Gold Digger: Precious metal bounces on flight to safety narrative, but CPI data curbs enthusiasm

• War. What is it good for? Absolutely nothing. At the risk of sounding tone deaf about fresh world horrors, however, gold has risen this week
• That said, the latest US CPI data is doing its level best to suppress
• ASX gold stock of the week: Zuleika Gold (ZAG)

In this week of war, hatred, sickening bloodshed and political posturing in places far flung from the Lucky Country, gold appears to have risen on the back of its age-old, safe-haven, store-of-value narrative.

Hey, it’s gold’s schtick and it’s schticking to it, come what may.

The precious metal supposedly climbs in times of high inflation and geopolitical uncertainty. And we’ve had no shortage of both those things over the past couple of years.

That said, it’s not necessarily as simple as that for gold investors. The Fed’s combat of said high inflation with “higher for longer” interest rates in a highly volatile year has seen the US dollar strengthen as a counterpoint to any yellow-metal-based exuberance.

With that in mind, gold’s return so far in 2023 is a fairly lacklustre 2.45%.

The Israel v Hamas conflict, however, has certainly brought the precious metal into focus once again for investors as one of the most obvious options for flight to financial safety.

Registering its highest levels in two weeks, spot gold is at US$1,876 an ounce at the time of writing. That’s about $2,967 in Aussie dollars. It’s certainly a good deal higher than when the conflict first broke out last weekend, when the price was languishing around US$1,811 oz.

CPI curbs enthusiasm; Paul Tudor Jones not deterred

The latest US Consumer Price Index data came in overnight (AEDT) and balmy, if slightly hot, rising by 0.4% in September (versus a forecasted expectations of 0.3%).

This could be seen as supporting the Fed’s “higher for longer” rhetoric and mission to bring down inflation to its 2% target. We’ll see what the Fedspeak brings later this month, though. It’s been leaning a little more dovish of late.

Indeed, rising gold and silver prices stalled out as a result, with gold falling 0.3% overnight while the US dollar and Treasury yields boosted.

Short-term noise aside, gold chart watcher “Graddhy”, though, is very much sticking to the golden inflation-hedge narrative…

#gold has a huge breakout vs US CPI.

This is a very bullish chart for precious metals.

It now has a beauty of a backtest, and is getting ready.

And so should you.

Get educated. Get prepared. Get ready.#inflation #trading #investing #strategy #commodities #uscpi #ppi #finance pic.twitter.com/IeRHXuec7b

— Graddhy – Commodities TA+Cycles (@graddhybpc) October 12, 2023

And here’s someone with a better-known investing pedigree – legendary US hedge fund bloke Paul Tudor Jones – who noted to CNBC this week that he “would love gold and Bitcoin together” as a hedge against geopolitical uncertainty.

"This might be the most threatening and challenging geopolitical environment that I've ever seen," says @ptj_official. "That is also happening at the same time the United States is at its weakest fiscal position since World War 2. It's a really difficult time." pic.twitter.com/SfSwMiEfFK

— Squawk Box (@SquawkCNBC) October 10, 2023

“I think they [gold and Bitcoin] probably take on a larger percentage of your portfolio than historically they would because we’re going to go through both a challenging political time here in the United States, and we’re going to go through – we’ve obviously got a geopolitical situation,” said Tudor Jones, adding:

“I think, on a relative basis, look what’s happened to gold. Clearly, it’s suppressed,” Jones said. “So, you know that more likely than not, we’re going to go into a recession. There’s some pretty clear-cut recession trades.

“The easiest are: the yield curve gets really steep, term premium goes into the backends of debt markets, into 30-year and 10-year and 7-year paper.

“The stock market typically, right before a recession, declines about 12%. That’s probably going to happen at some point, from some level. And you look at the big shorts in gold, more likely than not in a recession, the market’s typically really long assets like Bitcoin and gold.”

Tudor Jones concluded: “[There is] probably $40 billion worth of buying that has to come into gold at some point between now and if that recession actually occurs. So, yes, I like Bitcoin and I like gold right here.”

