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GOLD – WHAT TO EXPECT NEXT

Gold’s value is not determined by world events, political turmoil, or industrial demand. The only thing that you need to know in order to understand…

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This article was originally published by Munknee

Gold’s value is not determined by world events, political turmoil, or industrial demand. The only thing that you need to know in order to understand and appreciate gold for what it is, is to know and understand what is happening to the U.S. dollar. Gold is priced in U.S. dollars and since the U.S. dollar is in a state of perpetual decline, the U.S. dollar price of gold will continue to rise over time.

This post by Lorimer Wilson, Managing Editor of munKNEE.com is an edited ([ ]) and abridged (…) version of an article by Kelsey Williams for the sake of clarity and length to ensure a fast and easy read.

The U.S. dollar is in a constant state of deterioration, punctuated with periods of temporary strength and stability [and] the dollar price of gold reflects the deterioration by moving higher over time, usually after the fact, [because] gold is not forward-looking. The higher price of gold in dollars is a reflection of the loss in purchasing power that has already occurred.

There are five major turning points for gold’s price that are reflected on the chart (source) below which illustrates the link between gold’s price and the U.S. dollar. All five turning points (1933, 1971, 1980, 2000, 2011) coincided with changes in the U.S. dollar…and these changes can last for years (1980-2000; 2011-2016):

  • 2001 – 2008:
    • Beginning in 2001, the U.S. dollar began a significant decline on world markets lasting until 2008 [and] during that time the price of gold rose from $256 ozt. to as high as $1023 ozt..
  • 2011:
    • A secondary low for the U.S. dollar occurred in 2011 [and] this was closely concurrent with a peak in gold’s price at $1896 ozt..
  • 2011 – 2016:
    • The U.S. dollar then began a multi-year period of strength and stability [and] the muted effects of inflation between 2011 and 2016 resulted in…the price of gold declining 45% from $1896 ozt. to $1049 ozt. during that period.
  • The price of gold since then has risen to $2060 ozt. and subsequently declined back to $1675 oz. Meanwhile, the US dollar has neither gotten much weaker nor strengthened to any measurable degree.

GOLD – WHAT TO EXPECT NEXT

As far as gold is concerned, the only thing that will take its price higher is further lasting deterioration in actual purchasing power of the U.S. dollar. 

  1. If you think that a collapse in the U,S. dollar is imminent, and that runaway inflation is just around the corner, then load up on gold – but don’t expect to get rich if you are correct. At best, all you can expect is to maintain your current level of purchasing power for whatever wealth you have already accumulated.
  2. If we have a period of relative tranquility and economic prosperity with mild  inflation effects, then gold’s price could languish or decline for many years.
  3. A financial collapse with credit defaults would likely usher in a long-lasting economic depression and deflation…[which] would result in price declines for all assets of anywhere from 60-90 percent or more, and, yes, that includes gold.

CONCLUSION

The value of gold is constant. Its price changes according to changes in actual purchasing power of the U.S. dollar…[so] if you want to know and understand what is happening to gold’s price, then you need to know and understand what is happening to the U.S. dollar. Changes in the price of gold do not tell us anything about gold; they tell us what has happened to the U.S. dollar.

Editor’s Note:  The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.  Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor. Also note that this complete paragraph must be included in any re-posting to avoid copyright infringement.

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Author: Lorimer Wilson

Articles

Drilling proves Strickland’s theory about Dusk til Dawn gold mineralisation

Special Report: The balance of results from drilling at Dusk til Dawn have all but confirmed Strickland’s reinterpretation of how … Read More
The post…

The balance of results from drilling at Dusk til Dawn have all but confirmed Strickland’s reinterpretation of how mineralisation at the prospect really looks like.

Results such as 10m grading 3.1 grams per tonne (g/t) gold from 314m and 11m at 2g/t gold from 249m including 5m at 3.2g/t gold have extended gold mineralisation further down dip.

Previous results from the same drill program had yielded hits such as 33m at 3.6g/t gold from 61m and 24m at 1.6g/t gold from 196m including 12m at 2.5g/t gold.

More importantly, all holes have intersected the modelled alteration zone where Strickland Metals (ASX:STK) had predicted, a strong indicator that its understanding of Dusk til Dawn mineralisation is down pat.

It also means that further discoveries in the surrounding terrain are very likely given the proven effectiveness of the company’s current set of geophysical and geochemical techniques used at the prospect.

This means that there is significant potential for the discovery to scale-up given that there are up to 20 lookalike targets in two corridors within roughly 10km strike of Dusk til Dawn.

“The drilling has confirmed the company’s reinterpretation of the mineralisation at the prospect, with all holes intersecting the targeted zones where predicted. Remodelling of the mineralisation is underway, with an updated Mineral Resource expected in early February 2022,” chief executive officer Andrew Bray said.

“Most excitingly, our growing understanding of the mineralisation in this area opens up a tremendous opportunity to intersect repeats of this style of mineralisation.”

He added that six of the lookalike targets were drilled prior to the reverse circulation program concluding in December 2021, with all holes intersecting the targeted alteration zones.

However, the ongoing laboratory delays mean that results from these initial holes are not due until the middle of February 2022.

Dusk til Dawn cross section. Pic: Supplied

And now for the next act

Work is now underway to remodel the existing resource of 108,900oz of contained gold.

Strickland believes that correctly orientating the mineralised plunge will potentially lead to a material increase in both grade and tonnage.

This remodelling should also demonstrate the excellent potential to build a substantial mineralised inventory in the immediate surrounding region should the nearby ‘look-a-like’ targets also be mineralised.

