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Precious Metals

What Some People Are Doing (and Not Doing) to Prepare for Retirement Without Social Security

Social Security is in worse shape than we thought. The program’s Old-Age and Survivors Insurance (OASI) Trust Fund is now expected to be insolvent by…

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This article was originally published by US Global Investors

Social Security is in worse shape than we thought. The program’s Old-Age and Survivors Insurance (OASI) Trust Fund is now expected to be insolvent by 2033, a year earlier than anticipated.

According to the annual report, its finances have been “significantly affected” by the pandemic and 2020 recession, not to mention “rapid population aging.”

Indeed, the ratio between contributors and beneficiaries has been shrinking for decades. In 1941, there were about 42 workers for every Social Security recipient. Today, that figure is around 2.5 workers per beneficiary.

A tipping point will occur in 2034: Americans age 65 and over will, for the first time ever, outnumber those 18 and under, according to Census Bureau estimates.

It’s believed that around 40% of older Americans only receive income from Social Security, and there have been calls to expand the program. I’ll leave that to lawmakers to decide.

For my part, I’ll say that it might make sense just to assume Social Security won’t be there when you’re ready to retire. Either that, or the income will be even less sufficient than it is now—especially if inflation proves not as “transitory” as Jerome Powell insists it is. I think it’s very telling that next year’s Social Security cost-of-living adjustment is expected to be above 6%. That would be the biggest bump since the early 1980s, when consumer price increases were sky high.

Global Silver Industrial Demand, in Millions of Ounces
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I don’t want to insult anybody’s intelligence or preparedness, but if you’re reading this and haven’t been participating in a defined-contribution (DC) plan such as a 401(k), or if you haven’t been contributing to an individual retirement account (IRA), I urge you to get started today.

If you have been doing those things, you might want to consider increasing your contributions. A 2021 survey found that just over half of older U.S. workers have less than $50,000 saved for retirement.

It doesn’t have to cost a lot. Our own ABC Investment Plan is only $1,000 to get started, then $100 per month in a fund of your choice. Want to invest in Amazon but can’t afford the $3,460 share price? With Robinhood, you can buy a fraction of a share if you wish. Plus, it’s commission-free.

Retirement Balances Hit Record High, Retail Trading Volumes Up

Now for the good news. Americans who’ve already been saving and investing for retirement saw their account balances hit record average highs in the second quarter of 2021. That’s according to Fidelity Investment’s analysis of more than 30 million IRA, 401(k) and 403(b) retirement accounts.

Looking just at 401(k) plans, Fidelity found that the average balance was just under $130,000, a new record high. That may not sound like a lot, but this includes everyone with a 401(k), including young people who may have just got started. The overall average balance for employees who have been contributing continuously for the past 10 years crossed above $400,000 for the first time ever, while that of people who have been investing for 15 years exceeded half a million dollars.

German Demand for Physical Gold Hit at Least a Decade High in First Half
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Individual investors and traders have also gotten more involved in the market, at least since the start of the pandemic. A recent article in the Economist shows that the number of trading accounts at brokerage firms, including Robinhood, has exploded from 59 million at the end of 2019 to 95 million today. Retail trading has likewise expanded. As a share of total trading volume, retail activity spiked to over 40% in the first quarter of this year, twice the volume from a decade ago. To meet the surging demand for stock and ETF trading, Fidelity is planning to hire as many as 9,000 new employees by year end.

Red Earth Miners Have Crushed Metal Producers Over the Past Year
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Granted, trading is not the same thing as investing—and certainly not the same as planning for retirement—but I’m encouraged to see interest in personal finance improve among young people.

Only 12% of Americans Own Gold, 15% Own Silver

I believe gold and silver should also be part of a diversified retirement portfolio, but too few Americans are invested. One survey in 2019 found that only 15% of respondents held silver, and a little over one in 10 held gold.

Hopefully people will change their minds about hard assets, especially as we face the after effects of unprecedented monetary and fiscal stimulus measures. I agree with emerging markets investor Mark Mobius, who earlier last week recommended people buy gold in anticipation of “significant” currency devaluation as a result of runaway money-printing.

It appears more and more Europeans are getting the message. I’ve shared with you already that German investors’ gold purchases were highest in the first half of 2021 than in any period since at least 2009. The World Gold Council (WGC) attributes this activity to negative real rates and asset purchases made by the European Central Bank (ECB). As you can see below, euro-priced gold has closely tracked negative-yielding debt. 

