We would love to hear your thoughts about our site and services, please take our survey here.
Merger and acquisition fever returned to the local sharemarket on Monday as Newcrest Mining’s board said it plans to accept Newmont Mining’s $26.2 billion takeover bid, with junior gold miner Genesis Mining also sweetening its bid for St Barbara’s Gwalia mine in Western Australia. Lets just say it is a tough mining and processing for profit gig at Newcrest and I am sure they have done a great deal for shareholders. But of course the bet is on the gold price longer term .... ?
The gold price fetched US$2018 an ounce at the closing bell as broker Macquarie said it expects the precious metal to top a record high of $US2075 this year, as investors, including central banks, buy the safe-haven asset as a hedge against macroeconomic and political uncertainty.
“We’ve got a pretty hot gold price, more recently it’s been trading inversely with the US dollar, so as that fell, and gold in US dollar terms is more attractive,” said Mr McMillan.
“Those local miners have faced inflation headwinds in terms of labour inflation and capital costs into their businesses, so for some the higher gold price has actually hidden some of those operational issues.”
Well, well?
Falling bond yields, fear over the US debt ceiling and an end to the US Federal Reserve’s interest rate tightening cycle have created a “near enough perfect backdrop” for the gold price to forge a record high, according to analysts at Macquarie.
Gold’s melt-up in 2023, which saw the price jump around 10 per cent, was also stoked by the US regional banking crisis that prompted Macquarie to argue the case for the safe-haven asset to test $US2075 an ounce. That was reached at the peak of the pandemic in August 2020 when central banks printed money to fund emergency spending programs.
It does look like the Central Banks will continue to print money, for any cause that is needed ... business as usual !?
Stocks in Oz? Macquarie’s preferred stock picks among the local gold miners are Northern Star Resources and Regis Resources thanks to the duo’s organic growth opportunities, which offer potential to lift total production.
Organic growth, good grief, whats that all about? It means some one is doing exploration AND making discoveries, THAT BECOME COMMERCIAL... long long time between drinks, and that is why MandA is a recurrent theme if not necessity to fuel growth...but its not neceassirly growth of SP or shareholders ROI
best
the Gnome (in passing)
So if the shareholders were given dividends, and there was no contractor to take on the work (Egypt is not flush with contractors...for good reasons, like having to employ 8 egyptian staff for exvery expat and so on...), what would you have Horgan do? and how would that wash out in terms of reurns to shareholders, short and long term? Just curious
regards
The Gnome
Thanks Dasut
My understanding on Doropo, is that the Metallurgy is fairly stright forward, the drill sampling is good, and the Geologists are happy withthe Geological understanding of the geometry of the mineralisation (I dont think this is rocket science), but it can cause concern for the geostats fraternity, who wallow in numbers, and the higher density the more relaxed they get, but this takes time, and money..so I hope these guys are sidelined a bit.
The area and zones of mineralisation are a logistics issue, but not one that has not been solved numerous times before, but you have ot get it right, best do this upfront! The reverse of this is there is a lot of gold over a large area, and this means there is a very reasonable chance we are dealing with a significantly larger mineral system than is on their books right now.
This is what I would be thinking about.
best
the Gnome
There is a lot to like about Charlie Munger, and he has seen a lot ....
Inflation and aggressive central bank interest rate rises are the top concern of many global investors, but the 98-year-old is not overly concerned.
“I’m always aware of it, but it doesn’t stop me from operating,” Munger says.
“I’m 98½ years of age, and I’ve seen a lot of inflation. I intend to live through inflation. I’ve lived through a lot of it already in my long life. It doesn’t discourage.”
Munger says inflation is “always with us in an episodic way”.
“That’s what modernity causes. So, eventually, I assume every currency in the world will go down to nothing. That’s my basic cynical view.”
The Reserve Bank of Australia has raised interest rates to 3.85 per cent, The Reserve Bank of Australia has raised interest rates to 3.85 per cent, stunning economists and markets, which were predicting almost no chance of an increase just one month after the central bank hit pause.
The decision to raise the cash rate by 0.25 percentage points takes the cumulative increase in rates since last May to 375 basis points, making it the most rapid tightening cycle in a generation !!!
