gleams. But the stronger the dollar, the lower the price of gold tends to fall.
According to Bart Melek, the global head of commodity strategy at TD Securities in Toronto, investors and observers can expect to see the price of gold to climb as the dollar continues to weaken.
Since April 11, 2018 gold bullion lost about 5% in value, due to a surging dollar. Despite confusion in Italy and other uncertainties around the world, gold was selling for under $1300. Melek is predicting a surge in the price during the final quarter of 2018 to an average of $1375 an ounce, and could possibly hit a high price of $1400.
“As time moves on, there’ll be less and less reasons to get into the U.S. dollar, which will likely reverse some of the flows,” said Melek, a speaker at a precious metals conference in Singapore. “We do ultimately think that as we move into 2019, the U.S. dollar will weaken, which is a very powerful fuel for the gold complex.”
The outlook for the very near future is less optimistic for gold, whcich Melek does not believe will rise given the dollars continued strengthening. In addtion, the Fed is expected to raise interest rates two more times this year. Prices for gold will most likely average at about $1290 in the third quarter, and $1300 in the fourth quarter of 2018.
After six years and a $541 million investment, Anglo American, one of the world’s largest mining companies, pulled out its stake in the Pebble Mine project, a gold mine estimated to be valued at about $300 billion, or even more.
Left behind with 100 percent ownership of the project, which is in the Alaskan Peninsula, is Northern Dynasty, a much smaller mining company. What is not fully understood are the reasons for Anglo American’s withdrawal after so much investment of time and money?
According to Anglo’s chief executive officer Mark Cutifani, the abandonment of the project is for strictly business reasons concerned with the company’s efforts to “prioritize capital to projects with the highest value and lowest risks.”
Whether that is the whole truth or not, environmentalists and Native American communities in the area would be happy to see a complete shut-down of the development of the Pebble Mine. The mine is located upstream from the salmon fisheries in Alaska’s Bristol Bay, where about half of the planet’s sockeye salmon spawn. Perhaps Anglo American is afraid that the Environmental Protection Agency will one day block the mine. (The Clean Water Act gives the EPA the power to close down the mine for environmental reasons.)
It is also possible that the No Dirty Gold campaign also swayed Anglo away from the mine. This effort by 50 prominent gold buyers and retailers, who signed a promise not to buy gold from Pebble Mine, could have dimmed Anglo’s enthusiasm for the project.
“I do not know whether the No Dirty Gold campaign contributed to Anglo American’s decision. I do believe that the campaign was a meaningful part of very broad-based opposition,” says Michael Kowalski, the CEO of Tiffany, one of the most prominent signatories of the preemptive boycott.
Kowalski added that opposition to the mine is broad-based, including most Bristol Bay residents, commercial and sport fishermen, jewelers, and “all those concerned with protecting the Bristol Bay ecosystem. … I assume that this diverse, robust opposition was reflected in a risk/return assessment of this project.”
Anglo continues to deny that the opposing forces had anything to do with the company’s decision to exit the mine. Spokesman for Anglo, James Wyatt-Tilby said no, opposition from environmentalists and fear of being denied permits from the EPA were not a factor.
“Our views on Pebble as a mining project are unchanged. … We wish the project well, and express our thanks to those who have supported Pebble.” Asked directly about the No Dirty Gold campaign, he declined to bite, reiterating that “our decision to withdraw from the project is the result of an internal prioritization of the many projects that we have in our portfolio.”
Gold is on its way up again and so is Randgold Resources Limited (GOLD) on its way up. Starting on September 20th, the stock fell from $113.45 to $92.61 on October 4, 2011. Since then it has been inching its way back up and today it is trading at $108.90. The stock is trading above its 200-day moving average of 91.40 and also above its 50-day moving average of 103.16. Randgold has a market capitalization of $9.5 billion and a beta risk factor of 0.46. While regular gold stocks tend to be directly related to the price of Gold, mining stocks only have to cover the production costs to be profitable.
Randgold has partial ownership in mines located in central and western Africa. These mines are: the Loulo mine in Western Mali; the Gounkoto gold deposit in Mali; the Kibali mine in the Democratic Republic of Congo; the Morila mine in Mali; the Massawa mine located in Senegal and the Tongon mine located in the Ivory Coast. What I like is that this company has several different projects in different locations. If something happens to one the company’s projects, the diversification will balance the loss and lower the total risk.
Randgold was founded by Mark Bristow and has been is gaining in profitability over the last 3 years.
Disclaimer: The content used in this article is for educational purposes. All investments should be thoroughly analyzed before being transacted.
Endeavor Silver (Exk) had a solid third quarter. Gold mined rose by 7% yoy to 4,926 ounces. Silver mined rose by 8% to 858,738 ounces. Revenues rose by 93% to $38 million for the sale of silver and gold mined and produced by the company. Endeavor has also expanded its Guanajuato plant and remained within its expansion budget.
While the stock tumbled From $12.60 to $8.04 in late September due to the fall in the stock market, Endeavor stock has stabilized and seems to be headed up. It is presently selling at $9.83. Its 200-day moving average is $10.57 and its 50 day moving average is $10.10. Endeavor also has agreements to purchase silver at cheap prices from silver mines in Mexico and Chile. In addition, since silver has industrial and jewelry applications, it should go up over the long term.
Mario D. Szotlender and Ricardo M. Campoy are 2 directors at the company.
Disclaimer: The information contained in this article is for educational purposes. All investments decisions should be thoroughly analyzed before purchase.
With the Dow plunging 6.66% yesterday and with its continuing travails in negative territory today, the only safe haven (outside of the Franc and Australian Dollar) seems to be gold. The price of gold keeps climbing and is nearing 1750. As long as the economy keeps worsening and sovereign debt and currency issues are not taken care of, gold will continue to climb.
The Only Real Currency
Many analysts see gold as the only real “currency.” It is the only thing with value. With increased skepticism growing about the strength of the US Dollar and the world has begun to murmur the possibility of dropping the greenback as the world’s reserve currency. Russia and China have suggested a basket of currencies replace the dollar. This writer suggests backing it with…gold.