Friday, 15 November 2019

Gold In The USA, Alaskan Elephant Country: History Lessons - Debt Growing To The Sky, Round Bottoms And Secular Gold Bull Markets.

J.C. Parets

J.C. Parets provided us today with a brilliant history lesson on round bottoms. This time his beautiful charts are applied to our beloved Gold. We are discussing here fundamentals for the new young secular Gold Bull market at length. But a lot of people are very busy, cannot really read anymore and these colourful illustrations are hitting the nerve of those who are still on the quest for something different from fast food for brains served on the Bubble TV.

J.C. Parets 

Historical parallels are unmistakable, 1997 - 2002 round bottom for Gold coincided with the blow-off top of the Internet Bubble and following market crash with the most dangerous words in investing: "This time it's different".

Following up FED's emergency procedures in order to revitalise what was left of the economy in early 2000 have propelled Gold into the first great bull market of the 21st century.

This time around we have an even more interesting situation. All Central Banks are pumping money into the financial system as if it is already after the market crash even before it happened. And this time Central Banks are buying Gold at the same time because they know too well where it's all going from here. 

Global Village is finished, everybody will be for themselves swimming in the icy waters after this last party on Titanic. "The greatest bull market in history" is overextended. This tired bull is having panic attacks after every headline when the imminent "Chinese Salami" deal is not happening again. And he even himself is looking in total disbelief at "the greatest economy in the history" pumped by the QE4 and built on the growing unsustainable pile of debt.

Our new secular Gold Bull is very strong already, it was swimming against the tide of very strong and still rising US Dollar. POTUS is furious, demanding the negative rates as in Europe and will put all FED on trial for treason if the economy will choke up in the election cycle. Can you imagine how this young Gold Bull will be kicking with US dollar finally giving up and going down?    

This time not only all these factors will be driving the demand for Gold entering the potentially explosive stage of the investment cycle, but all prospective buyers will be facing the real problem while competing with Central Banks in order to increase their allocations to Gold. 

McKinsey calls it "The Gold Mining Reserve Crisis". Combination of these historical tectonic shifts in the demand and available supply can easily take out any question marks left about the new secular Gold Bull market as early as in the next few months. 

Nobody knows the future and you all will have to do your own research and pick up the winners. We at TNR Gold are very encouraged with all these recent developments in macroeconomy supporting the very healthy Gold Bull market for years to come and our position with Shotgun Gold project development in the great state of Alaska. All brave scientific observations must be confirmed by people who can put some money on the table to prove it in real life. I am personally following very closely billionaires who are not only buying Gold now but are coming to our Alaskan elephant country in a quest for the next Donlin Gold. You can find this story on the links below.

"Gold Exploration Vital For Future Supply": Gold In The USA - Alaskan Elephant Country.

Wood Mackenzie brings attention to the unfolding "Gold Reserves Crisis" as McKinsey calls it. The growing demand for gold from Central Banks, institutional investors and retail is facing the peak gold production and collapsing gold reserves of the major mining companies. Everything is being set for "The Perfect Storm" in the gold market:

"Exploration budgets were slashed following the fall in the gold price from the highs that were reached in 2011/2012 and they have since failed to recover. The slight rebound in exploration spend we have seen over the past couple of years has largely been focused on brownfield projects and near-mine development. This has not been sufficient to replenish mined ounces and as such peak gold supply is now a very real possibility. Wood Mackenzie."

M&A activity will only redistribute the well known and already developed reserves. The industry needs new major discoveries which are very few and far between. Years of the Gold Bear market have not only burnt alive the whole generation of investors but made mining companies extremely cautious with any exploration and investment activities. All exploration budgets were cut to the bone. The industry suffered not only dramatically reduced exploration budgets, but the return on the money invested in exploration produced very few major discoveries.

After the recent wave of M&A activities among the major gold miners, mining companies are increasingly entering into the JVs with junior miners in order to develop the new resource base:

"To secure their longevity as pillars of the gold industry, we have seen heightened M&A activity and miners focusing on their core assets. Whilst this may help to bolster balance sheets through improved operational performance and realised “synergies”, it seemingly does little to address the problem the industry is facing with regards to how to sustain current production levels. We have, as of late, noticed an uptick in some majors opting to increase their footholds in a select few juniors with promising exploration opportunities.
Agnico Eagle, AngloGold Ashanti, Kinross and Newcrest are actively investing in, or entering into joint-ventures with junior gold companies to create long-term value. Wood Mackenzie"

News about Electrum Group partnering in the new venture with gold mining legends Rob McEwen and Eric Sprott for exploration in Alaska will ignite the new wave of interest to the juniors operating in Alaska. Alaska jumped to the 5th place among safe mining jurisdictions and giant 39 Moz Donlin Gold project is getting more and more attention. Electrum Group is the major shareholder of Nova Gold which is developing Donlin Gold in JV with Barrick Gold.

With gold prices reaching new highs this year some mining analysts are starting to apply the old metrics to value "gold in the ground" when comparing juniors and their projects. Nova Gold was trading as high as $2.4B reflecting its 50% stake in Donlin Gold. It gives more than $120 valuation per oz in the ground. All projects are different, but previous Gold Bull market valuations started at $20 per oz of the inferred resources - the very initial level of resources. New mining deals will give us a better sense of the valuations. Eric Sprott and Rob McEwen will make sure that Alaska is shining bright on the radars of investors now. Increased gold prices are making the great state of Alaska as one of the most attractive in the industry: "leverage in the place where you can keep the rewards". And their own gold price projections can bring real fireworks to the exploration opportunities. As always do your own research and you will have to pick up the winners.

TNR Gold is developing the Shotgun Gold project in the Alaskan elephant country near Donlin Gold mining district. On the links below you can find more information. Barrick Gold received crucial permits to advance Donlin Gold and this new developing mining district in the US can make the promise of "Gold In the USA" providing stable supply feasible again and it can become that solution to "The Gold Mining Reserve Crisis" McKinsey is talking about:
"The Company's strategy with the Shotgun Gold Project is to attract a partnership with one of the major gold mining companies. TNR Gold ("TNR") is actively introducing the project to interested parties," commented Kirill Klip, Executive Chairman of TNR. "We may be at the beginning of a great discovery. There is a clear path on how to move this project forward using the geological and geophysical research currently available to target drilling to expand the resource and form the basis of a preliminary economic analysis. The next step is to acquire a partner that shares our vision and recognizes the growth potential and value to be added to the Shotgun project over time."

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