Gold Miners Aren’t Concerned Over the Pullback in Gold, Nor Am I

April 2, 2022

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3:00 pm

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35 comments

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Economics

Newmont Mining Corporation (NEM) courtesy of StockCharts.Com

Barrick Gold Corp

GDX Gold Miners ETF

Gold

Futures vs Miners

Gold futures hit a new record high of $2078 on March 8. Since then it has fallen to $1923, a decline of $155.
Nemont, GDX, and Barrick all shrugged off the pullback in gold.
Newmont (NEM) hit a new record high on Friday of $82.78, up 4.19%. And that is on a day in which the price of gold decline over $30.
GDX rallied 2.97%, and Barrick rallied 1.67% on Friday, also shrugging off a $30 decline in the price of gold.

Strong Bull Markets

These actions are typical of strong bull markets.

The miners aren’t concerned about consolidation in the price of gold or Fed tightening. And neither am I.

For discussion of Fed tightening and yield curve flattening please see Breathtaking Yield Curve Spread Collapse Including 2-10 and 3-30 Inversions

This post originated at MishTalk.Com.

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honestcreditguy

3 years ago

Gold is being bought like no tomorrow in the one exchange not with NY or London fixers….

Next up, flash mobs in grocery stores….its coming…the drought in west is going to surprise many and Gov. Newhitler is 10x behind in California…..

Doug78

3 years ago

Releasing some oil from the Strategic Reserve put a bit of a damper on oil prices and if the US wanted to screw Russia some more we could sell some or our gold stocks as well. Maybe just rumors of that possibility could keep gold prices within a “reasonable” range. Gold like oil and gas is a resource that Russia could sell so it is on the short list of items whose prices are to be manipulated.

TheCaptain

3 years ago

Reply to Doug78

The US is stupid, but not stupid enough to sell any of the real money that we still have, which is gold. When the great reset hits for the Global Debt Ponzi, those who have the gold will be making the rules.

Doug78

3 years ago

Reply to TheCaptain

Gold is not money. It is just a commodity. You use money to buy it and you get money when you sell it. That is the relationship.

JRM

3 years ago

Reply to Doug78

Not True, if somebody offered me gold/silver in lue of Cash for guns/ammo, ect ect. I would do a trade!!!!

Doug78

3 years ago

Reply to JRM

How would you know if it was real gold/silver? You wouldn’t unless you had the equipment to assay it. Also if you are selling guns for gold then you are probably not dealing with a “normal” individual because nobody else would do that because it is not rational behavior. You would be asking yourself what is wrong here and why is he offering gold and not dollars? You could accept the transaction but only at a significant discount of the gold to its…………….price in dollars.

Maximus_Minimus

3 years ago

Reply to TheCaptain

Gold is an non-perishable medium of exchange which happens to have an intrinsic value: it has a beutiful shine.

Oil/natural gas etc. are essential commodities, and technology produced knowledge based essential products. Both are necessary.

To solve the problem of exchanging products, their price is expressed in terms of fungible unique product, gold.

To solve the problem of transporting gold safely, the equivalent amount of paper is issued, which itself has no intrinsic value.

Until the link between gold and fiat was broken, and fiat floated freely, it’s value determined only in comparison to other fiat.

SyTuck

3 years ago

Say mish, with the US killing the usd reserve status with the seizure of Russia’s money, how about a fantasy article or two of returning to gold as the international currency.

How would such a world order look? Would crypto play a role? Can cash be converted to coins (al a the canadian Tooney style)? How do gold miners fit in the picture anyways?

Just some indulgent lazy saturday day dreaming 😉

Felix_Mish

3 years ago

Graphs scaled and framed to fit the minimum and maximum values of the data are dangerously misleading.

Two stocks: One goes from 1 to 100 from then and now. The other goes from 10000 to 10001 from then to now. Their graphs look the same.

Clip on the bottom to mislead.

Fill a graph from min to max to mislead.

Writing for a friend who learned the hard way. 🙂

Nuddernoitall

3 years ago

Yes, Newmont (NEM) did hit a high yesterday and I sold all my NEM holdings. Of course its stock price could go higher, and maybe reaching the mesosphere. Frankly, I’m quite happy with any gain in the stratospheric level, but I will admit I’ve sold a lot of securities too that barely made the troposphere. (From an accounting perspective, my cost basis is at 597′ above sea level.)

