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Peter Schiff: Gold Is An Inflation Safe-Haven, Not Bonds

Peter Schiff: Gold Is An Inflation Safe-Haven, Not Bonds

Via SchiffGold.com,

Gold and bonds are both considered to be safe havens. But in…

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This article was originally published by Zero Hedge

Peter Schiff: Gold Is An Inflation Safe-Haven, Not Bonds

Via SchiffGold.com,

Gold and bonds are both considered to be safe havens. But in a recent podcast, Peter explained why bonds are not a safe haven in an inflationary environment. In fact, bonds – including US Treasuries – are risk assets when inflation is running hot. If you want safety from inflation, you need to buy gold.

Another gold rally fizzled this week when bond yields pushed up, sparked by rising oil prices. Peter said nothing happening in the bond market should have been a drag on gold and silver. Nevertheless, traders have consistently responded to rising yields or a steepening yield curve by selling gold and silver. The narrative is that rising rates are bearish for the metals — even though real rates remain negative.

Peter said this makes no sense.

Just because the rates are less negative doesn’t mean you have a negative environment for gold and silver. I think as long as rates are negative, that is a huge wind in the sails of gold and silver – because you want to avoid negative interest rates.”

The knock on gold and silver has always been that you forgo interest. Higher interest rates increase the opportunity cost of owning the metals. For example, if interest rates are 10% and you own gold, you’re giving up 10% interest on the money you have in the yellow metal. But when rates are negative, it doesn’t matter.

If they’re negative 2% or negative 10%, nobody wants a negative yield. So, as long as yields are negative, you want to get out of bonds. It doesn’t matter how negative. Once you’re losing, it’s a loss.”

Ultimately, a negative rate environment, no matter how negative, should be bullish for gold and silver.

The other tailwind for gold and silver is traders still expect the Federal Reserve to respond to inflation by tightening monetary policy – and thus raising interest rates.

Oil prices are rising as a result of inflation. Gold should also be rising as a result of inflation. It should not be falling because investors expect the Fed to fight inflation. Again, if the Fed could fight inflation, they’s be fighting it right now. The reason they’re not fighting it, the reason they’re pretending that it’s not a problem, and so there’s no need to fight it, is because they can’t. But they’re never going to admit that. That would be a complete disaster. So, they have to pretend that it’s transitory, that it’s not a real problem, but also pretend that if it ever becomes a real problem, well, they’re going to do something about it. But of course, they can’t do anything about it. So, they won’t.”

Most investors regard Treasuries as a safe haven. They move into bonds when they’re in a risk-off mood. But when inflation is the risk, Treasury bonds lose their safe-haven status. Peter said bonds are never a safe haven against inflation.

Inflation erodes away the purchasing power of all bonds.”

Peter emphasized that it’s got nothing to do with default risk. You’re not concerned about default in an inflationary environment.

You’re concerned about getting paid back in money that doesn’t have much value. It doesn’t matter about the credit quality. The highest credit quality bonds are no different from junk bonds when it comes to the inflation risk. They may be different when it comes to judging default risk. But this is not about default. This is about the value of the principle of the bond going down. So, even if you get repaid, you still are subject to the risk of inflation. So, when inflation is the risk, you don’t have any safety in US Treasuries. Alternatively, you have complete safety in gold. Gold is a safe haven from inflation and bonds are not.”

Nevertheless, investors continue to look at both assets as if they both have the same characteristics. They lump them together as safe-havens. But Peter said Treasuries are a risk asset when it comes to inflation.

They need to trade the opposite of gold. They’re not the same as gold. They’re different. Because gold has a real value. It is not a piece of paper. Gold is a hedge against inflation because gold is an actual commodity whose price rises as a result of inflation alongside of other commodities that also see higher prices in an inflationary environment. So, the two assets have to diverge. And at some point, they will. At some point, weakness in the bond market is going to stop translating to weakness in the gold and silver market when people start to realize how these two assets have actually diverged from one another and are serving completely different roles in the environment we have right now. Because, again, the risk-on asset in an inflationary environment is Treasuries.”

Peter thinks the markets will figure this out eventually.

In an inflationary environment — and we are in the most inflationary environment we’ve ever been in — the riskiest things you can own are bonds. And it doesn’t matter what bond you have. Treasuries are no safer than the riskiest junk bond when the threat is the loss of purchasing power to inflation. The real safe haven in this environment is gold. And as soon as investors understand the difference between gold and Treasuries, they will then start moving into gold as a safe haven, and they will not be deterred in their buying of gold when bonds go down because they will expect bonds to go down. When you’re looking to remove inflation risk from your portfolio, you sell bonds, including Treasuries, and you buy gold and silver.”

In this podcast, Peter also talks about the housing market, Zillow bailing out of the home-flipping business, Biden’s mischaracterization of inflation as a “high class” problem, the US using Soviet propaganda tactics to describe inflation, and the latest in the bitcoin market.

