The Fed’s first post-2008 rate hike in December 2015 marked the very bottom of the gold bear market. It’s been a halting ascent out of a rounding bottom since then, but there’s no doubt that the bear market ended almost exactly then, notes resources sector specialist Brien Lundin, editor of Gold Newsletter.
My view has been that, because everything’s been moving much more quickly this time around, gold might begin rallying on the first taper rather than the first rate hike. Counter-intuitively after the Fed announces tapering, the Dollar Index is flat while the 10-Year Treasury yield is plummeting. As I write, the 10-year yield has fallen from 1.582% to 1.465%.
I’ll let the pundits ponder the reasons why yields are falling as the Fed’s support for the market is waning, but many also view gold’s typical rebound on tightening news as being illogical. I think it’s all a part of how the markets no longer trade on fundamentals post 2008, and are purely driven, at least in the short term, by the shifting fancies of the algos and hot-money traders in futures.
Those same factors are what have kept the metals corralled as monetary and fiscal policies have fueled rampant inflation, and perhaps those traders will now get behind the metals and help them make up for lost time. Regardless, the end result — manipulation or not — will be much higher prices for gold and silver as the Fed’s impotence is revealed. So we’d better be ready.
In that regard, some of our portfolio companies have posted important news. For example, Integra Resources (ITRG) released some monster drill results yesterday from its Florida Mountain deposit in Idaho.
The highlight was Hole 115, which cut 92.66 meters of 3.15 g/t gold and 16.63 g/t silver (most of it in oxide mineralization), including:
- 68.88 g/t gold and 135.00 g/t silver (70.62 g/t GoldEq) over 1.53 meters
- 23.25 g/t gold and 70.04 g/t silver (24.15 g/t GoldEq) over 7.01 meters
- 67.16 g/t gold and 208.00 g/t silver (69.84 g/t GoldEq) over 1.53 meters
- 28.44 g/t gold and 40.14 g/t silver (28.96 g/t GoldEq) over 1.22 meters
The news release featured a number of other great drill results, but the bottom line is that drilling at Florida Mountain is continuing to not only hit long, bulk-tonnage-grade intersections of a higher grade than the average for the conceptualized open pit, but also consistent, very-high-grade intersections below that resource.
Company CEO George Salamis noted that “These high-grade intercepts provide further support in the evaluation of a potential high-grade, underground exploration program at Florida Mountain in the future.” (He also recorded an excellent video explaining the results that you can view here.)
Integra also reported that the pre-feasibility study (PFS) for the greater DeLamar project is on schedule to be completed in the fourth quarter of this year and, importantly, noted that the PFS will be based on significantly larger throughputs that the previous PEA.
“This larger scope is expected to result in a 50% or greater increase in the gold equivalent production profile over a longer time-frame relative to the 2019 PEA (preliminary economic assessment) which showed 124,000 oz AuEq per year over 10 years,” the company reported.
While Integra’s share price bounced a bit on the news, I think the market is still under-appreciating both the implications of these high-grade results and the impact of the upcoming PFS. In short, Integra is a buy.
