Gold's latest rally was merely teasing investors. Nevertheless, one reason to remain steadfast on the bullish side for gold is the powerful short-term factor that has driven this rally so far: the Fed’s sudden halt of its rate-hike campaign, argues Brien Lundin, editor of Gold Newsletter.
It didn’t take much, if anything, economically to prompt the Fed to stop. Rather, it was stock market volatility that did the trick. If this wasn’t evident before, it was made painfully obvious by Fed Chairman Jerome Powell in his Congressional testimony.
It seems inevitable that the Fed, now that it has stopped tightening, must return to easing at some point. If merely a halt in rate hikes has fueled a powerful rally in gold, another round of quantitative easing should send it hundreds of dollars higher.
That’s the short-term case for gold, and by short term I mean the next year or so. Longer term, the issue of our massive, rapidly-expanding debt load will prevent the Fed from ever allowing interest rates to normalize...until the day that bond vigilantes return to wrest control of rates away from the central bankers.
Many analysts out there are calling this event the great “dollar reset,” and I can’t argue with them. Where I differ is in timing: whether this reset will come with the next big financial crisis or whether we’ll need more rounds of boom-bust-QE before there’s a consensus that the dollar and other fiat currencies are worthless.
Regardless of the exact timing, we know that gold will not only be the primary beneficiary of these events, but also the essential safeguard of wealth during them.
Altius Minerals (Toronto: ALS) has made news on a number of fronts over the past several weeks. Altius published its 2018 fiscal year forecasts for royalty revenue in January, with the company’s combination of base metal, potash, coal and iron ore royalties providing the lion’s share of its estimated C$66.9 million in attributable revenue.
Comparisons to the previous year are a little tricky, as Altius transitioned to a calendar year reporting in 2018. In general, though, it continues to do a good job generating cash flow from its widespread royalty interests.
ALS’s share price remains well below its trading levels in April of last year, when trade war worries began to hamper base metal and general commodities plays. It’s not a stock to chase, but it’s one that you may want to consider buying if short-term weakness again takes its shares below the C$11.00 mark.
Great Bear Resources (Vancouver: GBR) flirted with the C$4.00 benchmark after a recent surge, oscillating around that number before dipping a bit in the past several days.
Over the long term, I expect it to not only firmly clear that C$4.00 (Canadian) mark, but to go substantially higher from there. Yes, we’re up more than six times from our entry point. And yes, I can’t argue with anyone taking some money off of the table. But I haven’t sold a share of my personal position.
I think the company is going to prove up much more than a million ounces, and is probably targeting at least two million ounces.Great Bear has settled back to a good buying level. As I’ve noted, I expect this stock to go significantly higher, even after its rich gains so far. It’s a buy.
Silvercorp Metals (SVM) provided the market with financial results from the third quarter of its 2019 fiscal year. The quarter’s end date was Dec. 31, 2018. The company posted sales of $42.4 million, a 5% decrease from the same quarter in its 2018 fiscal year.
Gross profit margin was 46%, compared to its Q3 in the prior year. Net income attributable to equity shareholders was $8.7 million compared to $12.7 million in the same quarter last year.
Silvercorp has followed the broader market higher in the past few weeks. I believe this is a sign of things to come as the silver market gains momentum. This company’s profitable silver production story makes it a near-ideal lever on rising prices for the metal. SVM is still a buy at current levels and a strong buy on any short-term weakness.