Jmurr

3 years ago

I fully expect gold to go to $2,500 once the Fed blinks and restarts QE.

Esclaro

3 years ago

Gold? You gotta be kidding me. That’s for senile old men – all the young bucks want crypto now.

Maximus_Minimus

3 years ago

Reply to Esclaro

It will take a major depression to separate men from the boys.

TheCaptain

3 years ago

Reply to Esclaro

Yeah, it’s different this time. LOL. They say there is a sucker born every day but you just proved that it happened twice on your birthday.

FromBrussels

3 years ago

Have a look at Polymetal, one of the world’s largest gold and silver producers, ‘thanks’ to your hegemonic, utterly disgusting , terrorists supporting, warmonging nation it now quotes at a mere fraction of its real value…. If only I could get my hands on it to buy some (more) , impossible of course ‘thanks’ to your …(see above) ….nation ! Yet I don t worry , the US of A has already signed its death certificate, the odds are of course that between you and Russia you ll destroy the fn planet , if not, your world dominating rogue policeman and its intrinsically worthless reserve currency are FINISHED !

Doug78

3 years ago

Reply to FromBrussels

Isn’t the Russian government now buying all of Polymetal’s output with rubles?

Scooot

3 years ago

Reply to Doug78

They operate in Kazakhstan too. It looks like they’re considering splitting the operations of the company. Haven’t seen any evidence of the Russian Government buying their output.

TexasTim65

3 years ago

Mish, did something change with the site or the hosting provider in the last day?

Your site it totally blocked until I disable AdBlockPlus. Then it displays immediately. As soon as I turn AdBlockPlus back on, it hangs again.

Mish

3 years ago

Reply to TexasTim65

Not that I know of.

Just got up – was out last night with the Milky Way

Will pass on

Anyone else have issues?

Felix_Mish

3 years ago

Reply to Mish

Yes. I’ve had AdBlock+ turned off for this site for some time now. Just checked it turned on and get a blank page. Firefox.

Ah. The EasyList filter-list toggle in ABP’s settings turns MishTalk content on and off. All the others can be turned on.

TexasTim65

3 years ago

Reply to Felix_Mish

Thanks for that. As soon as I forced an update to the EasyList filter the site worked again

Felix_Mish

3 years ago

Reply to TexasTim65

Cool! Nice find. Update fixed the site for me, too.

Maximus_Minimus

3 years ago

Not sure why the pullback in gold, it’s not like interest rates are going to hit 3% anytime soon.

Did gold keep up with housing market inflation?

shamrock

3 years ago

Reply to Maximus_Minimus

Gold just gave back the gains from the Russian invasion as the threat of it escalating beyond Ukraine has waned, it’s really as simple as that.

goldguy

3 years ago

Another nice right up Mish.

Still long and strong with Wesdome gold and another I just started to build a position in, Gold Mountain Mining Corp. These are the only two producers I deem worthy of my money. I do have another explorer, Goldshore Resources Inc, Will do very well in the distant future IMO.

Dean_70

3 years ago

Interesting take on linking rubles to gold: https://www.bullionstar.com/blogs/ronan-manly/russian-ruble-relaunched-linked-to-gold-and-commodities-rt-com-q-and-a/

Scooot

3 years ago

Reply to Dean_70

I must admit I’m struggling to follow the logic of this.

Russia has announced it will buy Gold at 5000 rubles per gram, much lower than the current price of 5300 Rubles per gram. The inverse of this is they will sell Rubles against gold at 5000 Rubles per gram if the Ruble strengthens against Gold. In other words if the Ruble strengthens against Gold they can print Rubles if necessary to prevent it rising too much or to support the Gold price in Rubles. 5300 to 5000 is 5.67%.

The current Ruble/USD exchange rate is about 85, and the Gold price is roughly USD62 per gram. So if the Ruble strengthened to USD80.18, the Ruble Gold Price would fall to just below 5000 prompting Russia to sell Rubles for Gold.

All they’re doing as far as I can see is putting a ceiling on the value of the Ruble, presumably to prevent their exports getting too expensive in foreign currency terms.

Maybe I’m missing something here?

Mish

3 years ago

Reply to Scooot

Scoot, It’s all meaningless nonsense

An agreement to buy gold at under the market price is meaningless.

