Gold Digger: Lacklustre week ends on brighter note for yellow metal, as China hoards like there’s no tomorrow
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It wasn’t the greatest week for gold but Friday, thankfully, was ordinary for everyone else – so there’s a faint, gilt-edged gleam for the precious metal heading into the weekend.
In some sort of return to recent abnormal proceedings, the ASX200 has had a red Friday after Wall Street nosebled post some hawkish Fedspeak, while gold prices rebounded a tad. At the time of writing, the spot gold prices look like this:
In relatively strong US dollars, gold is travelling at $1,962 (a good year to be a Beatle) per ounce.
In relatively pissweak Aussie dollars, we’re talking: $3,087 an oz.
We’re down from this time last week, but still, everyone’s fave safe-haven asset precious metal is clinging to some support and modest gains made overnight.
Meanwhile, here’s a meme-tastic tweet we gold-spotted. It’s possibly applied more to lowered lithium spot pricing and apparent downward EV demand, but it works quite nicely for gold this week, too…
"I'm not worried about this near-term downswing, I'm a long-term holder. It's only a matter of time before a major picks this up. In fact, the only thing I'm really worried about is being bought out too soon."#bagholderquotes pic.twitter.com/0qxrlfsqMz
— Mark (@Mark_IKN) November 8, 2023
The week has been punctuated by less media frenzy surrounding the Israel-Hamas conflict and the words, dripping like… tar, from Jerome Powell’s mouth, indicating the door to more rate hikes has been left open.
“The Federal Open Market Committee (FOMC) is committed to achieving a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2 per cent over time; we are not confident that we have achieved such a stance,” said JPow this week.
There are mixed messages from within da Fed, though, with Atlanta Fed bloke Raphael Bostic suggesting the central bank has probably hiked enough and the Chicago Fed’s Austan “Yes, This is My Actual Name” Goolsbee warning of the dangers of interest rate overshooting.
In any case, the gold market hasn’t reacted negatively to Powell’s hawkish words. Luke-warm if anything.
Apropos nothing to do with gold, Powell was clearly feeling the cold, though. Here was his best highlight from the latest Fed speech…
JUST IN: 🇺🇸 FED Chair Jerome Powell says "just close the f*cking door" after climate protestors interrupt his speech. pic.twitter.com/feDlOteRaz
— Watcher.Guru (@WatcherGuru) November 9, 2023
Canadian gold bug Frank Giustra is spouting the great gold safe-haven narrative by emphasising a hyperinflation contagion.
Here he is warning that a similar debasing of currencies that’s been occurring in Argentina and Turkey seems to be also taking hold of Japan… which, if it continues, could then have a knock-on effect on the all-important world’s biggest economy – that of the US of A.
Re: Turkish and Argentine currencies Giustra says: “what are they collapsing against? Gold… And we’re starting to see what’s happening in Japan… Japan’s gold is up 50% in yen terms just this year. If Japan starts to unravel because of their monetary policies, that’s when you’re going to start to see a contagion effect into the US.”
Well said @Frank_Giustra
Gold has appreciated by 50% against the Japanese yen this year, coinciding with the beginning of Japan's economic unravelling.
This is what a game of economic dominos looks like. pic.twitter.com/DyXIbQvI9L
— Gold Telegraph ⚡ (@GoldTelegraph_) November 9, 2023
With this in mind, plus several other salient points covered off by Stockhead‘s Cam Drummond in his latest piece on the precious metal, including stupendous spiralling US debt, is it any wonder that central banks the world over have been hedging into and buying up gold aggressively this year?
And on that note, the Chinese central bank, The People’s Bank of China, has just reported, by the way, that its gold reserves rose by 23 tonnes in October – the 12th consecutive month of buying…
The People's Bank of China has reported that its #gold reserves rose by 23 tonnes in October – the 12th consecutive month of buying. It's reported gold reserves now total 2,215 tonnes, 204 tonnes higher than at the start of the year. pic.twitter.com/zWhKLXWDrj
— Krishan Gopaul (@KrishanGopaul) November 7, 2023
Ripped from Christian’s Closing Bell just now…
Vivek Dhar at CBA says falling safe‑haven demand could pressure gold futures to ~$US1900/oz, after retaining a 7‑8% premium since the Israel‑Hamas war began.
Gold futures rose as high as ~$US2006/oz on 30 October, but have now eased to ~$US1964/oz.
