Good afternoon
Trump is now getting the bill for playing the doctor of the nation…by the end of the day, we will probably have more than 100.000 infections in the US, and more in New York, than in Germany - and both numbers despite a later start to the pandemic in the US…He will potentially get his personal bill with elections in November…And Johnson already has got his: Tested positive! As well as his Secretary of Health….
Cases are still rising pretty strongly ove rhere - but really strong action has only been in place since the last weekend - with incubation of up to 14 days, our infection numbers should start coming back significantly early next week…I hope! But people are very disciplined generally over here, and it would be disturbing, if the extreme measure and the extreme change of behaviour will not have a massive impact - showing up in numbers - over the next few days.
Equity markets are expected by many to have a big bounce - and even if it´s only liquidity-driven - once this is all behind us. The big question is, how much of that bounce will take place before it´s actually happening? I would certainly not buy the market after it went up strongly 3 days in a row…My fear is, that we will have another massive rise in cases in the US and especially in New York in front of us. This could have a major effect on Wall Street, sentiment-wise.All markets are lower today - very understandable following a record 3-day rise in N.Y. and also elsewhere!
Metals are once again holding up really well - all green except for copper, which is down a fraction in the moment. Gold is having a relatively quiet day today, fluctuating around 1620 US$Oz over most of the day, and as I am leaving at bout 4 pm .
So while I see a good chance, that we have seen the absolute lows., I see a good chance for a few weak days in front of us.
The Northern Star profit warning the other day has many gold investors very concerned. In the conference call, they mentioned the transport of FIFO-workers as the main reason for their problems. As I have mentioned, my favourite Evolution only has one small mine, Cracow, working on a FIFO-basis…. As I wrote yesterday there are many Australian producers coping well in the moment. certainly, there is a risk of one mine or the other getting problems - - but even IF so, they would be temporary. I am still much happier to be a gold producer, than say a car producer! At least they can sell all their product, even at rising prices - and they have pretty remote operations. And this is not taking into account, that gold looks pretty good in my opinion for quite some time ahead!! Many people still wonder, why production at NST is so heavily impacted - numerous others
Perseus, as well as Panoramic, came out with virus-updates. The essential is, that operations of both companies work as scheduled. Interesting to note, that Savannah has worked since the new start-up on a 2-week-on-two week-off roster, something RIO has just moved to in it´s iron ore operations, to reduce travel from it´s previous 8-days-on / 6-days-off roster. Fortescue are doing the same. In the case of Savannah, 25% of FIFO-workers are from Interstate. They require special permission to travel as mining is an exempt industry and deemed necessary. Alternatively, the company is also replacing Interstate-workers with labor from Western Australia.
I have spoken to a few explorers today…none of these companies are running as “normal” - certainly, all of them have changed the operating enviroment to protect workers. But all three I have spoken to - Tietto, Bellevue and Apollo Consolidated - are currently drilling. Some of them experienced some minor problems, like staff arriving late due to travel restrictions, voluntary quarantine and things like that. But drill rigs are still turning here. More disruptions, though, have occured in other places, like the Northern Terrytories. At this stage, nobody is complacent anymore - everybody has taken responsible action to protect workers. But everybody is also uncertain, weather more restrictions might come into play for unnecessary activities - and in the short term at least, exploration is certainly not necessary. By the way - all three above mentioned companies are very cashed up and can sustain the storm very easily!
Strike - pointed out today, that today´s announcement from Woodside, to curtail capex by 60% and push decisions to bring Scarborough and Browse into production, will change the supply outlook for WA substantially. Even with a low-case demand scenario, supply/demand will be balanced by 2024, even without exporting any gas from the Perth Basin. In a stronger demand scenario, a balanced market is expected by the middle of 2023 already. Oil& gas stocks generally are very cheap in Australia currently - Strike is no exception here! But the upside medium term is certainly unchanged - the gas market is looking good , and while oil is under immens pressure in the moment, the market for gas is not totally uncorrelated, but looking better.
Have a quiet weekend, and hold tight!
WS