Gold Digger: Strong inflation could pump gold price to $US8,900/oz by the end of the decade, experts say

Over the past two months the gold price has turned a corner, up ~12.7% to a high of $US1898/oz.

That’s a four month high, erasing almost all of 2021’s losses. The share prices of local gold stocks have responded in kind.

Over the past month big producers Evolution Mining (ASX:EVN) +10%, Silver Lake Resources (ASX:SLR) +10%, Perseus Mining (ASX:PRU) +11%, and Gold Road Resources (ASX:GOR) +15% have all made solid gains.

This gold bull run is far from over, experts say.

“We have entered a new paradigm that will be dominated by deeply negative real interest rates, high inflation, and low nominal rates — an extremely supportive environment for gold,” Diego Parrilla, who runs the Quadriga Igneo fund told Bloomberg.

Incrementum’s ‘In Gold We Trust’ report goes a step (or ten) further, predicting that should inflation rise significantly in the coming years, “we believe that five-digit gold prices are conceivable at the end of the decade”.

A ~$US5,000/oz gold price, they say.

“The conservative base scenario, (i.e.) without any extraordinary inflationary tendencies, results in a price target of USD 4,800 for gold,” the report says.

“If the decade was plagued by stronger inflation, a price of USD 8,900 could be expected at the end of the decade.”

Winners & Losers

Here’s how ASX-listed gold & silver stocks are performing:

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Small Cap Standouts

SIREN GOLD (ASX:SNG) +52%

Siren is exploring the rich Reefton gold district on the South Island of New Zealand, an area which has already delivered 2Moz across 84 historical mines.

This week, drilling has pulled up high grades like 3.1m @ 10.9 g/t gold at the top of the ‘Loftus McKay’ shoot, part of the Alexander River project.

More results are incoming.

The company has generated a combined exploration target for Alexander River of 250koz-500koz of gold at 5 to 6 g/t.

AMANI GOLD (ASX:ANL) +50%

The Klaus Eckhof-managed tiddler owns the mammoth 4.4moz Giro gold project in the DRC.

It sits in the same rocks as Randgold Resources’ 17 million-ounce, 600,000 oz per annum Kibali group of deposits, 35km away.

An update to the 4.21moz Kebigda deposit Feasibility Study at Giro commenced in December.

LEFROY EXPLORATION (ASX:LEX) +38%

Kalgoorlie explorer Lefroy has gained 480% since the ‘Burns’ copper-gold discovery was first made in February.

New drilling has now extended the mineralised porphyry zone to at least 100m below an impressive earlier strike of 8m at 7.63g/t of gold and 0.56 per cent copper from 134m.

It is the first news flow from an accelerated 14-hole, 3000m diamond drill program.

ENCOUNTER RESOURCES (ASX:ENR) +37%

Last week, Encounter locked in a lucrative farm-in deal over the ‘Elliot’ copper project in the NT with major miner BHP (ASX:BHP).

This week, the company announced a drilling program would kick off in June at the wholly owned ‘Lamil’ and ‘East Thompson’ gold-copper projects in the Paterson Province of WA.

“Assays from the broad spaced RC drill program in February 2021 indicate that we are approaching the core of the copper-gold system at ‘Dune’ [Lamil project],” Encounter managing director Will Robinson says.

“With copper-gold mineralisation strengthening towards the end of a number of RC holes we are eager to test in the downhole extents.

“The program will also seek to extend the high grade 45 Reef identified at East Thomson’s Dome located just 5km from Telfer.”