The updated resource estimate is expected to be announced early in February 2022.

 


 

 

This article was developed in collaboration with Strickland Metals, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

The post Drilling proves Strickland’s theory about Dusk til Dawn gold mineralisation appeared first on Stockhead.


Author: Special Report

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Economics

What the Experts See Coming in 2022

We have analyzed 300+ articles, whitepapers, podcasts and interviews to create a big picture look at what experts predict could unfold in 2022.
The post…

We have analyzed 300+ articles, whitepapers, podcasts and interviews to create a big picture look at what experts predict could unfold in 2022.
Experts are merely guessing at what will happen over the coming year so why should we pay any attention to predictions at all? Well, for one, these guesses are backed by expertise and experience, so the accompanying analysis is informative. Perhaps more importantly though, influential people and companies are in a position to shape the future with their predictions. In some cases, sentiment and actions can turn a prediction into a self-fulfilling prophecy.

Based on the hundreds of predictions we analyzed, the general mood can be described as cautiously optimistic:

  • the global economy will likely keep growing, but not at the rate it did in 2021,
  • monetary policy will begin to tighten over the next 12 months,
  • an era of lower equity returns and increased volatility will continue as many of the issues that plagued 2021 have carried over into 2022,
  • technological disruptions will continues to reshape industries,
  • climate change and cybersecurity issues will continue to be top of mind,
  • geopolitical tensions will heat up as well, now that countries have acclimated to the immediate challenges posed by the pandemic,
  • China will have a rocky start to 2022 with pessimism around China’s zero-COVID strategy, uncertainty around power shortages, a potential housing crisis, and regulatory crackdowns, and if the country is still on uncertain footing when the Chinese Communist Party’s 20th National Party Congress meets later in the year, , it could create a tense political atmosphere in Beijing,
  • the labor shortages that emerged during the pandemic will remain in place in 2022 and beyond, companies that don’t offer flexibility will face a disadvantage in attracting talent and individuals will look to the internet and social media for careers beyond simply working for a company,
  • we’ll be hearing a lot more about NFTs and Web3 with the prospects of the burgeoning “Creator Economy” – a catch-all term describing the new technological ecosystem and growing infrastructure – allowing individual content creators to monetize and flourish,
  • the ability to purchase products straight from influencers is becoming more common on major social platforms, and ecommerce companies are creating more products to support influencers in their marketing endeavors
  • experts expect higher-than-normal inflation levels to continue see it leveling off (relative to 2021) as supply chain disruptions work themselves out,
  • regulatory actions will force automakers to consider the future of their fossil-fuel models as EV sales set new records and the electrification of fleets will gather momentum,
  • industrial and battery metals like lithium and cobalt will continue to surge into 2022.

Editor’s Note: If you found the above version of the original article by Nick Routley of visualcapitalist.com informative and a fast and easy read, please DONATE something towards the costs involved in providing it. I find it demeaning to ask for money but it is either that or converting munKNEE.com into a fee-based subscription service which I don’t want to do. Any amount would be appreciated. It all adds up in the end. Thank you.
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Author: Lorimer Wilson

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Precious Metals

Foreign Holdings Of US Treasuries Hit A Record High In November

Foreign Holdings Of US Treasuries Hit A Record High In November

After October’s ugliness, and before the carnage began in December, November…

Foreign Holdings Of US Treasuries Hit A Record High In November

After October’s ugliness, and before the carnage began in December, November saw US Treasury yields oscillate with the last week seeing rates plunge on Omicron anxiety.

So, the big question is – did global central banks continue to dump bonds into this late-rally or did they flip-flop back to buyers of the world’s most liquid reserve asset?

The answer is – they were back to big buyers…

Today’s (latest) TIC data (for November) shows that foreign holdings of US government debt rose to a new record $7.75 trillion.

  • Foreign purchases of corporate stock +$7.2BN, biggest monthly increase since August, and follows sales of $11BN in Sept and $21.8BN in Oct

  • Foreign Purchases of corporate bonds +9.8BN, 4th month of purchases in a row

  • Foreign purchases of agencies $19.6BN, 56th consecutive month of foreign purchases of Agencies

Official buying of Long-Term Treasuries rose by $66.3BN in Nov, biggest increase since March 2021 when bonds got crushed on the Japanese pension selling

November saw the biggest private-buying of USTs ever

China added to its Treasury holdings for the 3rd straight month in November (+15.4bn to $1.08 trillion)…

But Japan remains the biggest holder of USTs and added for the second straight month in November (+$20.2bn to $1.3 trillion)…

Cayman Islands – often a proxy for hedge funds – saw net selling of $4.4bn USTs to $265.8b. That is the first monthly net-selling since Jan 2021…

Notably, foreigners haven’t sold any US agencies since March 20117, and if exclude that month, it has been non stop buying since April 2014…

On a 6-month-rolling-basis, enthusiasm for US stocks is fading…

Overall, while private TIC flows surged, official flows saw capital exit in November…

Finally, we note that the trend towards gold reserves (and away from USTs) continues (according to IMF and Fed Custody data)…

Net gold buying by central banks globally reached 393 tons at the end of Q3 (latest data from WGC). Central banks have already bought more gold this year than they did in the entirety of 2020 (255 tons) with one quarter left to go. The World Gold Council says net gold purchases are “poised to reach a significant total in 2021.”

Tyler Durden
Tue, 01/18/2022 – 16:17

Author: Tyler Durden

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