Gold and silver are surging once again as the price of gold approaches $2,000, but look at this…
Silver & Gold Breakouts
April 18 (King World News) – Graddhy out of Sweden: Using the yearly time frame plus closing prices, we can see that the neckline for the enormous cup & handle for Silver comes in very much lower than if we use lower time frames. Here the big breakout level is about 31-32, and not the 38 and 50 we get with the lower time frames.
Big Breakout For Silver Is $31-$32 Zone
The Gold 8 year cycle is the largest, established long cycle for Gold. Last 8 Year Cycle Low was 2016, next will be around 2024. It has followed my expected route for a very long time now.
Gold Solidly In Long Term Bullish Mode
My very big picture, long standing ratio chart showing precious metals miners vs Gold had a perfect blue backtest, and is now back at the black resistance line. Odds are good for a breakout this time. Expecting this ratio to make new highs in this bull market.
XAU vs Gold Breaking Out…Expect XAU
To Head To All-Time Highs vs
Gold During This Cycle
Peter Boockvar: I said it last month and will repeat it again that the monthly Treasury International Capital flow data is a really important data point to watch going forward. Even though it is dated when reported as I’m about to talk about February numbers, it will give us color on to what extent foreigners are buying our paper because we are about to lose the Fed and banks are already loaded up.
Gold Approaching $2,000
I sarcastically included an Uncle Sam phone number last week looking for buyers of Treasuries but losing the Fed is a serious buying hole that needs to be filled and we await data on how foreign owners of US Treasuries will react post the sanctioning of the Russian central bank. Did that event scare the Chinese who have about half their reserves in US dollar denominated securities? Or others using it as an excuse to reduce the dollar as a percentage of their reserves? Maybe to be replaced by gold which is approaching $2000 this morning?…
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In February, and this is mostly pre war so not a new world reflection post war but signs that it began to reflect it in the last week of the month, foreigners bought a net $75.3b and it’s the 4th month of good size buying. It is likely as good as it gets but we’ll of course only see for sure when the important March figures come out and we can really see the foreign response to all the sanctions. It was in 2011 and 2012 the last time foreigners were notable buyers of US Treasuries and have been net sellers since.
Japanese Yen Continues To Tumble
Now we also have to focus on the breakdown as Japan, the largest holder, was a net seller of $6b of notes/bonds and China (including Hong Kong and the 2nd largest) were net sellers of $8.8b. The weakness in the yen has made it even more expensive for Japanese buyers to hedge out their dollar risk when buying Treasuries. Europe contributed to almost half the net buying with purchases totaling $32.3b. It looks like the biggest buyers were hedge funds/insurance companies as the Cayman Islands saw net buying of $48.8b and I’d guess that they did that between February 24th and month end when the invasion began and the initial reaction was a drop in yields. That was likely quickly reversed in March.
I’ll mention the BoJ and the yen again because Governor Kuroda seems to be really feeling the heat of a weak yen. He told parliament today:
“The recent falls in the yen, which lost about 10 yen to the dollar in about a month, is quite sharp and could make it hard for companies to set business plans. In that sense, we need to take into account the negative effect of a weak yen.”
This is coming from a man who has made it his life’s work to weaken the yen for the sole purpose of raising the cost of living for the Japanese citizenry. Because Kuroda also said they will continue on with their easing, the yen is still lower to a fresh 20 year low and down for the 12th straight day.
Yen Hits Fresh 20-Year Low vs US Dollar
Tying this back to the TIC data and the JGB market, if both the Japanese continue to buy less or outright sell Treasuries because the weak yen and high cost of hedging will limit future purchases and/or the BoJ decides to widen the yield curve control range, it will have big implications for the US Treasury market and not in a good way. I still am bullish on Japanese stocks but one needs to hedge out this yen weakness which fortunately we’ve done.
