With the action in precious metals continuing to surprise traders, today the man who correctly predicted silver would hit $30 just three weeks ago now says silver may surge to a new all-time high by September 30, plus look at his target for gold.
New Price Targets Issued For Gold & Silver
August 10 (King World News) – James Turk: It’s time to update my gold and silver price targets, Eric. It’s hard to believe but it was only three weeks ago on KWN that I raised my target for Sep delivery silver from $22 to “the $30 area.” Silver reached $29.91 on Friday.
I expect that prices over $30 can be seen any day now given the speed at which silver is traveling, and it is traveling at high speed for two really good reasons…
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the world click here or on the image below
First, silver is undervalued. What other commodity as important and useful as silver is trading 45% below the high price it reached when the dollar was inflating wildly 40 years ago in 1980?
Second, the flow of wealth moving out of the US dollar is picking up momentum. The reason is clear. The outlook for the dollar is poor because of artificially low interest rates and the Fed’s easy-money policies that are funding massive US government deficits.
But there is one big question in everyone’s mind at the moment, Eric. When will there be a price correction in silver?
Silver Bull Continues To Stampede
Because silver’s price advance has been spectacular, the first correction was easy to miss. It was July 28th, the day silver covered $3.65 of ground within a few hours. The correction then continued for a couple of more days, but there was no further price drop. Prices corrected by just moving sideways in a trading range, which does happen in bull markets. Sometimes a sideways correction is enough to take the steam out of an overbought market.
Silver is now in another correction. After September silver touched $29.91 on Friday, it dropped nearly $2.50. The slide was a combination of profit taking and shaking out over-leveraged traders, but the preliminary estimate shows open interest increased. That suggests the sellers were unloading into the open arms of new buyers looking to climb aboard this speeding locomotive. That is a bullish development in my view.
Of course markets can do anything, and we always need to be prepared for events that may appear to be a low probability. So silver could retrace back to lower levels. But maybe this current correction will be like the last one with prices simply trading in a range for a few days. Then again, maybe the correction is over. After all, silver jumped 75¢ in trading after Friday’s Comex close.
Gold’s Long Overdue Bull Market
Gold also climbed after Friday’s Comex close, jumping $20. My price target for gold has been “a new record high,” which is still a good target. We should be expecting new record highs to recur in the weeks and months ahead. The precious metals are in a long overdue major bull market.
As my colleague Alasdair Macleod told KWN, the London gold market is “running on vapor,” meaning that physical gold is in short supply. Conditions at present have the potential for a short squeeze in gold, much like what is happening in silver.
New Price Target For Gold
So my price target for gold is much, much higher. Near term, I’m focusing on 20% higher, so $2,400 before year end – and very possibly by September 30th if the scramble for physical gold continues.
New Price Target For Silver
As for silver, my target is based on the gold/silver ratio, which has dropped from 126 on March 18th to 73 on Friday, about a 40% decline. If it happened once, it can happen again – and I think another plunge in the ratio is very likely. So another 40% decline would put the gold/silver ratio at 44. That would also target a new record high of $55 for silver based on my $2,400 gold target.
For those of you that are accumulating physical gold and silver, do not try to get cute and time the markets. Instead, simply continue to dollar cost average by purchasing gold and silver at the same time each month or each quarter. This will help you by removing your emotions as these markets become even more volatile and continue to hit new all-time highs in their secular bull markets.
Also of importance…
John Lewins: “Mining is a game of numbers, and let me give you the numbers for the stage 3 expansion:
Zero. That is the amount of external funding that is required to build stage 3.
$489. That is the all-in sustaining cost per ounce of gold production.
318,000. That’s the average annual gold equivalent production at the run rate.
1,000,000. That’s the tonnes we treat per year in stage 3.
$125 million. That’s our initial pre-production expansion cap.
$1.5 billion. That is the after tax NPV at a $1,500 gold price.
Those are the numbers for stage 3. And that’s what mining is about.”
Eric King: “John, those numbers are staggering. Let me give you some numbers.
$2,050 gold.
$29.50 silver.
We’ve talked cash flows in the past. What are we looking at going forward with the dramatic upside surge and the prices that we are seeing in the gold and silver markets?”
A Staggering $450 Million Of Free Cash Flow Each Year
John Lewins: “Well, if you take stage 3, and we are producing over 300,000 ounces of gold a year, and our all-in sustaining cost is below $500, at $1,500 gold we are making $1,000 an ounce. So that’s $300 million in cash flow. With the price of gold at $2,000, that becomes $450 million of free cash flow each year.”
Eric King: “What are you going to do with nearly a half a billion dollars in free cash flow?”
10 Drill Rigs On Site By The End Of The Year
John Lewins: “We currently have 7 drill rigs operating but we are going to expand that to 10 drill rigs by the end of the year. We will have more drilling results out later this month and we have so many exciting targets to drill. And to go back to that first number, zero, that’s the amount of external funding that will be required to build stage 3 because we are generating so much cash flow that we don’t need equity and we don’t need debt. We are actually making cash while we are building stage 3 and expanding to what is effectively a tier-one mine.” K92 Mining, symbol KNT in Canada and KNTNF in the US.
***To listen to the powerful audio interview where Alasdair Macleod discusses the possible collapse of the LBMA, trapped bullion bank gold shorts and much more click here or on the image below.
Prepare For Market Crash, Economic Depression, Skyrocketing Gold & Silver
***ALSO JUST RELEASED: Greyerz – Prepare For Crisis In World Stock Markets, Global Economic Depression And Despite Volatility, Skyrocketing Gold & Silver Prices CLICK HERE.
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