The outcome of Tuesday’s board meeting was a shock to economists and money markets, which were pricing almost no chance of a move given the RBA’s recent rhetoric and evidence that households are cutting back on spending.
Twenty-one of the 30 economists surveyed by Bloomberg had forecast the cash rate to be left on hold.
But RBA governor Philip Lowe said on Tuesday inflation was still too high.
The lunatics are well in charge of the asylum
good luck to us all
the gnome
"In a Sun Tzu 2.0 environment, it is no wonder the Russia-China strategic partnership exhibits no intention of interrupting the enemy when he is so busy defeating himself."
One govt report on the bank failures ... interesting read
https://www.gao.gov/assets/820/819616.pdf
Yes, I think this is the tip of a very predictable iceberg. Three banks in the U.S. (Silicon Valley Bank, Signature Bank and Silvergate) have collapsed since early March, a few more to go is the hot rumours coming out of the US
News wires are reporting the US Federal Deposit Insurance Corporation (FDIC) is preparing to place First Republic Bank under receivership.
In simple terms, San Francisco-based First Republic Bank is facing collapse.
Its shares crashed 43 per cent by the close of trade in Friday New York trade.
There are global ructions in banking.
With over $US200 billion ($302.34 billion) worth of assets and roughly 7,000 employees, its financial distress is taken very seriously by the authorities.
If it winds up, it will be the third bank collapse in the US this year...more to come
Recapping the SVB causes if failure ...
the Federal Reserve’s anti-inflation obsession causing it to raise interest rates too high and too fast;
the inherent fragility of banking, which for centuries has periodically erupted in crises;
inadequate regulation of this fragile system, which often leads to high profits that accrue to banks and their wealthy owners;
the corruption and self-dealing that often result from banks’ insufficient supervision; and
the lack of public alternatives for financial institutions and services that could perform many of the key functions of banking and finance with less risk and without the private financiers taking their cut.
https://truthout.org/articles/three-banks-have-now-collapsed-a-progressive-economist-explains-why/
Regulating banks is not that hard. The politics of it is the hard stuff ...
https://www.fdic.gov/resources/resolutions/bank-failures/failed-bank-list/
More to come, ho hum, business as usual, and incidentally when will the Fed Reserve become accountable?
The Gnome
Reserve Bank needs to be held accountable...revolutionary? or evolutionary...
The Reserve Bank holds Australians in fear of a “dagger in the heart” if they were to openly speak negatively… about the RBA, according to independent economist Clifford Bennett. “Isn’t it nice that we can finally speak openly about our central bank, which has been relatively free of critique !
If the RBA cannot be held accountable, its independence will eventually prove politically unsustainable.
Establish a panel of fishmongers and they will tell you fishmongers deserve to be on top. Establish a panel of economists and they will conclude economists should run the world. Trouble is that none of them have much expereince in the world, they instead build theories of how the world should run, and the assumptions are ...interesting?
That prediction may seem simplistic; but the review of the Reserve Bank does nothing to disprove it. On the contrary, rarely have so few recommended creating jobs for so many – of their colleagues.
A new committee largely composed of economists will set monetary policy. Economists will also dominate a new expert advisory panel. So as to service those economists, yet more economists will be added to the RBA’s already massive staff. And a new program will fund university research in monetary economics, spreading some joy among those who don’t get the plum jobs.
Amazingly for a profession that prides itself on being evidence-driven, all this is proposed in a report that is essentially data-free. There is, in particular, nothing in the report to show that countries where monetary policy is set by a specialist committee outperform those where decisions are taken by a generalist board (as has been the case at the RBA). Nor is that omission surprising: particularly for the UK and New Zealand, the data suggests no such thing.
But the puzzle runs even deeper. One might have expected a report that mentions diversity nearly 100 times to prefer delegating responsibility to a more – rather than less – diverse body, which would muster a wider range of experience. And perhaps the panel didn’t notice that relying so heavily on one type of expertise could entrench the “group think” it rightly excoriates.
Some philology might have helped: when the noun “expert” entered common usage in the 1860s, the Germans promptly accompanied their term for an expert (“der fachman”) with the delightful neologism “fachidiot” – a person whose professional narrowness blots out common sense.
