Do we see a golden opportunity this 2020?
For most of you who have been following our articles/blog, it is quite apparent that we have a general bias and liking for anything stable or has proven over the long centuries to be seen to be a secured store of value – Gold.
Last week, Gold pulled back sharply from six-year highs above US$1,600. Yet we remain bullish on this yellow metal for various reasons:
Amidst all the brewing instabilities in the world – from political to economic and now most recently an epidemic of health fears; gold remains as the risk diversifier and a good hedge against elevated geopolitical risks to include trade wars, Brexit fallout and the interminable situation in the Middle East. Any renewed risk sentiment in the coming weeks, given low deposit/interest rates, will inevitably trigger asset flight to gold.
In our view, an interesting development over the past week is Donald Trump’s formal nomination of Judy Shelton and Christopher Waller for vacant governorship positions on the Federal Reserve.
Judy Shelton’s nomination is most interesting.
A former Trump campaign adviser, Ms Sheldon has been a vocal Fed critic and has always supported the gold standard. Although she recently advocated for lower interest rates, she has criticized the Fed for paying interest on excess reserves, which remains a Fed policy tool since 2008. Her presence on the Fed board will give it the spice and contrarian thinking given her background and policy advocacy – which is a stark contrast from the rest of her colleagues.
Sheldon’s possible inclusion as a Fed governor will give that much needed ideological diversity to the central bank. For one who used to attack the Fed’s policy direction, Sheldon will act as a ‘fiscal hawk’ voice and will give her colleagues much thought before they proceed with any monetary action.
One of the things we are confident that Sheldon will push as a Fed Governor is a move to go back to the gold standard. Where money is backed up by something like gold compared to what we have now with the Fed’s continuous penchant to print money to solve its fiscal inconsistencies. She once challenged an article of faith regarding the US Federal Reserve that it should operate free of political influence. We now ask if she would stick to her guns should Trump ask her to keep interest rates low for cheap money to flow in view of the election season this November 2020.
Now that we have a staunch gold supporter at the Fed, we prefer to look at gold stocks to position with, as we see the gearing factor to give a much-enhanced price-performance relatively, against investing in the actual metal.
Franco Nevada |FNV| = a royalty and a class on its own in the gold space, we are looking at Franco for the simple reason that it has proven to be a best of class, “sleep well at night” investment. Although primarily holding gold assets, it also generates revenue from other sources, including silver and oil.
Franco Nevada |FNV| = a royalty and a class on its own in the gold space, we are looking at Franco for the simple reason that it has proven to be a best of class, “sleep well at night” investment. Although primarily holding gold assets, it also generates revenue from other sources, including silver and oil.
Integra Resources} Vancouver: ITR} – Integra Resources is developing the large scale Delamar gold-silver project in SouthWest Idaho. And by large scale, we mean a resource estimate of 3.9 million ounces in gold equivalent.
Major Drilling Group International} Toronto: MDI} – As we see more and more money being poured in the gold space, senior gold producers will be the likely beneficiary. That is where Major Drilling Group International comes in with their track record, mining projects, and ability to deliver returns to its shareholders.