Gold Digger: Gold battles the dollar for safe haven status and JP Morgan in the hot seat
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Our Gold Digger column wraps all the news driving ASX stocks with exposure to precious metals.
It looks like the dollar is winning the battle of the safe havens, as the gold price dropped toward an 11-month low this week – currently trading at US$1,716.00.
The US dollar, which was perched near 20-year highs, is essentially suppressing demand for greenback-priced gold among buyers holding other currencies. Aka:
— 88888 Account (@88888sAccount) July 13, 2022
Gold, which pays no interest, tends to be pressured when interest rates rise as this increases the opportunity cost of holding bullion.
Plus the expectation among investors is for more aggressive US monetary tightening after savage inflation numbers of 9.1% this week.
“Bullion has been caught in a vice between a US dollar rally that’s gone into overdrive and real Treasury yields that won’t stop grinding higher,” XM CEO Peter McGuire says.
“It has been a case of ‘all news is bad news for gold’, with the precious metal suffering during both inflationary and recessionary bouts of concern, since inflation fears propel yields higher while recession risks turbocharge the dollar.
“It’s difficult to see this dynamic changing until the Fed hits the pause button on rate increases.”
It wouldn’t be a precious metals wrap if we didn’t mention JP Morgan’s gold trading and sales team is facing a Chicago Jury this week after allegations of ‘spoofing trades’ or manipulating the price of precious metals like gold and silver to boost their profits.
JPMorgan’s gold trading and sales team was so focused on making money that they scammed the market for years with so-called spoofing trades, according to a former colleague who testified at the trial of three former employees https://t.co/ylONBYlV9r
— Bloomberg (@business) July 12, 2022
Let’s look at other precious metals like platinum group metals (PGMs) — platinum, palladium, rhodium, iridium, ruthenium and osmium — whose highest demand sector is ‘auto catalysts’ in car exhausts which reduce polluting emissions in ICE and hybrid vehicles.
These auto catalysts, or catalytic convertors, account for 40% and 80% of annual platinum and palladium production, respectively.
And Metals Focus says its sharply revised its auto catalyst recycling outlook down for 2022 after the recent International Platinum Metals Institute conference in Orlando.
Metals Focus says Covid fallout – like increased shipping costs and the semiconductor shortage – have directly impacted the recycling of auto catalysts and the PGMs in them.
“New vehicle output fell to 76M units in 2021, with a modest 5% gain (80M) forecast for this year as the semiconductor and other parts’ shortages persist,” Metals Focus says.
“The outcome for recycling is that secondhand vehicles have become much harder to source.”
Consumers are now holding on to their vehicles for longer, while second-hand cars, which would traditionally have found their way to auction, a parts dealer or scrap yard, are bought and sold for continued use.
“We have lowered the total PGM supply by close to 380koz y/y,” Metals Focus says.
“The platinum, palladium and rhodium supply for the full-year will reach 4.0Moz, falling back to levels last seen in 2018.
“The expected improvement in vehicle sales for the full year should cap the drop in PGM auto catalyst recycling to around 12%.”
Here’s how ASX-listed precious metals stocks are performing:
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WA goldie AUN has hit a thick 344m at 1.29g/t gold in its first diamond hole at the Central Sandstone Gold Project this week, where drilling is hoping to both extend and better define the existing inferred underground mineral resource estimate of 14.2Mt at 1.1g/t gold for 500,000oz at Two Mile Hill.
The Central Sandstone Project, some 12km south of the township of Sandstone between the mining towns of Mt Magnet and Leinster, comprises granted tenure cover 112km and two mining licences.
AUN managing director Brad Valiukas says the company is ‘very happy’ with how Sandstone is progressing.
“We have been expanding our tenement footprint, looking for new deposits and advancing the Mile Hill underground deposit with deep holes,” he says.
“This is a great result from our first hole at Two Mile, which we see as a key part of the project going forward.”
AUN is awaiting further results with the fourth diamond drillhole and program now completed.
The ~$17.2m market cap company had $3.68m cash in the bank at the end of the March quarter.
This Liontown Resources (ASX:LTR) spinoff, focused on the Moora Gold-Nickel-PGE Project near the Julimar mineral province, has made an ‘outstanding’ new intersection of 13m at 3.3g/t gold at its Zest prospect.
Although assays are pending for another 126 aircore holes across previously defined geochemical anomalies on the Moora and adjacent Koojan JV Project, MI6 says this hit continues the company’s success in identifying significant mineralised zones.
This massive hit is located only 55m down dip of a recent intersection recording 12m at 2g/t gold and 1.4% copper.
With $25.5m cash in the bank, MI6 is in a strong cash position to maintain exploration momentum with a 10,000m–15,000m planned RC program.