Red Earth Miners Have Crushed Metal Producers Over the Past Year
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As always, I recommend a 10% weighting in gold, with 5% in physical bullion and 5% in high-quality gold stocks and ETFs. I also recommend no more than 2% in cryptos, particularly Bitcoin and Ether. Remember to rebalance on a quarterly basis.

I will be speaking on gold and cryptocurrencies at Gold Forum Americas 2021 in Colorado Springs, September 13. For those not attending in person, you can register to tune in virtually by clicking here!

 

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content.

Frank Holmes has been appointed non-executive chairman of the Board of Directors of HIVE Blockchain Technologies. Both Mr. Holmes and U.S. Global Investors own shares of HIVE. Effective 8/31/2018, Frank Holmes serves as the interim executive chairman of HIVE.

Holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more accounts managed by U.S. Global Investors as of (06/30/2021): Amazon.com Inc.

Precious Metals

Asante Gold Signs US$5 Million Investment Into West African-Focused Roscan Gold

Asante Gold Corporation (CSE: ASE) announced on Thursday that it has entered into a binding term sheet earmarking a US$5.0
The post Asante Gold Signs US$5…

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Asante Gold Corporation (CSE: ASE) announced on Thursday that it has entered into a binding term sheet earmarking a US$5.0 million “strategic investment” into West Africa-focused gold explorer, Roscan Gold Corporation. The move sets the stage for Asante Gold to grow its reach in the African gold exploration market.

Under the term sheet, the firm has agreed to purchase 22.1 million Roscan Gold common shares at $0.29 per share, a 14% premium to its share price on September 22, 2021. At the transaction’s close, Asante Gold is expected to own approximately 6.7% of the outstanding Roscan Gold common shares.

“Roscan’s 100% owned Kandiole Gold Project in West Mali is located in one of the most prolific and productive gold jurisdictions in Africa,” said Asante Gold CEO Douglas MacQuarrie. “With this investment, Asante’s shareholders gain exposure to Roscan’s large exploration upside, and at a very attractive entry point.”

Related to this planned investment, the two gold exploration firms also entered into an investors rights agreement which will give Asante Gold a possible right to appoint a member in Roscan Gold’s board, subject to time and ownership thresholds.

The investment transaction is expected to close on October 15, 2021, subject to customary closing conditions.

Asante Gold last traded at $1.13 on the CSE.


Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

The post Asante Gold Signs US$5 Million Investment Into West African-Focused Roscan Gold appeared first on the deep dive.

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Precious Metals

Is Silver a good buy in October 2021?

Silver extended its correction from the recent highs above $24, and we could see even lower prices in the weeks ahead if the U.S. dollar remains strong….

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Silver extended its correction from the recent highs above $24, and we could see even lower prices in the weeks ahead if the U.S. dollar remains strong. The demand for the dollar continues to grow, although it remained below its weekly high of 0.86 compared to the euro.

Fundamental analysis: Fed Chair Jerome Powell said that interest rates could rise quicker than expected

Since the beginning of September, the silver price has weakened more than 5% and reached the price levels that we had seen in November 2020. The U.S. central bank reported on Wednesday it could begin reducing its monthly bond purchases by as soon as November 2021, which positively influenced the U.S. dollar, and the most significant force behind the silver price slide is the appreciation of the U.S. dollar.

“The U.S. central bank is preparing the ground to possibly begin dialing back some of the extraordinary support it has given the economy during the pandemic. The timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff,” Fed Chair Jerome Powell told reporters on Wednesday.

The U.S. Federal Reserve switched to a more hawkish tone, and Fed Chair Jerome Powell said that interest rates could rise quicker than expected by next year. Jerome Powell also said that Fed achieved its goal on inflation, while more than half of Fed members believe that the economy reached the employment goal.

The global business activity is recovering, the U.S. unemployment rate fell to 5.2% in August, and the rapid price increases are also a reason to begin raising rates. The prospect of interest rate hikes positively influences the U.S. dollar, and those whose interest is to invest in precious metals like Silver should have the U.S. dollar on their “watch list.”

Technical analysis: $20 represents a strong support level

Those whose interest is to invest in commodities like Silver should consider that the risk of further decline is still not over.

Data source: tradingview.com

The important support level currently stands at $20, and if the price falls below this level, it would be a firm “sell” signal. The next price target could be around $18 or even below.

On the other side, if the price jumps above $25, it would be a signal to trade Silver, and we have the open way to $27.

Summary

Silver price remains under pressure after the U.S. central bank reported that it could begin reducing its monthly bond purchases by as soon as November. The most important driving force behind the price slide is the appreciation of the U.S. dollar, and investors will continue to pay attention to the U.S. Federal Reserve comments.