Tyler Durden
Thu, 10/21/2021 – 09:05














Author: Tyler Durden

Precious Metals

Black Friday Bedlam Means Kiss The Taper Goodbye

Black Friday Bedlam Means Kiss The Taper Goodbye

Submitted by QTR’s Fringe Finance

It’s semi-hilarious that when Covid first occurred…

Black Friday Bedlam Means Kiss The Taper Goodbye

Submitted by QTR’s Fringe Finance

It’s semi-hilarious that when Covid first occurred at the beginning of 2020, I couldn’t get a single soul to listen to me when I warned that the market would eventually react negatively.

Now, entire continents stop all travel, immediately consider lockdowns and markets sell off 2% every time a new variant makes its way into the news cycle. 

Just hours after Goldman Sachs made the dumbass move of predicting a quicker than expected taper, index futures are getting destroyed on news of a new Covid variant out of South Africa – days after I warned that the market could wind up getting its salad tossed heading into the new year. That prediction was for reasons other than another Covid variant, but I stand by my analysis. Just three days ago, I wrote:

I’m often one of the first people to joke about how nonsensical the idea of a Santa Claus rally is, but it puts the idea of a rising market over the holidays into everybody’s head, every year. Obviously, it’s just made up bullshit-lingo used to provide an excuse for people to buy overvalued money losing crap in the market, but it seems like a good year to remind market participants that a rally doesn’t always have to happen.

You can read that article here: The Market Could Collapse Heading Into The Holidays

Additionally, I had already detailed several reasons why I believed the NASDAQ could be on the verge of a collapse without warning here: Why We Could Be Staring Down The Barrel of A Catastrophic NASDAQ Crash And Not Even Know It

As mentioned, the overnight panic has been due to a scary sounding report of a new Covid variant out of South Africa. The variant may evade immunity, reports say, but is still being evaluated by scientists. Newsweek summed up the hysteria:

Scientists have voiced concern about a new COVID variant that has a “really awful” combination of mutations that could possibly cause the virus to evade immunity.

The variant, now called B.1.1.529, was reported on just days ago after a small cluster of cases were spotted by Tom Peacock, a virologist at Imperial College London in the U.K.

As of Wednesday this week, the variant had been detected in Botswana, South Africa, and Hong Kong, and there were only 10 cases reported, The Guardian newspaper reported.

Despite the low number of cases, B.1.1.529 has some experts worried due to the mutations it has.

In a Twitter thread on Tuesday, Peacock said the variant had a number of notable mutations such as K417N, S477N and E484A among several others associated with the virus’ spike protein. The virus uses this protein to enter human cells.

Peacock wrote: “Worth emphasising this is at super low numbers right now in a region of Africa that is fairly well sampled, however it very very much should be monitored due to that horrific spike profile (would take a guess that this would be worse antigenically than nearly anything else about).”

As of this morning, the new variant has already been detected in Israel and is likely going to wind up spreading globally, so it’s probably a good idea to just accept that fact now.

While the significance of this variant as it relates to people’s actual health remains to be seen, its significance in terms of macroeconomic policy and certainly today’s trading session shouldn’t be overlooked. If you want to know more about the science, Zero Hedge did an excellent job of summing up the key points of what we know about the new variant in their overnight coverage.

Here’s my wild-ass guess at the path this new variant is going to take us: more than likely back to all time highs, but not before we hit some (potentially large) bumps in the road first. While I happen to think this will be the Delta variant part 2 (in that it drums up a lot of hysteria and then everyone eventually ignores it), that doesn’t mean the government and markets won’t overreact to the news.

Remember, scary sounding words like “mutation”, “spike protein” and “variant” are a prompt to act like hysterical hyenas and usurp power unilaterally for those on the left side of the aisle (read: our entire government right now).

We will have more information over the coming days as to what the government’s response is going to be globally, but if the U.S. follows the lead of the U.K. and the EU overnight, its looking like travel bans, mandates and lockdowns could all once again be on their way.

If the government uses this variant as a an excuse to assert even more control over the country and lock down again:

  1. You can kiss any plans to taper goodbye for the time being. This’ll create political turmoil, as tapering seems to be the only “solution” politicians have explored to inflation running rampant in the country. Expect prices to continue to rip higher and the market to potentially react positively.

  2. We can eventually expect more stimulus checks, as we head further down the path to stagflation and universal basic income. The additionally stimmies will throw a wet blanket onto job growth and make the nation’s labor shortage worse. This should be a massive tailwind for gold, which is up about $25/oz. as of the time of this writing. Bitcoin selling off like a risk asset this morning leads me to believe my long held thesis that BTC is a risk-asset and not a hedge may be correct. I’ll keep looking for rotation from BTC (risk on) to gold (risk off) in the event of deleveraging. Remember, gold also sold off in early 2020 prior to ripping to all-time highs. When margin calls come in, people sell whatever they can get their hands on.