Well, at least the panel has taken its recommendation that the RBA concern itself not just with inflation but also unemployment to heart...
THEY JUST HAVE NO CAPACITY TO LEARN FROM THEIR MISTAKES
good luck to us all
the gnome
What strong gold says about the weak $US
Too confident in the indomitable dollar, the US saw sanctions as a cost-free way to fight Russia without risking troops. But it is paying the price in lost currency allegiances, with gold left as the main safe haven.
Today commentators overwhelmingly agree that a weakening US dollar cannot possibly lose its status as the world’s dominant currency because there is “no alternative” on the visible horizon. Perhaps, but don’t tell that to the many countries racing to find an alternative, and such complacency will only accelerate their search.
The prime example right now is gold, up 20 per cent in six months. Surging demand is not led by the usual suspects – investors large and small, seeking a hedge against inflation and low real interest rates.
The heavy gold buyers are central banks...
Instead, the heavy buyers are central banks, which are sharply reducing their dollar holdings and seeking a safe alternative. Central banks are buying more tons of gold now than at any time since data begins in 1950 and currently account for a record 33 per cent of monthly global demand for gold.
This buying boom has helped push the price of gold to near-record levels and more than 50 per cent higher than what models based on real interest rates would suggest. Clearly, something new is driving gold prices.
Look closer at the central bank buyers, and nine of the top 10 are in the developing world, including Russia, India and China. Not coincidentally, these three countries are in talks with Brazil and South Africa about creating a new currency to challenge the dollar.
Their immediate goal: to trade with one another directly, in their own coin. “Every night I ask myself why all countries have to base their trade on the dollar,” Brazilian President Luiz Inácio Lula da Silva said recently on a visit to China, arguing that an alternative would help “balance world geopolitics”.
Thus, the oldest and most traditional of assets, gold, is now a vehicle of central bank revolt against the dollar. Often in the past both the dollar and gold have been seen as havens, but now gold is seen as much safer. During the short banking crisis in March, gold kept rising while the dollar drifted down. The difference in the movement of the two has never been so large.
And why are emerging nations rebelling now, when global trade has been based on the dollar since the end of World War II? Because the US and its allies have increasingly turned to financial sanctions as a weapon.
Astonishingly, 30 per cent of all countries now face sanctions from the US, the EU, Japan and the UK – up from 10 per cent in the early 90s. Until recently, most of the targets were small.
Go gold, its about time the US$ was recognised for what it is ...a tool of US policy and hegemony
the gnome
Yes, and moral rectitude is amiss int he Middle East as well, which i the vhannel for the gold. The artisinal gold from West Africa goes through Dubai as well by the bucket loads.
Its the poor citizens who are fleeced, as there is no tax paid on the gold smuggled out. Nor the diamonds, And of coure in Zimbabwe we have the appalling mess made of farming as well by the political class. They could not do any worse if they tried
regards
the gnome
It begs the question as to what would the POG be if this sort of behaviour was illegal (which it is meant to be?)
https://www.youtube.com/watch?v=evWEuVR1XIs
quite sad
the gnome
We could do something exciting and invent a new demographic unit Russina...LOL
Sad to see Barry Humphreys pass along. Loved the satire, and now we need it more than ever (or do we have it more than ever?!). Could you imagine the send up of the US Presidential race (s)...or bunny hopping. Just so much material to hand, where is the new talent!!!
https://www.youtube.com/watch?v=mOduzg0hn-k
https://www.youtube.com/watch?v=lSdt1B_4Giw
cheers
the gnome
For those that follow the plight of the US politics and the US$, there are some gigantic revelations being made in the US at the highest level. We all know about the lst President being up for concealing payouts to a former Play Bunny. We know Foxtel is paying up for numerous biassed reportings of the last presidential elections.
But the the most significant revelation is just dawning...An all-time media blackout is in effect. We’re experiencing real-time Sovietization.
Now to the current President, and some interesting events...
It transpires that the infamous incident before the 2020 election in which 50 former intelligence officials signed an open letter declared a New York Post expose about Hunter Biden's laptop to have the “classic earmarks of a Russian information operation” was, allegedly at least, instigated at the behest of the Joe Biden campaign. This at least is the allegation in a letter to Secretary of State Anthony Blinken released by Jim Jordan, chair of the House Judiciary Committee, and Subcommittee on the Weaponization of Government.
