The Seeds Have Been Planted (And Continue To Be Planted) For The Next Big Run In Gold Stocks
There’s no better cure for low prices than low prices. The great benefit of the collapse in Gold prices in 2013 is that it forced producers (at least most of them) to start to become much more lean in terms of their cost structures. Producers, big and small, have started to make hard decisions in terms of costs, projects, and rationalizing their their overall operations. Exploration budgets among both producers and juniors have also been cut sharply. In addition, government policies across much of the globe are making it more difficult (sometimes impossible) for mining companies to carry out exploration or put Gold (or other) deposits into production, thanks to the ignorance of many politicians and the impact of radical and vocal environmentalists (technology has made it easier for groups opposing mining projects to organize and disseminate information, even in remote areas around the globe). Ultimately, all of these factors are going to create a supply problem – think about it, where are the next major Gold deposits going to come from? On top of that, grades have fallen significantly just over the past decade.
Gold
Gold pushed above resistance at $1,260 last week and closed Friday at $1,276 for a weekly gain of $24. Events in Iraq were certainly the catalyst with Crude Oil surging to a new 9-month high. This morning in Ukraine, a Ukrainian military plane was shot down (49 people killed) by pro-Russian separatists using anti-aircraft guns, likely courtesy of Vladimir Putin (the flow of heavy weapons and militants from Russia into Ukraine continues). There are hot spots in different areas of the globe, and a Jimmy Carter clone in the White House at the worst possible time. So it’s quite possible that geopolitical instability will be a major theme in the months ahead, and at the very least this should put a floor underneath Gold prices to keep them above last year’s lows. Potentially, bullion could surprise to the upside, especially if Crude Oil (WTIC) busts through major resistance around $110 a barrel.
There’s no better cure for low prices than low prices. The great benefit of the collapse in Gold prices in 2013 is that it forced producers (at least most of them) to start to become much more lean in terms of their cost structures. Producers, big and small, have started to make hard decisions in terms of costs, projects, and rationalizing their their overall operations. Exploration budgets among both producers and juniors have also been cut sharply. In addition, government policies across much of the globe are making it more difficult (sometimes impossible) for mining companies to carry out exploration or put Gold (or other) deposits into production, thanks to the ignorance of many politicians and the impact of radical and vocal environmentalists (technology has made it easier for groups opposing mining projects to organize and disseminate information, even in remote areas around the globe). Ultimately, all of these factors are going to create a supply problem – think about it, where are the next major Gold deposits going to come from? On top of that, grades have fallen significantly just over the past decade.
Gold
Gold pushed above resistance at $1,260 last week and closed Friday at $1,276 for a weekly gain of $24. Events in Iraq were certainly the catalyst with Crude Oil surging to a new 9-month high. This morning in Ukraine, a Ukrainian military plane was shot down (49 people killed) by pro-Russian separatists using anti-aircraft guns, likely courtesy of Vladimir Putin (the flow of heavy weapons and militants from Russia into Ukraine continues). There are hot spots in different areas of the globe, and a Jimmy Carter clone in the White House at the worst possible time. So it’s quite possible that geopolitical instability will be a major theme in the months ahead, and at the very least this should put a floor underneath Gold prices to keep them above last year’s lows. Potentially, bullion could surprise to the upside, especially if Crude Oil (WTIC) busts through major resistance around $110 a barrel.
