In the midst of the global market panic, here is a look at the just announced emergency actions plus a look at gold and silver.
Slide On Gold
March 19 (King World News) – Ole Hansen, Head of Commodity Strategy at Saxo Bank: Slide on gold. Last time US 10-year real yields hit 0.60% gold was trading $130 lower. A sign of strength despite current weakness (see below).
Gold Showing Strength, Despite Rush
To Cash & Bond Upheaval
Emergency Actions, Plus Gold & Silver
Peter Boockvar: Central banks are again announcing more steps to fill liquidity holes, reduce rates, etc… The Fed last night created The Money Market Mutual Fund Liquidity Facility that would:
“enhance the liquidity and smooth functioning of money markets, support the flow of credit to hard working Americans, and help stabilize the broader financial system.”
It is essentially back stopping the Prime money market funds that have seen liquidations…
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The ECB said they are back with a 750 billion euro bond buying program and sovereign bond yields are down sharply in response, particularly Italy. The Italian 10 yr yield is down 71 bps to 1.73% after the spike over the past week. The Greek 10 yr yield is down a whopping 167 bps as the ECB can now buy their paper. They will also be buying corporate bonds. The euro is down 1% vs the dollar in response.
The Swiss National Bank with a benchmark rate at an already deeply negative -.75% kept that rate and actually eased the burden on banks to pay it by exempting more deposits. They are also threatening FX intervention to stem any further rise in the Swiss Franc.
The BoJ and Bank of Korea also came in to buy bonds, the BoJ bought more ETF’s (a record one day amount) and the RBA cut rates by another 25 bps to .25% and has entered the world of QE for the 1st time.
Indonesia cut rates by 25 bps to 4.5%, Taiwan cut too by 25 bps to 1.125% and the Philippines cut by 50 bps to 3.25%.
I Remain Positive On Gold & Silver
With everything going on and all the steps being taken by central banks in cutting rates and printing money, I still remain positive on the need to own gold and silver notwithstanding its recent poor performance caught up in the liquidation of everything.
The only March number of note overseas was the German IFO which fell to 87.7 from 96 with expectations down by 11.2 pts and the current assessment lower by 5.2 pts. The IFO said “Companies’ expectations in particular have darkened as never before. Assessments of the current situation have also worsened considerably. The German economy is speeding into recession.”
Also of importance…
Eric King: “John, people look around at the carnage in the mining sector and ask themselves, ‘What should I be buying?’ And your company has the most powerful fundamentals in terms of massive growth in production, high grade ounces, and dramatically expanding cash flow of any gold producer in the world.”
Massive Growth In Production And Cash Flow
John Lewins, CEO: “First and foremost you mentioned production growth. We produced 47,000 ounces of gold in 2018, and 82,000 ounces in 2019, both of which beat guidance. The guidance for this year is 110,000-120,000 ounces of production. And we are conservatively targeting 140,000 of production for 2021. But, Eric, K92 is also one of the lowest cost producers in the world in terms of cash costs and all-in sustaining costs of sub-$700 an ounce. So we have huge margins with the gold price today near $1,500.
A Staggering $100 Million Of Cash Flow
And even more exciting is the fact that all of this growth is being funded with existing cash flow. Meaning, there will be no dilution, and our cash on hand will expand from $20 million to $40-50 million by the end of the year, even with our aggressive expansion plans. And, importantly, in 2021 we expect our cash flow to be a staggering $100 million, even at today’s gold price.
High Grade Production Will Increase To 250,000-300,000 Ounces
And, Eric, we currently have a resource of 2.8 million ounces of gold, but we are about to release a new resource estimate that includes 18 months of drilling. That will dramatically expand our resource to roughly the 5 million ounce level. Every time we drill it, we expand it. Our hit rate from our drilling has been 100%, and we currently have 5 drill rigs continuing to expand that resource. It’s open at depth. It’s 1,100 meters at depth so far, and we haven’t drilled a hole at depth that hasn’t hit the system. And we haven’t drilled a hole to the south that hasn’t hit the system. So it’s open to the south and at depth. That is why we are planning to ramp up production to 250,000-300,000 ounces a year in the future. This will more than double our already ramped up production guidance for 2020.
One Of The Greatest Growth Stories In The World
We have already bought the equipment and committed the capital for that growth. And, again, we are using our existing cash flow for all of this future growth, while dramatically expanding our cash balance. So yes, Eric, K92 is one of the greatest and most exciting growth stories in the mining world, and this pullback in the mining space has created a tremendous opportunity for investors. K92, symbol KNT in Canada and KNTNF in the US.
***Also Released: HISTORY IS BEING MADE: Gold/Oil Ratio Shatters All-Time Record Once Again! CLICK HERE.
Global Market Panic
To listen to legendary billionaire Pierre Lassonde discuss what he is doing with his own money right now, how the global panic will unfold as well where he believes the gold price is headed from here CLICK HERE OR ON THE IMAGE BELOW.
Everyone Needs To Listen To This Interview
To listen to one of the most important interviews of 2020 with Robert Arnott discussing the Coronavirus pandemic, wild trading in stocks, bonds, and global markets, as well as where he is investing over half of his liquid net worth right now CLICK HERE OR ON THE IMAGE BELOW.
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