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Hi,
Does anyone have a view (maybe goldgnome?) on the implications of this on bullionvault if any of note?
"With gold prices falling almost $100 per ounce this month as longer-term US interest rates have jumped by half-a-percentage point, the market has had no sight of speculator or commercial-trader positioning for the last 4 weeks as Comex futures and options data from US regulator the CFTC continue to be delayed following a "cyber-related incident" at a third-party provider.""
I get the interest rate bit, just not the gold bit.
See the link for the entire bit for more context if needed:
"https://www.bullionvault.co.uk/gold-news/gold-etf-022120231"
Steve
We have been losing visibility on the extent of long gold contracts closed and the extent of the short contract increases at 27 times leverage. The short contracts can face margin calls when the volume position is high and gold moves 4% up. Those playing long contracts will wait to see if the short contract volume is at particular ratios to the long volume. It helps give them an edge as to when a new rally starts or a bottoming process is forming on gold. Those who went short could see he long volume buying was reducing when gold was at $1960 odd per ounce.
I am curious how a war in Ukraine can be fought with western central bankers continuing to hike interest rates. After pulling out of Afghanistan the optics would not look good for USA if they did the same with Ukraine. Inflation is going up anyway and high rates just create a much deeper stagflation.
Steve
The oscillations in the gold price, and interest rates can be just noise or can be signal depending on your investment timelines (to perhaps state the obvious).
LONG Time Lines....Gold discoveries are monotonically down in number, down in grade, down in evry way, and there is no way gold will be found at a “sustainable” rate in the future. The new discoveries of size are most likely to be very low grade, and relatively deep, and as such will need a high gold price before they are ever mined. So mine supply is going to be limited in the future, which leaves demand for gold. My guess is demand is going to increase. It has been an asset in human history, it is entrenched in the vernacular, and entrenched in the human psyche. A long standing emotional asset, that has carried far more significant value than the Ponzi schemes of the fiat paper machines.
Interest rates were unsustainably low for an unsustainable time, and now the "engineers" look like they are going to make them unsustainably high for an unsustainable time, and so on it will go. Thde bt loading will see interest rates plummet in the near term, or businesses will wobble.
SHORT time lines: Interest rates up, Gold may go down in fiat pricing, except for the contrarians who have a longer time line who will see it as a (great) buying opportunity and create a buffer to limit the gold price contraction (if there is any). The hot money looks like it has run out of Venture Capitalists (and the new darlings of fintech -low moat high bravado businesses), and is concerned about what WILL BE an economic slowdown, unless there is a big move on developing the undeveloped countries to try and sensibly counter the spread of terrorism (the other way is knives, bombs, wars -big and small and I think everyone is sufficiently unimpressed with the outcomes of these)?
Interesting to watch the quality bitcoin types (again the hot money has gone) as there is real opportunities in the space of quality providers.
But in short I am a long term gold bug. Have been for a long term. The flatulence in the market are my buying opportunities, and I have bught quite a lot. I am a long term CEY share holder of significance. Loved the original story of CEY. The silver spoon child did not do well, and his buddy a very mediocre performance. But it proved to be not what you know, but who! Anyhow, I think CEY is out of the woods, and in great hands.
Sorry for the length of discussion, lots missed ut
The gnome
So Gnome, in the longer term gild should rise, but because miners are doing worse with far higher costs so better buy gold than the miners, unless like CEY with a long life mine that should become increasingly profitable at least until 2040 or 50 in your scenario, as other miners find life much more expensive ( just look at the likes of scrabbling Hoc)
Thanks goldgnome and Tornadotony- very useful.
I'm still on inflation "top and drop" so i don't see stagflation but a drop soon as the FED will ensure this - but I also see data reflecting this and making its possible without .5 hikes- i hope I'm right!
Sotolo,
As above- with inflation dropping AISC will reduce a lot (it's well high at the mo) so an increased gold price will create a double positive whammy, along with the other positives in the CEY Pipeline.
Again, here's hoping, a strategy is only good when it's right but it's better thanks flipping a coin(I think!)!
Hi Sotolo
You're close.
Mining like any business you have to play a margin +/- volume business. Build brand. So this is what I watch, and CEY has the reserves, the resources and the exploration hectares, and is a 10 year plus comfort position, with pipeline of growth. Mngt has done a good job of building brand
If you go to miners who have small resources, low margins, ..the end is in the volatility of the market and their ability to build a cash reserve or investor buffer. Muical chairs for ambitous Mine Mngrs and future CEO's a cash cgrab and acreer jump/ The short term volatility will on odds, bury them. Lows odds for investors, more pain than gain.
regards
the Gnome
Steve I think it is mining inflation rather than the general level, that Gnome is talking about. with gold getting harder and harder to find it will become rapidly increasingly expensive to get out - expect for us who already have the gold and mostly have costs that increase or decrease with inflation/deflation, unless we start searching for far more expensive gold to get out
True if less high grade gold is found not if not.
AISC is deffo higher due to general inflation which will abate- and some costs will actually deflate
AISC is a very flawed metric that can easily be manipulated and does not reflect the true cost of mining.
It is simplistic to believe that gold mines will be mothballed when they cannot produce at positive cash flow. There are a myriad of gold producers that have to go back to the market continuously for funding with gullible investors prepared to do.
- The AISC cost does not cover ALL cash outlays required to keep mining.
An important component is hidden by classifying these as “growth”.
Centamin stands out as one of the few companies that consistently generates positive cash flow and able to pay dividends.
Alas it is one that impacts the SP though and one that the markets use.
Every time the AISC goes up in the RNS, with all else being equal, the SP goes and down and vice-versa.