  3. Travel stocks could get pasted and stay-at-home stocks could rip. Of particular interest is oil, which has had a monstrous run over the last 6 months. Even though President Numb-Nuts is failing at actively trying to micromanage the oil market (as the Saudis look on and laugh), oil could still pull back further as perceived demand would crumble in the event of a lockdown. Also of note are names like Peloton (PTON) and Zoom (ZM) – both of which are more than 50% off their Covid-catalyzed highs.

  4. Pfizer, Moderna and Johnson & Johnson could have a heyday again, especially if the new variant spreads (it will) and can evade current vaccines (undetermined). One has to think about whether or not the new variant will be able to evade the vaccines on the market. Should this turn out to be the case, it would not only be the impetus for another round of unilateral power grabs by the government, but could also send the stocks of Pfizer, Johnson & Johnson and Moderna into the stratosphere as it would almost ensure, at the very least, new booster shots, and at the very most, an entire new round of vaccines.

And if the government decides to do nothing about the new variant, we likely wind up going back to all time highs in 2022 anyways, as it’ll probably still be used as an excuse to delay the taper.

I think the only thing that could send the markets moving much lower in very fast fashion would be a lockdown style attitude from the government without clear messaging from the Fed that they’re going to back off the gas when it comes to the taper.

The odds of this are low, in my opinion, but it would be your classic lose/lose scenario.

I’d love to be able to tell my subscribers that I know exactly where the market is going to go today, and in the week ahead, but the fact of the matter is that I don’t, but for my prediction that we could see volatility heading into the end of the year.

With so many unknowns at play (the severity of the variant, how governments and the Fed will react), I’d rather be honest with you and tell you it’s too early to try and analyze than make up some shit to justify why I charge for analysis behind a pay wall to begin with.

The only one true honest inclination that I’ve had so far this morning has been that Gold rising just $20 on this news doesn’t seem like quite enough. It had already started to feel like sentiment was shifting back towards gold as an inflation hedge over the last couple months. A brand new round of stimulus from the government would only act as a tailwind for that thesis. Lockdowns that keep production and labor suppressed would also act as a tailwind, as they’d keep a bid under consumer prices.

If I had to make any bet, I’d say this headline too will pass. And even if it doesn’t, Covid is already over for me in my head – an attitude I suggested many should gift themselves heading into the holidays.

Enjoy your Thanksgiving leftovers, and your long weekend.

*  *  *

Read more from QTR:

1. Covid Is Over (If You Want It)

2. Two Reasons The Market Could Collapse Heading Into The Holidays

3. When The Global Monetary Reset Happens, Don’t Forget Who To Blame

4. Pride Goeth Before The Bitcoin Fall

5. Cathie Wood’s Sweet Superficial Success

This was a free preview of paid content from QTR’s Fringe Finance. Zerohedge readers always get 10% off a subscription to my blog for life by using this link.

Tyler Durden
Fri, 11/26/2021 – 09:40








Author: Tyler Durden

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Precious Metals

Secova Initiates NI 43-101 Technical Report for the Montauban Site and Announces C$5M in Private Placement

Secova Metals Corp. (CSE:SEK), (CSNX:SEK.CN) has engaged M. Langton to prepare the NI 43-101 Technical Report

 

VANCOUVER, BRITISH COLUMBIA – TheNewswire – November 25, 2021 – Secova Metals Corp. (“Secova” or the “Company”) (CSE:SEK), (CSNX:SEK.CN), (OTC:SEKZF) is pleased to announce the Company has retained John Langton, M.Sc., P. Geo of JPL GeoServices Inc. to produce a  NI-43-101 Technical Report and Mineral Resource Estimate on the Montauban Site project located in the Montauban Mine Property, sector of Notre-Dame-de-Montauban municipality, Quebec (“Montauban” or the “Project”).

 

“The Company is very pleased to engage M. Langton to prepare the NI 43-101 Technical Report and Mineral Resource as he has extensive experience with the Project,” stated Brad Kitchen, President and CEO of Secova.  “John has worked with DNA Canada, the prior owners of the Montauban Project, to build an extensive database and model of the mineralization and prepared the most recent NI 43-101 Technical Report on the Project in March 2019.”

Convertible Debenture Private Placement

The Company announces a non-brokered private placement of unsecured convertible debentures (the “Debentures”) at a price of $1,000 per debenture for gross proceeds of up to $5,000,000 (the “Offering”).  The Offering is expected to close in tranches with the first tranche expected to close on or about December 15, 2021.  The Debentures will pay interest of 10% per annum on a semi-annual basis, payable in cash or common shares of the Company (“Shares”).  The form of interest payment will be at the discretion of Secova with the exception of the first interest payment which will be paid in Shares at a deemed price of $0.20.  The Debentures will mature on the date that is 36 months following the closing date of the Offering (the “Maturity Date”).