Meanwhile… another prominent gold investor, Frank Giustra, isn’t down with Nobel-Prize-winning economist Paul Krugman‘s idea that “the war on inflation is over”.

This quote will age as well as September 1929 quote-After prices peaked, economist Irving Fisher proclaimed, “stock prices have reached 'what looks like a permanently high plateau. '” @GoldTelegraph_ https://t.co/LC19OEilDr

— Frank Giustra (@Frank_Giustra) October 12, 2023

He's right. The top 0.1% has won at very little cost. https://t.co/w07kpGNKjJ pic.twitter.com/6XbHcRU1gM

— Sven Henrich (@NorthmanTrader) October 12, 2023

World Gold Council sees chop not drop

Before we look at which goldies have been performing on the ASX, and which haven’t, a quick word from out spons… wait, no they’re not… the World Gold Council.

This week, it provided the following outlook…

• Bond yields continue to rage higher, as central banks, led by the Fed, are defiantly resisting a pivot in the near future, and higher supply chases reluctant demand
• At the same time underlying economic conditions remain buoyant so a soft landing is still the consensus outcome
• The cocktail of economic resilience and rising yields is likely to bring continued turbulence to gold
• Yet, in our view, gold is more likely to experience choppiness than material weakness as support from a number of factors remains, including a poor risk reward for equities, rising recession risk over the next 6-12 months, inflation volatility and central bank buying
• Opportunity in gold from a short squeeze will continue to present itself from COMEX short positions at levels not seen since March 2023 and persistent ETF outflows.

On another note, and speaking of chopping… jeez, did you see this?

The iconic Paddy Hannan statue on Hannan street in Kalgoorlie WA has had its head removed overnight. @ABCaustralia pic.twitter.com/lfHTM18aXd

— Robert Koenig-Luck (@koenig_luck) October 11, 2023

According to various reports, a 38-year-old man has now been charged with lopping off the head of the famed Paddy Hannan statue in Kalgoorlie.

Hannan was a gold pioneer in the region, striking it big in 1893, which kicked off WA’s biggest-ever gold rush, which in turn led to the founding of Kalgoorlie.

Winners & Losers

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.

Stocks missing from this list? Email [email protected] and/or [email protected]

And the biggest of winners this week?

The golden star stamp goes to…

Zuleika Gold (ASX:ZAG): +82%

When the world zigs (and boy has it zigged this week, see further above), Mark Creasy ZAGs – lately into Zuleika Gold.

The small goldie was the standout performer in precious metals this week, up 82% over the past seven days on news that it has entered into a subscription agreement with Yandal Investments, for the raising of $3 million.

And that’s a company owned and controlled by legendary West Australian prospector and investor Mark Creasy.

Zuleika noted that the subscription price came in at a 28% premium to its prior closing price. Nice work if you can get it.

Proceeds from the private placement will be funnelled straight into the company’s ongoing exploration and development programs across multiple targets at its four Kalgoorlie projects – Zuleika, Credo, Menzies and Goongarrie.

It’s not the first time ZAG has seen a Creasy pump. Here’s a jump back in time for you, to January 2022…

Resources Top 5: Tiny goldie gets $3m thumbs-up from Mark Creasy, shares explodehttps://t.co/LalOlNk2ee #ASX $ZAG @AutecoMinerals @MTHResources @rarex_asx @KaiserReef pic.twitter.com/OI3vPco2Uc

— Stockhead (@StockheadAU) January 18, 2022

Meanwhile, Creasy has been particularly busy lately. His majority owned CZR is eyeing the iron throne. Per a report from Stockhead resources expert Josh Chiat:

“The famous Perth prospector owns more than 50% of CZR Resources (ASX:CZR), owner of the Robe Mesa deposit adjacent to Rio Tinto’s (ASX:RIO) Robe Valley mines, which include the Robe River JV from where over 1.7 BILLION TONNES have been shipped over the past 51 years.”

Read here for more on that story. The CZR share price, by the way, is also well up today with a 20% gain at the time of writing.

This is not to say anything of Creasy’s massive stakes in IGO (ASX:IGO), Galileo Mining (ASX:GAL) and Azure Minerals (ASX:AZS).

ZAG share price