In that letter, which is not easy to find, you’ll see three snippets of dialogue from questioning of Morell, who appears to have organized the open letter. In the first snippet, he explains that the idea originated with a call from Blinken, then of the Biden campaign, and that absent that call, Morell wouldn’t have done what he did:
In the second snippet Morell bluntly explains that he did it because “I wanted him to win,” him being Joe Biden:
By any marker, this is an enormous news story. If we go by the usual measuring stick of American scandal, the Watergate story, this potentially meets or exceed that, on almost every level. Does it reach into the current White House? Check. Was it a craven attempt to subvert the electoral process? Check again. Did a presidential candidate engineer a massive public deception? Yes, resoundingly. Did it involve intelligence agencies? Yes, and these weren’t amateurs like Nixon’s plumbers. These were 50 of the most powerful people in the intelligence world — including five former heads or acting heads of the Agency in Morell, John Brennan, Leon Panetta, Michael Hayden, and John McLughlin — conspiring to meddle in domestic politics on a grand scale. ...
What can one say? The political processes are about as robust as their financial processes.
https://www.racket.news/p/news-blackout-in-effect?utm_source=profile&utm_medium=reader2
https://www.youtube.com/watch?v=nSXs_IkyGf4
Off topic perhaps, but there is a social license that is deteriating very rapidly in the US
enjoy the rest of the weekend,
the gnome
Dasut
I would think there must have been some robust investigation as to the commercial viability of a significant cutback, to look at the commercial and technical case for trying to increase the open pit production to meet forward projections. No back of the envelope thumb suck. Given the impact of the exercise, not to mention cost and time frame, I would have thought it good business practise to share this with the owners (shareholders) of the company. The counter argument could have been that the figures might have been of such concern to analysts and investors that they put the SP in a falling spiral situation...?
I think you touched on an issue for me in that the previous mine plan did not have eough optionality built into it, to cover for such a situation let alone the wall failure. Having options to cover such events is fundamental to a successful mine plan and successful mine project. So I come back to the previous Mine Management and their amateurism.
A Tier one orebody can forgive a lot of Mine Mangement mediocrity, and it look slike Sukari has allowed this.
I am always very circumspect when I see a Geologist running a Mining Operations, .. it nearly always end in tears, as they have different experiences, education and mindsets, some unsuited for runing a comlpex mining operation. The last CEO was a Geo, and all I can say is thank goodness he has done...
The endless looking back is not really getting us too far ahead, and I suggest people look at what the future holds rather getting bogged the past
best
the gnome
Prof
I would not discount gold going to $2100 or $2200
The belief in curency is a belief in government, and that belief has all but disappeared.
good luck to us all
The gnome
Bank of America lifts gold forecast by 10pc to $US2200 an ounce
As the peak for interest rates comes into view, Bank of America is forecasting that the price of gold will rise to $US2200 an ounce in the fourth quarter. It previously had gold at $US2000 in the December quarter.
Bank of America previously said it expected gold to rally this year, “driven by a view that central banks have no silver bullet in bringing inflation under control (e.g. energy prices or supply chain disruptions cannot be directly influenced by monetary authorities).
“A re-acceleration of China’s economy should push aluminium and copper up into year-end,” BofA said. Bloomberg
“This remains our core view and we see scope for gold to move higher once the end of the hiking cycle is reached.”
BofA said gold’s move on the banking crisis proved fleeting because Credit Suisse’s collapse came after near two decades of struggle and “the problems with regional US banks were heavily influenced by a lack of oversight”.
“As such, while we acknowledge the recent issues, they are not indicative of a wider banking crisis, in our view.”
the gnome
I think one has to be realistic about the situation in Burkina Faso. There is a lot of stuff going on in the country, that tends to negatively impact government processing (notriously slow in the best of times). Ditto for CdIvoire
So not sure your conclusion is correct, only so fast you can push the govt in those countries...
Doropo PFS is to be completed 2023 and there is a lot of exploration to be done...2023 could be a good year
regards
the gnome