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In September 2019 the SP maxed out at 129p with gold at around $1530/oz Now gold is bouncing around between 1850 and 1950 $/oz the SP is struggling to hold £1.
Comparison makes a share price fall of at least 22% with the gold price up as of today by approximately 22%. Clearly moved in opposite directions, will that continue? I can't see how that is sustainable unless company performance flounders.
So it looks to me that the SP has nowhere near tracked the gold price up even on a 1 for 1 basis ( bearing in mind miners are supposed to be a leveraged play on gold).
Point is, just to get to fair value the SP needs to rise significantly - this observation holds good for almost all of the small scale gold mining sector. If the BoD deliver in 2021 we should make some good money here in the medium to long term.
last 5 years have returned a profit and paid a dividend ........ they defy gravity. Too many people watching Gold futures and trying to equate it here, but it never works and give it a week and they will bounce up. They will make a profit and pay a dividend same old story.
This is a waiting game, the only downside IMO is the opportunity cost of missing out on the resurgence of bombed out stocks in other sector as the euphoria surrounding a vaccine feeds through. With a balanced portfolio all bases are covered
Gold under pressure again today because of sentiment. positive confidence statistics from the US today being the driver. But rest assured there will be many more flips in sentiment as the US prints money and lets not lose site of the fact that TSG have been selling gold all year at a great price so as we near the end of month eleven a good year end result is already baked in.
The UK is going to print Billions and the US will print Trillions, it's just a matter of how many 2, 3 or 4 trillion and when.
Strangely, it could all depend upon a US election. It's not Biden v Trump though. Whomever controls the Senate controls the purse strings as they need to approve the President's/Congresses spending proposals.
The Republicans will block Democrat spending on ideological principles and to simply frustrate Biden's efforts - it's a mess with all the hatred created by Trump.
I'm sure many of you know but for those that don't follow US politics the impact cannot be overstated as sentiment for the next couple of years could depend upon it (2 seats up for grabs to control the Senate to be decided in January).
A huge support package together with the likelihood of loose financial policy from Democrats
will set gold up for another good year in 2021 - $US weakness is obviously very bullish.
Whatever happens there will be huge spending, it's either going to be positive or fantastic news for gold.
When I see predictions of $10k to $15k per ounce gold I tend to glaze over as we are so far away from these figures. The outlook is positive but I'm not sure if it will ever reach those heights in my lifetime.
Positives include
+ US Fed Delays Rate Hike to 2024, a year later than forecast just 2 months ago.
+ Monetary and fiscal policy remain accommodative and expansionary.
+ US markets among others are in bubble territory, pushing new highs in the middle of the worst economic crises in living memory.
+ Post-inauguration stimulus package of approx $2.5 trillion expected to flow into the markets early 2021.
If we assume the vaccine will counter the Covid impact on global economic growth in the second half of next year, the similarities to be drawn from the 2007-08 crisis following the US election are striking. During this period of increased borrowing (stimulus) which coincided with the US election, rates were kept low, markets rebounded and the gold price tripled.
To get a sense of how significant the economic stimulus has been compare the responses to this crisis with that of the 2008-09 financial crisis (page 3). $10 trillion announced in the first two months of the crisis up to end of April, which is three times more than the response to the 2008–09 financial crisis.
https://www.mckinsey.com/~/media/McKinsey/Industries/Public%20Sector/Our%20Insights/The%2010%20trillion%20dollar%20rescue%20How%20governments%20can%20deliver%20impact/The-10-trillion-dollar-rescue-How-governments-can-deliver-impact-vF.pdf