Gold Digger: All signs point towards another price breakout
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Gold prices might be heading for another breakout after US jobless claims came in at 3.17 million last week, bringing the total to 33.5 million over the past seven weeks.
This is higher than the expected 3.05 million claims, though it is down from the previous week’s 3.85 million claims, underscoring the amount of damage the COVID-19 pandemic has inflicted on the US and other major world economies.
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Further underscoring the weakness is the revelation that the US Treasury Department has borrowed just a hair under $US3 trillion ($4.6 trillion) to fund fiscal measures, almost six times its borrowing during the 2008 global financial crisis.
While stimulus spending is aimed at preventing a depression, it does not create productivity or boost investment, making gold look even more like a hedge, Kitco News quoted Pepperstone head of research Chris Weston as saying.
Spot gold is currently trading at $US1,715.60 per ounce, or about $2,625.57 in Australian dollar terms thanks to the currency exchange rate.
There has certainly been no shortage of predictions about where gold is heading and the consensus seems to be largely bullish.
Predictions of how far gold could go have ranged from the conservative to the downright outlandish — $US20,000 per ounce is a figure we are highly unlikely to see.
Here’s how ASX gold stocks performed for the period May 1 – May 8 [intraday]:
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Alliance Resources’ (ASX:AGS) infill reverse circulation drilling has increased its geological confidence in the Weednanna gold deposit in South Australia.
Not hard when you get results of up to 2m at 154 grams per tonne (g/t) gold from a depth of just 15m at Shoot 10, which is looking increasingly likely to be a shallow, high-grade open pit in line with suggestions in the Weednanna scoping study.
Further drilling will be carried out in May to better define the extent of the gold mineralisation for estimation of a high-confidence measured resource.
The company plans to upgrade the gold and iron ore resource estimates for the deposit during the second half of 2020 and to commence feasibility study level assessments into its commercial viability.
Meanwhile, E2 Metals (ASX:E2M) has captured some market attention after holes drilled at its Conserrat project in March, before Argentina’s mandatory isolation measures kicked in, returned some noteworthy hits.
These included a top intersection of 8m at 7.64g/t and 216g/t silver from a depth of 76m within a broader 16m zone grading 3.9g/t gold and 123g/t silver.
Drilling has defined the mineralised structure over a 280m strike length and is open to the northwest.
With $16.6m in the bank at the end of the March quarter, the company has more than $20m to focus on its Lake Rebecca gold project near Kalgoorlie, Western Australia.
Earlier this year, Apollo announced a pit-constrained maiden resource of just 1 million ounces of gold at the project.
The explorer has now intersected gold another 100m below the existing resource at the Abujar‐Gludehi (AG) deposit down to 460m below surface.
Gold producer Red 5 (ASX:RED) has defined maiden resources of 112,000 ounces of contained gold and 81,300 ounces of contained gold for its Cerebus-Eclipse and Centauri satellite open pit deposits, respectively, at its King of the Hills project in Western Australia.
Red 5 expects the satellite deposits, which now have total resources of 308,200 ounces of gold, to be a key component of its mining strategy, providing potential complementary mill feed and cash flow during the early stages of the proposed stand-alone 4-million-tonne-per-annum processing operation.