The post Is Silver a good buy in October 2021? appeared first on Invezz.

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Economics

Teck Resources’ Investor Day Shines Light on Long-Term Resilience of Steelmaking Coal

Source: Peter Epstein for Streetwise Reports   09/24/2021

Teck Resources, a CA$26 billion company, is the 2nd largest steelmaking coal producer…

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Source: Peter Epstein for Streetwise Reports   09/24/2021

Teck Resources, a CA$26 billion company, is the 2nd largest steelmaking coal producer in the world. In its Investor Day presentation earlier this week it reiterated the long-term strength of the seaborne coking coal market. Colonial Coal is also 100% coking coal, with two valuable projects for sale in B.C., Canada.

On September 21st copper, zinc & steelmaking coal producer Teck Resources Ltd. (TECK:TSX; TECK:NYSE) held its annual investor day, a three-hour webcast highlighting very robust global demand for steel and the small number of critical materials essential in making it.

"However, steel is absolutely essential in building the very renewable power plants & electrified transportation systems the world needs to decarbonize."

 

 

 

 

Teck is the 2nd largest coking (metallurgical / met) coal producer in the world behind BHP. Anglo American is #3.

 

Teck’s investor day had been anxiously anticipated. A week earlier there was a rumor that the Company wanted to divest its steelmaking coal business due in part to (as per the rumor) pressure from shareholders & prospective investors calling for companies to dump coal.

A key takeaway from the event was that seaborne met coal (Teck’s specialty) will remain in high demand as several Asian countries, especially India, are building a substantial number of blast furnaces that can only be supplied by exporters like BHP, Teck & Anglo.

There’s no doubt that burning coal, be it thermal (used to generate electricity) or met (to make steel) is bad for the environment, producing greenhouse gases that are warming the planet.

However, steel is absolutely essential in building the very renewable power plants & electrified transportation systems the world needs to decarbonize.

In assessing steelmaking coal’s role in global warming it’s imperative that we separate it from thermal coal. Thermal coal is already being fazed out — readily & cost-effectively — replaceable by nuclear, hydro, wind, solar, biomass, and geothermal sources.

Teck is a prime beneficiary of thermal coal’s demise. According to steelmaker ArcelorMittal’s website,

Each new MW of solar power requires 35 to 45 metric tonnes of steel. Each MW of wind power requires 120 to 180 tonnes. Utility-scale wind farms typically produce a 100 to 300 MW, and up to 1,000 MW. ” Annually, hundreds — eventually thousands — of giant wind farms will be installed.

Steelmakers have been trying to diminish the power that met coal, coke & iron ore producers hold by finding alternatives to blast furnace steel fabrication. That initiative has only grown with increased environmental concerns. Yet, 70% of steel still comes from 20th century blast furnaces.

New technologies are on drawing boards, but none are expected to make meaningful inroads anytime soon. New methods have their own carbon footprints to contend with. Instead, new technology is being deployed at the steel plant level.

 

teck

Carbon capture and other methods (such as the advent of Li-ion battery powered container ships) offer no silver bullets, but they’re reasonably affordable & fairly effective. Unsurprisingly, Teck is a big fan of carbon capture & fossil-free shipping!

Tens of trillions of dollars in debt-fueled economic stimulus packages in the 2020s alone will buy a staggering amount of steel, which will continue to consume vast amounts of met coal. There’s no practical, large-scale substitute.

"Teck is a big fan of carbon capture & fossil-free shipping."

Although I believe met coal should be given more slack, some good projects will, inevitably, fail to get funded or die on the permitting vine. This suggests that met coal prices are likely to remain stronger for longer. Teck forecasts the potential of a meaningful deficit in the seaborne market from 2025-2030.

According to Teck’s presentation, the 10-year avg. inflation-adj. met coal price is ~$180/Metric tonne (“Mt”). Fastmarkets lists four hard (and premium hard) met coals ranging in price from ~$336 to $601/Mt (Sept. 22nd), and averaging $475/Mt. That average price has quadrupled from its 2020 low!

teck

Will prices in the next 10 years average $180/Mt? No, my guess is prices might return to $225-$275/Mt.However, can steelmakers take the chance of multi-yr. stretches of $300-$400/Mt pricing? Vertical integration into met coal is a move that all steelmakers should seriously be considering.

Teck’s trailing 12-yr. normalized (adjusted) annual EBITDA {from presentation slides} is $2.2 billion. At a “new normal” avg. long-term met coal price of say $240/Mt, EBITDA would be closer to $2.95 billion = CA$3.75 billion.

