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Lol Suggins,
I have worked with ‘SAfer’s’ many times in the past. Not sure if I am allowed to say that now but I mean it affectionately and it was ‘appropriate’ at the time… Anyways…
Hard men, hard working, broad accents, strange sense of humour…. At least I think so as most of them were called ‘pardon’.
????????
Trek
Interesting analysis Trek.
I’m afraid I don’t understand macro economics but what I do like to do, in honour of our CEO and our heap leach operation, is to describe simple everyday tasks as ‘low cap-ex, low op-ex’ in a very strong South African accent. Try it next time you offer someone a cup of tea/coffee.
Many overlook comparing POG to domestic currency for investors.
Imo CB’s are chasing USD as it’s out performing gold compared to local currency.
EM’s debts is USD. If you have IOU’s you would prefer your foreign reserves to be in USD as opposed to gold.
Countries that have capacity do both, like BRIC’s but bias to USD. For many EM’s the pseudo currency is embedded as USD. I don’t see that changing anytime soon.
Gold buffs will tell ya that the Fed have printed themselves into oblivion, inflation has eroded fiat, gold standard, Basel 3 the traders death nail! At the end of the day we have heard that narrative for decades!
Meanwhile USD has gone from strength to strength!
Imo it’s not a case of one camp or another, it’s a case of using gold to underwrite USD. So as USD looks more vulnerable so will gold be more attractive.
Atm the market is just focusing on returns of USD v Gold it’s not that simple.
The narrative will change when the market sees a chink in USD’s attraction and that will imo be economic. So gold will be a hedge and perhaps BTC although I am not convinced but appreciate that is a view.
Gotta give it to Biden. Huge trillion $ Keynesian infrastructure spend starts next month after years in planning. Legislation to streamline commodity exploitation, smoother planning and permitting regs have just been passed.
It’s to kickstart the economy. All the right moves imo (don’t get me onto UK plc’s decades of missed opportunities!)
But that’s all spending. All borrowing. All necessary. All points to an epoch of weakness in USD.
Then for the macro purists factor in population demographics. 2050 the world goes negative, deaths overtake births. Some countries like China which have 100 people working to support 20 pensioners will see a reversal. 100 people will be in work but there will be 120 pensioners! Birth rates there are down 12% since one child and covid..
The emerging populous, India! Lovers of gold! conjecture lol, but gold investors 10-20yr view is what will matter!
Macro is the driver for gold and art.
“China’s baby bust is so dramatic, it’s accelerating a long-expected global population shift.
A new report from the United Nations’ Department of Economic and Social Affairs released Monday puts China and India neck-and-neck in the population rankings. The UN estimates that China currently has 1.426 billion people, while India has 1.412 billion.
But the UN predicts the two Asian countries will switch places next year—four years earlier than it previously predicted…”
https://fortune.com/2022/07/12/china-population-india-birth-rates-baby-bust-worlds-most-populous-country/
Usual caveats
Trek
Post of the week TM
@ItsYou & Trek I have with forethought and malice invested my GBPs into junior explorers and moved my investments towards junior producers with plenty of proven metal (priced in dollars) in the ground ... why? USD is the least 'dirty shirt' so in times of strife will strengthen versus GBP which is a nice hedge versus the GBP for my investments. If you look at POG performance over the last few YEARS it has performed well and in 2022 has actually held its value rather well in USD and even better in anything else especially if you live in Japan, Zimbabwe or Turkey whose fiat currencies have devalued to varying degrees.
Curiously most CBs are now nett purchasers of gold and silver despite discouraging their populations. The West is trying to devalue gold & silver to make their fiat currencies look better whilst the East is buying it up cheap as they know what is eventually coming!
Ray Dalio's "Principles for Dealing with the Changing World Order" is a must watch and clearly lays it out
https://www.youtube.com/watch?v=xguam0TKMw8
ATB APR
POG is only down is US$, It's up today in all other currencies.
It's £1480 in GBP currently +0.5%, £83 off all time high close. Although that day was the spike on 8th March, so if you forget a couple of days around then, it's only £40-50 off an all time high.
GCAT future profits and valuation is in GBP, so GBP POG is the only price I look at.
Just need to get through next 3 months in the range of .7 to .9 and I will be happy.
POG has gone from $400 an Oz to $1800 since 2004
Inflation doesn’t shift in one year it sticks and currently it will mean your cash will be worth 50% less by 2030! That’s a huge loss in spending power within a timeframe that many can appreciate.
It won’t be long before folk realise the value of producers or of course you could spend all your money now! Lol!
Think I will bag an ‘undervalued’ smallcap producer with huge rerate potential to get some inflation and gold leverage!
“ Gold prices weakened to a three-week low past $1,760 an ounce on Friday and were on track to end the week sharply lower, weighed down by the US Federal Reserve’s commitment to keep raising interest rates to bring down inflation. The US central bank's hawkish stance has pushed up the dollar to a one-month high against major rivals, making gold more expensive for buyers holding other currencies. In the latest Fed commentary, St. Louis Fed Bank President James Bullard said he is considering support for a third straight 75-basis point rate hike in September and said he is not ready to say the economy has seen the worst of the inflation surge. Meanwhile, Credit Suisse recently joined Goldman Sachs in slashing price targets for gold, citing pressure from rising real rates and the Fed’s resolve in bringing down inflation.”
https://tradingeconomics.com/commodity/gold
The delta between US inflation 8.5% and US 10yr treasuries, 2.99% , is still 5.5%. Putting rates up by another 75bps doesn’t change it that significantly. It just shows that the Fed intend to support the USD to make imports cheaper. But then when the payrolls stall, trade balances decline, wage costs rise and tax receipts diminish due to a slowdown then comes the oh sht moment as you can’t stimulate with rate cuts! That puts back in place the QE loop!
Don’t believe what the brokers tell ya. They have their own book to push and that will be physical and paper gold for as cheap as they can get it!
I have been pretty ambivalent on gold. The conspiracies have mostly come to pass and the USD has marched on. Whilst I don’t think the USD is in jeopardy I do think gold may just at last have its day again because of real inflation. This time it looks very different.
Usual caveats
Trek
I see POG & silver are being caned again today as DXY bounces up off Feb-22 strong up-channel which is putting pressure on commodity and miner prices in general. There has been a $50 or 2.8% drop in POG and a $1.8 or 8.7% drop in Silver over the last 6 trading days.
I can see POG support at $1,724/1,736 but if that does not hold it opens up support down at $1,680 which is not great but as GCAT has a very low AISC of $1,250 and more Heap Leach coming online which will drop AISC further than we can remain highly profitable once we also strongly raise output.
ATB APR