“Safe‑haven demand helps explain the initial surge in gold futures since the war began, but there are credible concerns that the precious metal may see its post‑war premium continue to fade.
One key driver which is likely already playing out, Vivek says, is the impact of a contained Israel‑Hamas war.
“Where gold futures go after safe-haven demand subsides is likely in the hands of the US dollar. The inverse correlation between the US dollar and gold futures has weakened in the 12 months to October 2023 (‑0.73), but still remains strong enough to be relevant.”
The direction of US 10 year nominal yields is another key driver for gold futures, Vivek adds.
“While the inverse relationship between gold futures and the US 10 year nominal yields has broken down recently, higher long‑term US yields has typically meant weaker demand for gold.
“A sub‑$US1900/oz gold price therefore looks contingent on a higher‑for‑longer US interest rate environment – as this is likely to support both yields and the US dollar. Such an interest rate environment though would require more resilient US labour and inflation data in coming weeks.”
Here’s how ASX-listed precious metals stocks are performing:
Scroll or swipe to reveal table. Click headings to sort. Best viewed on a laptop.
The week’s biggest gains 🚀
TechGen Metals (ASX:TG1) +182%
North Stawell Minerals (ASX:NSM) : +107%
Metalicity (ASX:MCT) +67%
Which ASX goldies shined over the past seven days? In no particular preferential order, these did…
TechGen Metals (ASX:TG1), had a stonking Friday of the +182% variety. It dropped an update on its projects including stage three drilling approved for its John Bull Gold Project and pegmatite mapping to kick off at Ida Valley with historic data identifying lithium and caesiumin soils up to 144.5ppm Li (311ppm Li2O) along the Ida Fault.
TechGen’s MD Ashley Hood says exploration efforts are ongoing, ‘with a particular focus on multiple projects within our portfolio’ – vis a vis: John Bull, Ida Valley, Station Creek, and Harbutt Range.
At John Bull, all 17 drill holes have successfully intersected gold mineralisation exceeding 1g/t Au, Hood says.
“With approximately 900 meters of unexplored soil gold anomalies, we anticipate that Stage 3 drilling will target the most promising geological and geochemical features revealed through our mapping, geochemistry, and petrology studies.”
Stage three drilling approval has been green lit at John Bull – and two key areas to be targeted are the northern 10g/t Au in soil anomaly and the southern 4.77g/t Au in soil above monzonite anomaly.
Strickland Metals (ASX:STK) – With one hole down and four to go, Strickland Metals is committing RC and diamond drill rigs to its Marwari gold discovery, where it hit a spectacular 31m @ 5.6g/t Au. More here.
Golden State Mining (ASX:GSM) – GSM has been placing a fair amount of its recent focus on the highly prospective Yule project in the Pilbara where it’s hunting for Tier 1 gold and lithium not far from De Grey Mining’s (ASX:DEG) world class Hemi gold discovery. However, it’s been trending up this week on news today from its Paynes Find lithium project further to the south in the Murchison region of WA. More here.
Also, Peter Strachan’s ‘Gold’s Stage is Set‘ piece is a must read for Aussie gold bugs, in which he flags:
• De Grey Mining (ASX:DEG), which is working towards developing its 6Moz Hemi’s gold Ore Reserve in the Pilbara, with plans to process 10Mt of ore pa to produce 553 Koz pa of gold at an AISC of $1,229/oz.
• Challenger Gold (ASX:CEL), which has completed a detailed Scoping Study on a high-grade core at its Hualilan gold project in Argentina.
• Peregrine Gold (ASX:PGD), which has has been busy drilling at its Newman gold permits, located 25km to the west of Newman, WA.
• Spartan Resources (ASX:SPR), which recently outlined the “spectacular” Never-Never gold deposit, just 2km from its plant and adjacent to its Gilbey’s open pit, where a Resource of 3.8 Mt grading 5.85g/t Au for 721,200 ounces has been estimated, lifting group Resources to 1.96 Moz of gold in 38.5 Mt of mineralisation.
And read Cameron Drummond’s excellent article, too – Investors are fleeing currency for the safety of gold – which ASX small caps can benefit? – in which he highlights:
Note: while some of the stocks listed in this article – including STK, GSM, SPR, BTR, CEL, PGD and WWI – are Stockhead advertisers at the time of writing, none of them sponsored this article.