The principal amount of the Debentures will be convertible into Shares at a conversion price of $0.25 (the “Conversion Price”) at the option of the holder at any time prior to the close of business on the last business day immediately preceding the Maturity Date.  The Company will have the right to force conversion at the Conversion Price if the Shares trade at a volume weighted average price of $0.50 or greater for 10 consecutive days, for a period that commences after the statutory hold period commences.  

All securities issued in connection with the Offering will be subject to a statutory hold period expiring in accordance with applicable securities legislation.  The net proceeds of the Offering will be used for development of the Company’s Montauban Project and for working capital.

The Company will pay eligible finders a fee (the “Finder’s Fees”) on the Offering within the amount permitted by the policies of the Canadian Securities Exchange (the “CSE”).

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities described in this news release in the United States. Such securities have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities laws, and, accordingly, may not be offered or sold within the United States, or to or for the account or benefit of persons in the United States or “U.S. Persons”, as such term is defined in Regulation S promulgated under the U.S. Securities Act, unless registered under the U.S. Securities Act and applicable state securities laws or pursuant to an exemption from such registration requirements.

Pour une traduction française de ce communiqué de presse, veuillez visiter notre site Web à www.secova.ca.

About the Company

 

Secova Metals Corp. is a Canadian environmentally aware resource exploration and processing company. Management has demonstrated expertise in advancing gold exploration projects into acquisition targets, most notably in the province of Quebec. Secova’s principal restoration and recovery project is the Montauban property situated in Quebec, just 80 kilometers west of Quebec City. The Company is proposing to commence operations by the middle of 2022. The Company’s main exploration focus is its 100% ownership of the Eagle River project, which is adjacent to and on-trend to several gold projects in the Windfall Lake district of Urban Barry in Quebec. Secova will use its expertise in early-stage exploration to create shareholder value by attempting to prove out the resource in these assets.

 

For more information on Secova Metals Corp. please contact [email protected], Tel: +1 604-803-5229 or visit the website at www.secova.ca for the French version of this news release, past news releases, media interviews and opinion-editorial pieces by CEO and Chairman Brad Kitchen. For discussion forum on Secova go to https://t.me/secova.

On Behalf of the Board of Directors,SECOVAMETALS CORP.

“BradKitchen”

Chairman,CEO,andDirector

 

Tel:+1604-803-5229

Email:[email protected]

 

 

Telegram: (https://t.me/secova)

 

This press release contains “forward-looking information” that is based on the Company’s current expectations,estimates,forecasts,andprojections.Thisforward-lookinginformationincludes,amongotherthings,statementswithrespect to the Company’s exploration and development plans. The words “will”, “anticipated”, “plans” or othersimilar words and phrases are intended to identify forward-looking information. Forward-looking information issubject to known and unknown risks, uncertainties and other factors that may cause the Company’s actual results,level of activity, performance, or achievements to be materially different from those expressed or implied by suchforwardlooking information.

 

Neither the Canadian Securities Exchange nor its Regulation Services Provider accept responsibility for the adequacy or accuracy of this release.

 

Copyright (c) 2021 TheNewswire – All rights reserved.

Author: Author

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Precious Metals

Calibre Mining Drills High-Grade Gold at Volcan

 
Calibre Mining (CXB.TO) is in the middle of an extensive drill program which is aiming to update and upgrade the existing resources at and around the…

[nxtlink id="268557"]Calibre Mining[/nxtlink] (CXB.TO) is in the middle of an extensive drill program which is aiming to update and upgrade the existing resources at and around the Libertad mine in Nicaragua. The company recently released assay results from the Volcan area, which is just about five kilometers from the Libertad mill.

The drill program has now confirmed the continuity of gold mineralization along a 1.5 kilometer strike length while confirming gold mineralization to a depth of 100-250 meters while the vein system itself appears to remain open along strike and at depth. Some of the highlights of the recent drill program are for instance the 4.9 meters of 15.6 g/t gold followed by 3.4 meters containing 7.88 g/t gold just 16 meters below the first interval. But other holes also confirm the high-grade nature of the Volcan veins with for instance 9.2 meters containing 4.13 g/t gold and 1.8 meters containing 8.75 g/t gold.

Granted, these grades aren’t exceptionally high but given the close proximity to surface and an existing mill, Volcan is shaping up to be an interesting satellite zone to the main gold deposits that are feeding the Libertad mill.

Disclosure: The author currently has no position in [nxtlink id="268557"]Calibre Mining[/nxtlink]. Please read our disclaimer.

Author: CR Team

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