Gold Digger: Great news – gold price headwinds just became a tailwind
Link copied to
The recovery in the gold price from its early March lows — ~$1,670s to over $1,825 currently — was mostly driven by the decline in real interest rates and, more recently a poor US jobs report and increasing inflation.
US core inflation in April came in at nearly 3%, surpassing even most the aggressive forecasts, according to The Felder Report.
“With inflation now rising much faster than interest rates, real rates have now fallen (inverted in the chart below) to a level that should be about as bullish for gold prices as anything we have seen in recent years,” Jesse Felder writes.
“Should these nascent trends in inflation and interest rates prove to be more than “transitory,” as Dr. Copper would seem to suggest, it would appear that the gold price could be significantly undervalued at present.”
That’s good news for gold plays, many of which are still trading well below their late 2020 highs.
Here’s how ASX-listed gold & silver stocks are performing:
Scroll or swipe to reveal table. Click headings to sort. Best viewed on a laptop
Capital H’s Josh Baker reckons that the flagship asset of gold-copper explorer Talisman is actually a royalty over the Wonmunna iron ore project, acquired when it sold off the project in 2011.
The project is now owned by Mineral Resources (ASX:MIN), which is currently drilling to grow the resource.
“As such, we think there is a strong likelihood that the scope of the deposit will be expanded and able to support a 10Mtpa scale operation for 5yrs+,” Baker says.
“At the current average price for 58% graded ore for CY21 to date (~USD142/t), this implies a revenue run-rate of ~$9 million p.a. from TLM’s royalty.
“Should MIN be successful in doubling the production run-rate asap, it would imply a revenue run-rate of ~$18 million p.a. on the same assumptions, in stark contrast to [Talisman’s] current $37 million market cap.”
This quiet but industrious explorer was rerated in early trade Tuesday by a monster gold intercept at the 100,000oz ‘Bulgera’ project – 16m at 7g/t from 120m, to be exact.
That intercept is probably bigger, because the hole ended in 18.5g/t mineralisation.
The historic Bulgera project in WA remains underexplored, both along strike and at depth.
“The continuity of these relatively shallow, wide, high-grade drill intersections demonstrates Bulgera’s significant potential, especially with one of the holes ending in very-high grade mineralisation at only 210 metres,” managing director Charles Schaus says.
“We are very keen to recommence drilling to test for downdip extensions of this gold-rich zone.”
Another big gold hit.
Alto pulled up 4m at 60.6g/t from 40m, 240m away from the known mineralisation at ‘Vanguard’, part of the Sandstone project in WA.
There was a bunch of other good results, like 8m at 3.1g/t from 8m.
A total of 13 drill holes for over 2,600m are pending for Vanguard and a further 30 drill holes for over 6,300m from the ‘Lords Corridor’.
“Our wide-spaced, step-out drilling has now confirmed gold mineralisation over two kilometres, and it remains open along strike and down dip,” Alto managing director Matthew Bowles says.
“We can see Vanguard continuing to grow and plan to systematically test both the Vanguard and Vanguard North trends, along with the overall 20 kilometre corridor of differentiated dolerite that hosts Vanguard, Havilah and Indomitable deposits.
“Coming on the back of the ongoing success we are having at the Lords Corridor, where drilling is ongoing, these outstanding results from Vanguard validate our approach and view of a much larger gold system at our Sandstone Gold Project.”