The last few weeks had been brutal for the smaller end of mining stocks in Australia.
Why ? Labour CGT policy change + tax loss selling + Iran war. Iran war keeps oil prices high and the world is slowing, despite inflation flaring up. Not a good recipe for junior miners and gold.
Came across this YouTube interview with Pierre Lassonde... Worth a listen.
https://youtu.be/Gp8VqtZCP0U?si=5uUxRoRVrUkFUDEi
Lassonde was a co-founder of Franco Nevada. He later became president of Newmont. In summary, he is one of the pioneers in the gold industry for decades and he has built very large gold companies.
Quick summary of the interview is there is a very strong force at work in favor of gold or against USD i.e. USA has no interest in control its budget deficit and per Lassonde 80% of gold move is driven by USD.
The current set up of yield rising and bond tanking is not sustainable for US... The end game remains yield curve control and inflate the debt away. Key event to watch is what will the US Federal Reserve do. That is a key tell in the short term.
Beyond USA, maybe folks in other countries will also need to allocate more of their assets to gold to protect purchasing power. Case in point is look at the fiscal/debt situation of Japan, UK, France, Italy etc etc.... Again, easy way is to inflate away the debts for the politicians.
Noticeably, Lassonde predicts gold can rise to as much as $17000 (US$4400 or so now)...
My base case is these are strong supporting forces at work. My base case is gold will at least recover to its recent high of US$5300 or so at some point. Think my case for the junior gold stocks stands... Key for them is executing the business plans and as long as gold price hangs around current level they will be more than fine.....
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Something of note is happening. HK is setting up its own HK gold clearing system. It has the support of the major banks as well. As we know, China has been adding to its gold reserve. The question is what are the implications for this gold clearing system in HK ? One interesting example I picked up was say China and Saudi settles oil trade in Rmb. Obviously, Saudi imports from China will be nowhere close to square up with its oil sales to China... So Saudi would be holding excess Rmb. It can always change back to its local currency/or USD. With the new gold clearing system, it can park % of the excess Rmb in gold in HK as well.