It does not put a floor on the price of gold as some suggested nor does it put a ceiling. Perhaps it’s some sort of threat to back the ruble with gold, but that will not happen either.

Scooot

3 years ago

Reply to Mish

It would put a floor to the price of the Ruble Gold price wouldn’t it, because they could print as many rubles as they like to buy the Gold? and therefore a ceiling to the value of the Ruble as expressed in Gold?

StukiMoi

3 years ago

Reply to Scooot

Immediate suspicion, is that it’s just another “see what sticks” attempt to lower perceived risks third parties have of accepting, and possibly being stuck with, Rubles.

But…: Will people have confidence the CBoR will defend the peg? That they can continue to convert their Rubles into Gold a Ru5000/gram, even if the implied “peg” should come under stress? And/or, that Russia will honor “non-significant” parties’ Rubles with the currently implied Ruble/Gold/Oil “pegs’ ” worth of Russian oil, if depleting their Gold reserves ends up being a step too far? As of right now, the euro-gas-trade contracts makes everything temporarily hunky dory. But do people really trust the Kremlin to be any more reliable than Nixon was, if/when their promises requires some sacrifices to honor?

If China is a key architect, co-“conspirator”, pusher and willing defender of some variation of this kind of pricing oil in Gold; and has decided it is now willing go to the mat for it; it’s big. Real big. As in “cut Americans’ ability to buy oil, hence near anything else, in half overnight; resulting in, among other things, turning the US into a huge exporter of oil to, among others, China” big.

Eventually the Chinese will do that. And when they do, it will hit Americans just as hard as it did Argentinians, when similarly their ability to purchase imports were cut with “no” (the average Argie is no more economically astute and literate than his northern compatriots..) warning. It’s untenable for China long term, to have to work like dogs, for something someone else gets to just print up entirely cost free. Doubly so when that someone else, then turns around to literally use the privileged position resulting from it, explicitly to your detriment. But since quite a share of the “anything else” which Americans currently enjoy subsidized access to, is made in China, it’s very far from painfree in the short term.

Doug78

3 years ago

Reply to StukiMoi

Why would anyone want to tie the price of oil, a commodity, to gold which is another commodity? Both of them have wide fluctuations in supply and demand and consequently prices. These movements would create a self-reinforcing feedback loop. No one wants that much instability.

StukiMoi

3 years ago

Reply to Doug78

For what it effectively the only reason anyone with unlimited privileged access to print money, ever tentatively flirts with Gld: To shore up credibility for paper pieces noone would otherwise trust.

Even if the CBoR intends to be unusually sound and good stewards of the Ruble, people still won’t trust them. Convertibility to Gold, helps with that. Ditto convertibility to oil. The latter which is easier for Russia to honor indefinitely. At least from their end: They may well be willing to convert Rubles into deliveries of Russian oil at a pegged price, putting the onus on the government of the other side, to allow the shipment to go through.

China has a similar credibility problem. It’s not tempting to be stuck with a huge pile on Yuan long term, if what you buy, and the salaries and taxes/fees you pay, must be paid in either Dollars, or in currencies which are explicitly managed to effectively be pegged to The Dollar. And currently, particularly in natural resource areas, that’s the situation China faces: Oil (and other resources) industry producers, have their entire cost structures built on Dollars. Allowing those closest to the Dollar printers, the privilege of simply printing themselves privileged access to those resources. Depriving others of equal access to them. But, to change that, accepting, and holding, enormous amounts of Yuans must become considered loess risky than it currently is. Which is, again, where a temporary, until de-dollarization is further along, Gold tie could serve a role,

TheCaptain

3 years ago

Reply to Scooot

“The inverse of this is they will sell Rubles against gold at 5000 Rubles per gram”

Putin only promised to buy gold at less than market value. Where did he ever say he would sell it at less than market value?

Doug78

3 years ago

Reply to TheCaptain

Putin is the sole buyer of the company’s gold so he sets the price. Monopsony is the principle characteristic of a communist economy. Could he be trying to bring it back?

Scooot

3 years ago

Reply to TheCaptain

He didn’t, you’ve misunderstood me. If he’s buying Gold at a rate of 5000 rubles per gram he’s selling 5000 rubles per gram of gold. It’s the same thing.

Gold Miners Aren’t Concerned Over the Pullback in Gold, Nor Am I

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