Here is a contrarian gold alert, gold now in backwardation, ominous sign for the US dollar, plus a bonus interview!
Gold Now In Backwardation
September 28 (King World News) – Garlic Moran, at Moran-Tice Capital Management: “I have open interest down 19,000 contracts Thursday & Friday. You can now buy Gold after Comex Options Expiration & Rollover below the 100DMA; with Gold $5 into backwardation in a bull market. The odds strongly favor a bottom over the short term.”
CONTRARIAN GOLD ALERT: Managed Money Exit Out Of Gold
Fred Hickey: Managed Money in gold COT report now shows a whopping 30K contract decline (-27%) to just 81.4K contracts. That level is 2/3rds lower than earlier this year. Managed money gold shorts highest since 1st half 2019. And the report did not include Thursday option-related gold bombing.”
“The US Is Next”
Albert Edwards, Former Global Strategist at Societe Generale: “The self-serving tosh published by the Fed reminds me of Bernanke commissioned Fed Research which demonstrated (surprise surprise) that the 2008 GFC crisis was not the Fed’s or Bernanke’s fault and they couldn’t have done anything different Embarrassing. The Japanification of eurozone is almost complete. The US is next.”
Gold & Silver Update
Ole Hansen, Head of Commodity Strategy at Saxo Bank: “Dollar strength and rising real yields, leading to technical selling below $1900/oz, helped drive a 21% reduction in the gold net long to 131k lots, near a 15 month low. Silver’s 11% sell-off drove a 9% reduction in the net long to 35.6k lots.”
Ominous Sign For US Dollar
King World News note: This is a very ominous sign for the US Dollar going forward and it is also very bullish for gold long-term (see chart below).
US Dollar’s Performance After Signal
(RED CIRCLES) Highlighted Below
Also of importance…
Silver One of The Strongest Asset Classes Globally
Chris Ritchie, SilverCrest Metals: Silver has been one of the strongest asset classes globally in the last few months. Silver had a $14 handle in March and it nearly doubled before the recent pullback. This was a very healthy pullback. Profits needed to be taken and this move needs to be consolidated in order to prepare for another leg higher. The same goes for our stock. We raised money in the spring at $7.50 Canadian and we spent a fair bit of time in the $13 – $14 range. Shareholders were allowed to trim positions and take profits. Any time you have that strong of a move, it takes time for people to right size their positions.
Massive Free Cash Flow
I’m very comfortable that our stock cleaned itself up fairly well before this last leg down in the market so hopefully we have a strong base to build from here with an audience that is looking at adding at these levels instead of trimming. As it relates to our peers, our potential cost structure is definitely worth mentioning. Our last economic study referenced an “all in sustaining cost” of under $5.00 / oz of Silver for the first 4 years of production. If we execute on that, we’d be comfortably in the lowest 10th percentile of producers which means that our margins and potential free cash flow are far more resilient than the higher cost producers. So the lower silver goes, we should look more and more attractive relative to our peers on a valuation basis.
We are just as happy about the dips as the spikes, Eric. Every time the stock rolls over, new buyers that were waiting for an opportunity to buy stock have stepped in aggressively. The same goes for the spikes. Long term shareholders need to trim sometimes and this allows them to continue to participate in a healthy way going forward. We are very happy with the quality of our share register and dips like we’re seeing now are what get me excited for new buyers of the stock.
Hard Assets Haven’t Been This Cheap In Over 100 Years
Hard assets and commodities haven’t been this cheap relative to the broader market in over 100 years. Take a look at the Goldman Sachs Commodity Index relative to the Dow or S&P over that time frame and you’ll see the deep value scenario that’s set up. I wouldn’t be surprised if Buffet was looking at charts like this when deciding to buy gold recently. But commodities are volatile and this sector is capitally intensive which adds another level or risk that needs to be highlighted. That said, our high grades allow for potentially very strong margins at very low metals prices. So you have an extremely cheap sector and a very resilient business model in SilverCrest. That’s a really nice dynamic when thinking about the ways in which we can continue to grow. We’ve added approximately $9 of value to the stock for every $1 that we’ve spent.
We Are Going To Double The Amount Of Drilling
Our next economic study will only include 20 of a known 43 veins on the property and does not include the deeper zones we are starting to drill nor does it include the new property that we just purchased. Depending on our future success rate with our drilling, we hope to double the amount of metres drilled since we started the company in late 2015 from now until the end of 2022 which is when we hope to be cash flowing. We know the property much better now and if we’re half as successful as we’ve been to date, I will be ecstatic.
Extremely Low Cost Expansion
We also have the potential to increase the size of our mill and production profile if and when we find more tonnes. We are designing our mill to allow for extremely low cost expansion. Additional tonnes and ounces can allow for optimized sequencing of our mine plan and hopefully additional throughput. We are also just getting to the size and liquidity where the larger asset managers can consider buying us and when they do, they need a lot of stock in order to move the needle. So there are lots of ways in which we can provide upside potential all while providing really strong downside protection.
We have 8 drill rigs turning and we are focused on 2 high impact targets. We have 5 rigs on Babi Vista now and if you recall, we recently had a hit there at over 73kg/t at 1.3m of true width. We will only have ~800m of a potential 2km strike length vein included in the upcoming feasibility study so we hope that’s low hanging high grade fruit. We also have 3 rigs on El Muerto which is our first time focusing on deeper targets. If successful we may be looking at a parallel zone below some or all of the 43 veins we have on the property. That’s enormous scale potential. We will also have our feasibility study out by the end of the year, hope to finalize our financing solution for construction and the team is already pushing ahead with site preparation work for construction. SilverCrest Metals, symbol SIL in Canada and SILV in the US. To hear Chris Ritchie discuss the remarkable opportunity for new investors in SilverCrest Metals CLICK HERE.
Alasdair Macleod – Big Money Aggressively Buying Gold Takedown
***ALSO JUST RELEASED: Alasdair Macleod – Big Money Aggressively Buying Gold Takedown, Creating Major Problem For Bullion Banks CLICK HERE.
***To listen to the incredibly powerful audio interview with Danielle DiMartino Booth that is a must listen for anyone who wants to understand the big picture as she covers everything from the need for investors to aggressively buy the current dip in gold prices to the stock market hitting the biggest bubble level in history and much more. To listen to this incredibly powerful interview click here or on the image below.
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