Exploring for gold underneath salt lakes is tough, which is probably why so many remain under-explored — regardless of how prospective they are – but this morning KWR hit its first ‘significant diamond drill core’ gold intersection within the Sir Laurence mineralised system at Lake Goongarrie.
The 5m at 4.8g/t gold from 113.3m intersection also included 2.3m at 9.4g/t gold – confirming not only the geological model but the size and gold grade potential at the project as well.
KWR CEO Ed Turner says this hole is on the extreme western limit of the known bedrock gold mineralisation and demonstrates the potential to continue to grow Sir Laurence.
“The gold intersection remains open to the west, southwest and northeast at Target 1,” he says.
Exploration targeting will continue to be reviewed as new results come in.
Shares in KWR jumped as much as 50.85% on this news.
The ~$21.2m market cap company had ~$3.22m cash in the bank at the end of the March quarter.
Chaired by high profile mining personality Norman Seckold, $100m market cap company Santana’s main game is the ‘Bendigo-Ophir’ Project in New Zealand, where it has just announced a 2-million-ounce global inferred gold resource platform.
Resource extension drilling since September 2021 has focused mainly on the Rise and Shine (RAS) deposit, which has resulted in a six-fold increase in RAS inferred resources and a three-fold increase in overall global RAS shear zone resources.
SMI executive director Dick Deevers said the execution of the company’s plan to ‘follow the gold’ has paid off handsomely.
“This is a substantial upgrade in our MRE, both in a large increase in inferred contained ounces of gold at our lower cut-off grade and the definition of a substantial tonnage of higher-grade mineralisation at the higher cut-off grade of 1.5g/t gold,” he says.
“We have really opened up the prospect of future underground mining of the deeper parts of the RAS deposit if RAS continues further down plunge which our geological model suggests it should.”
This little ~$6m market cap junior hit a bonanza 1m at 478g/t gold assay at its Burtville East Gold Project southeast of Laverton in Western Australia.
WA-based PNT, which was spun out of London-listed Panther Metals PLC, only listed on the ASX back in December after a $5m IPO.
The fantastic result is from the first round of drilling at the Burtville East project which consisted of 6 reverse circulation (RC) holes for a total of 675m, designed as an initial first pass program to test accepted mineralisation trends and explore the potential for alternative trends.
“The results from this short program are simply stunning,” MD and CEO Daniel Tuffin says.
“Some of the holes drilled into the accepted trend model did not perform as expected, while others, particularly in the case of hole BVE006, intercepted a new shallow broad high-grade zone of 15m at 53.94g/t gold.”
PNT says it will now progress with a full review of the results and follow up with a new drill plan to continue testing and exploring for new mineralised trends in the area.
Emerging $5m market cap explorer RIE is sitting on an 80% high right now after announcing some high-grade gold and silver assays from the Tintic zone within the Kingman Gold project in Arizona, USA.
Highlights from these latest drill results include 1.5m at 27.5g/t gold and 37g/t silver from 13.7m, including 0.8m at 53.3g/t gold and 63g/t silver from 13.7m as well as 3m at 5.05g/t gold and 58g/t silver from 27.4m.
RIE chairman Michael Bohm says this final batch of assay results supports the high-grade mineralisation which has been achieved in every. single. drill program. at Tintic.
“The blanket of high-grade gold and silver sits just below the surface at Tintic, which means that drilling toward a future resource estimation and developing a conceptual mine plan, could be simple, cost effective and quick to achieve,” he explains.
The plan for the company now is to interpret the results and consider the next steps, which may include a small drill program targeting the shallow high-grade mineralisation at Tintic next quarter.
This Chalice Mining (ASX:CHN) spinoff is absolutely soaring after hitting high-grade gold in aircore drilling at the Ironbark East and Karri prospect within the Pyramid Hill Gold Project, north of Bendigo, Victoria.
Hole PHAC1030 returned 40m at 2.81g/t gold from 50m, including 26m at 4.20g/t gold from 51m, which also includes 2m at 15.42g/t gold from 51m.
Shares in the ~$40.5m market cap company went for a run and gained some 30%, with managing director Tim Markwell saying the results are indicative of the company’s quality of ground position and targets.
“Being in the fortunate position of having a strong cash balance, we look forward to completing an assessment of these encouraging results and planning for a major work program in the coming months,” he says.
FAL, which listed on the ASX back in December 2021 after raising $30m in an oversubscribed IPO, is chaired by Mark Bennett, known for his discovery of the Nova nickel deposit.
At Stockhead we tell it like it is. While Panther Metals is a Stockhead advertiser, it did not sponsor this article.