Gold rockets past $US2,000/oz mark to record highs, where to next?

Gold prices have blown past the $US2,000 ($2,793.27) an ounce mark for the first time to hit record highs after the US government closed in on an agreement for more stimulus to help its economy and news of an explosion in Beirut.

Spot gold hit a high of $US2,025.85 an ounce yesterday before moderating to the current price of $US2,021.65 an ounce, while September gold futures closed at $US2,023.2 an ounce.

State Street Global Markets head of North America macro strategy Lee Ferrdge says that markets have lost confidence that the US Congress will approve enough stimulus to provide adequate benefits.

“Gold is outperforming, Treasuries are outperforming. It’s all about the debasement of the dollar,” he told Reuters.

Blue Line Futures chief market strategist Phil Streible told Kitco.com that gold tends to shoot for round numbers and $US2,200 could be the next target for gold.

Having already swung broken past the $US2,000 mark earlier than the year-end target forecast by a poll of analysts by Stockhead, where is gold headed now?

Maybe that $US20,000 an ounce prediction made by Franco Nevada chairman Pierre Lassonde might not be as far fetched as we thought. Maybe.

Gold acquisitions and project developments

With gold at record prices, now seem like a good time to pick up gold projects, a sentiment shared by Trek Metals (ASX:TKM), which has exercised an option to complete the acquisition of two projects consisting of one exploration licence and one exploration licence application in WA’s Pilbara region.

The 154sqkm Pincunah gold and copper project has returned results of 10m at 5.9 grams per tonne (g/t) gold from surface and 7m at 6.2g/t gold from surface from historical drilling at the Carlindi and Carlindi North prospects.

Many intersections require follow-up and occur along the regionally important Carlindi Shear, which is highly prospective for 6km of strike within the licence.

Wide intersections at the historical Valley of Gossans nickel prospect also require follow-up as they are hosted in sulphide-altered felsic porphyry intrusions, similar to the host rocks at De Grey Mining’s (ASX:DEG) Hemi discovery.

Trek’s other project, Jimblebar, covers 111sqkm about 50km east of Newman and covers a 2km strike of the old Jimblebar gold field.

Meanwhile, Calidus Resources (ASX:CAI) has started early construction work at its Warrawoona project in the Pilbara after it was awarded the necessary environmental permits.

Construction of the access road and 240-person accommodation village will commence early next month, and pave the way for main project construction to begin early in 2021.

In June, the company updated the pre-feasibility study for the project that highlighted the ability to produce about 85,000 ounces of gold per annum at an all-in sustaining cost of $1,251 an ounce.

Warrawoona is expected to generate post-tax cashflow of $468m and average earnings before interest, taxes, depreciation, and amortisation of $97m per annum.

Post-tax net present value and internal rate of return, both of which are measures of profitability, have been estimated at $303m and 77 per cent respectively. Additionally, payback is expected within 13 months.

A definitive feasibility study is on track for completion in the current quarter.

TKM and CAI share price chart

Gold exploration hits shallow high-grade mineralisation

Zenith Minerals’ (ASX:ZNC) recent aircore drilling program at its Split Rocks project near Southern Cross, WA, has returned near-surface high-grade gold hits.

Notable intersections include 16m at 6.3g/t gold at the Dulcie North target, 8m at 4.1g/t gold at the Dulcie Laterite pit and 4m at 4.5g/t gold at Dulcie Far North.

Multiple targets remain open in several directions and require follow-up drill testing to define the limits of gold mineralisation.

The company plans to carry out a substantial follow-up aircore drill program later this month.