MoneyTalks: Gold price could hit as high as US$2,000/oz amid geopolitical tensions

Money Talks is Stockhead’s regular drill down into what stocks investors are looking at right now. We’ll tap our extensive list of experts to hear what’s hot, their top picks, and what they’re looking out for.

Today we hear from Peak Asset Management founder and executive director Niv Dagan.

What’s hot right now?

The gold price has picked up on the back of geopolitical tensions in Europe and higher inflation globally.

“US inflation has surpassed 7.5% which is the highest it has been in 40 years, the UK inflation numbers are at 5.5% and our inflation is above 3.5% – which is higher than the 2-3% the RBA was expecting,” Dagan says.

“We are seeing supply disruptions and cost blowouts, combined with a huge parallel in terms of volatility, which is driving large investor inflows into gold.

“At the same time there is a weakening US dollar, which is negatively correlated with commodities, so when the US dollar starts to fall, commodities traditionally have outperformed.’’

“On top of this, we are expecting central banks to unwind their stimulus and bond buying so we have a ‘perfect storm’ – investors are looking to diversify to safety where gold and crypto currencies are strongly correlated.”

Dagan says he expects the gold price to hit US$2,000/ounce in the next six months.

Top picks

BOADICEA RESOURCES (ASX:BOA)

“BOA have a huge land holding in the Paterson region in WA adjacent to Newcrest and Rio Tinto that they are looking to drill out next month,” Dagan says.

“Total granted Paterson Province tenement holding is now 607km2. The company has identified multiple internal dome features, strengthening the Telfer dome lookalike structure of the target.

“This would be a big catalyst to the stock.

“They are early stage but from an exploration perspective, Newcrest is sitting on a huge producing mine, so all the infrastructure and upside we feel is there.”

ORA BANDA MINING (ASX:OBM)

Ora Banda brought the previously producing Davyhurst Project back into production after completing remedial work programs in late January.

“OBM have received some high-grade intersections like 5m at 30.7g/t and 1m at 13.7g/t and are starting to generate cashflows from production,” Dagan says.

“Last quarter they generated over $42 million from their gold production – they are not yet cash flow positive, but we are expecting they will be in the next 6-9 months subject to the gold price and as they lift their production,” he says.

ALKANE RESOURCES (ASX:ALK)

ALK produced 15,919oz of gold during the December 2020 quarter at an AISC of just $1,201/oz.

“It expects to produce between 47,000oz to 52,000oz at an AISC of $1,450/oz to $1,600/oz,” Dagan explains.

“The company is currently in the process of securing approvals from the New South Wales government to develop the Roswell and San Antonio deposits.

“Feasibility plans that include both open cut and underground mines at the two deposits are expected to be finalised in the coming quarter once the San Antonio indicated resource is completed.”

BEACON MINERALS (ASX:BCN)

BCN produces gold from its Jaurdi project near Kalgoorlie, which achieved its first tonne of gold in December 2020.

Dagan added Jaurdi produced 7,870oz of gold in the December quarter, about 12 per cent above the high-end guidance.

“The strong performance has allowed the company to pay off its debts in October, leaving it debt-free,” he says.

The views, information, or opinions expressed in the interviews in this article are solely those of the interviewee and do not represent the views of Stockhead.

Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.