!
WS