Shifting gears and reflecting the tighter financial conditions (Thursday’s Goldman index closed just below the tightest since November 2020), just because an asset doesn’t trade on a public market doesn’t mean they are immune to their surroundings.
Goldman Sachs Financial Conditions
Index Is Tightening
In the weekend FT, they report:
“Forge Global, one of the largest venues for trading in private start ups, said the prices of companies on its platform had fallen 19.9% in February and March compared with the fourth quarter of last year.”
Stock Market Sentiment
With respect to sentiment, there are a lot of mixed signals as last week we saw a 30 yr low in Bulls in the weekly, but fickle, AAII survey but I saw over the weekend the Citi Panic/Euphoria index (created by the late, great Tobias Levkovich) which went back into Euphoria land.
Stock Market Investors Getting Euphoric…Again
We saw China over the weekend cut its reserve requirement ratio but as long as they keep this maniacal approach to omicron which is basically a cold (which I had a few weeks ago), they are spitting in the wind with these monetary tweaks. China also reported its Q1 GDP data and other March figures which magically were better than expected but in light of what has happened since, talk about old news.
Also of importance…
Top three reasons to own this remarkable gold and copper company!
- Red Top porphyry copper exploration play in the Superior Mining District of Arizona
- Five drill holes by Zacapa into the project this year, confirmed massive multi-kilometre alteration footprint, indicating a substantial hydrothermal system
- Presence of chalcopyrite and bornite copper mineralisation in advanced argillic and quartz-sericite-pyrite alteration sequence in drill holes, indicating the core of the porphyry system could be very well mineralized
- Favourable host rocks in several drill holes at depth, including diabase units, that are reactive host rocks at the Resolution deposit (1.8Bt at 1.53% Cu, 50Blbs Cu)
- Doubled the size of claim package in February through strategic staking, contiguous with Resolution Copper (Rio Tinto 55%, BHP 45% JV) and South32
- Completed MobileMT geophysics survey in March across entire expanded claim block to get visibility at depth and along strike and assist in vectoring in on the core of the porphyry system
- Starting sixth drill hole that incorporates all of the learnings from first five holes, new geophysics survey, and data from Freeport McMoRan – drilling the most informed and deepest hole on the project to date, targeting the next intact porphyry copper deposit like Resolution (50Blbs Cu)
Zacapa’s Red Top Surrounded By Freeport,
BHP, Rio, Asarco And Others
- South Bullfrog epithermal gold play in the Beatty District of Nevada
- IP geophysics survey and geochem sampling program complete and results returned from the lab showing anomalous gold and indicator minerals coincident with faults and structures that could host gold mineralization
- World class experts have conducted geophysics inversion and interpretation, ex-AngloGold Ashanti/Corvus Gold consultants have validated geochem and mapping results with boots on the ground
- AngloGold has completed its US$370m acquisition of Corvus Gold and will be in production in ~3 years at 300kozpa Au from a central hub and spoke heap leach, production facility <5km from South Bullfrog, 10Moz of gold in the Beatty District including ~5Moz added in the past 18 months
- +20 compelling drill targets identified within 500m of surface, diamond core drilling to commence this quarter – drilling compelling targets in a rapidly developing district where a supermajor is spending billions to build a new central processing facility that will be looking for feedstock, targeting the next oxide gold deposit like North Bullfrog (2.1 Moz Au), Mother Lode (1.7 Moz Au), or Silicon (3.4 Moz Au)
Zacapa’s Bullfrog Surrounded By AngloGold
Ashanti, Kinross And Others
- Zacapa’s vision and culture
- Our vision is to build a world class porphyry copper exploration team focused on projects in the southwest U.S. that have Tier 1 discovery potential at a time when the US urgently needs domestic supply of critical minerals and metals such as copper – strategically hiring top talent, involving best-in-class experts, service providers, and leveraging leading technology to maximize the potential for a significant discovery
Zacapa Resources, symbol ZACA in Canada and ZACAF in the US. Only 50 million shares outstanding and no warrants.
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