In my view, the valuation of Teck’s steelmaking coal biz. in today’s bull market is > CA$12 billion. If a robust bidding war were to break out, with prices at, or near, all-time highs, I believe the transaction value could surpass CA$16 billion

Which other steelmaking material companies might be poised to benefit from Teck’s bullish vision of the future? One seemingly undervalued company is Colonial Coal International Corp. (CAD:TSX.V).

Colonial has two 100%-owned, PEA-stage met coal projects in B.C. Canada. One borders Teck’s Quintette project, the other is sandwiched between two of Anglo American’s projects. While Teck has met coal reserves of ~800M Mt, all in B.C., Colonial has resources (not reserves) of 695M Mt.

The Huguenot project is ~620 km north-northeast of Vancouver, close to the boundary with Alberta. Huguenot’s PEA contemplates an open-pit only scenario; 27-yr. mine life @ 2.7M Mt/yr., at a cost of ~US$110.4/Mt & upfront cap-ex of US$303M. At current met coal prices, I estimate 2.7M Mt/yr. could generate ~CA$775M/yr. in EBITDA.

Colonial’s other project, Gordon Creek, is planned as an underground mine; 30-yr. life @ 1.9M Mt/yr., at a cost of ~US$81/Mt & upfront capital of US$300M. At current met & PCI coal prices, I estimate 1.9M Mt/yr. could generate ~CA$504M/yr. in EBITDA.

teck

Therefore, combined EBITDA could be ~CA$1.3 billion/yr. (at currently sky-high pricing). Having said that, it would likely take a buyer at least five years to approach full-scale production.

Assuming a 40% retreat in pricing, annual EBITDA would still be ~CA$774M. If one applies a 4x EBITDA multiple on that CA$774M, the indicative future value of Colonial could be ~CA$3.1 billion, (less CA$766m in initial cap-ex), equals $2.33 billion.

Discounting that figure back five years at 8%/yr., nets ~CA$1.6 billion.

I believe a well-funded steelmaker, miner, commodity trader or OEM could afford CA$1.5-$2.0 billion for Colonial’s 695M resource tonnes.

Colonial is run by experts in met coal & in mining, and by people with meaningful work experience in western Canada. For the past two years, the Company has been engaged in a process to divest one or both of Huguenot / Gordon Creek. They’ve retained a number of investment bankers to assist.

Soon after the sales process began, COVID-19 struck. India had a particularly difficult time, and Indian groups are thought to be among the most interested in Colonial’s assets. Indians, along with Chinese, Japanese, Australian, Korean, Russian, Canadian & American groups!

 

"[The] first bid will refocus everyone’s eyes on the size of the prize."

Understandably, COVID-19 has slowed the sales process considerably. In my opinion, it might still take months before one or both projects are sold. However, an opening indication of interest, a bid, even a “stink bid,” could come at any time. That first bid will refocus everyone’s eyes on the size of the prize.

 

teck

It seems odd that with Colonial trading at CA$1.05/shr., a suitor’s bid of say US$0.75 per resource tonne — considered by most to be too low — could vault the share price above CA$3/shr.

Colonial has 183.4M fully-diluted shares, no debt & ~CA$6M of fully-diluted cash. The Company is valued in the market @ US$0.21 per resource tonne.

Some shareholders are quick to point to comparable transactions and record high met coal prices to suggest > US$2-$4/Mt in the ground is called for. That’s certainly possible, but to be prudent, readers should not base investment decisions on best case scenarios. US$1.50/Mt equates to CA$7.25/shr. (NOT a price target)

Some of the same buyers from 2011-12, but significantly more steelmakers, coal / copper / iron ore miners, commodity trading firms (like Mitsui, Mitsubishi & Glencore), and perhaps even large automakers — are watching Colonial. Perhaps it’s time for giant Indian & Chinese thermal coal-heavy players to diversify into met?

There are only a handful of high-quality met coal resources of this size (695M Mt in total) anywhere in the world, no less in a great mining / met coal jurisdiction like B.C. Canada, and actively for sale.

It might be unwise for a Major steel company to allow Colonial’s projects to be sold too cheaply to a competitor, possibly giving that competitor a meaningful, long-term cost advantage.

"Retail investors have a rare opportunity."

teck

Retail investors have a rare opportunity. Trading volume is not consistently large enough to allow institutions to build multi-million share positions. But, investors looking for thousands of shares can get it done.

Make no mistake, an investment in Colonial’s stock offers a high-risk, high-reward, high share price volatility proposition. Readers are reminded not to invest more than they can afford to lose.

If one agrees that poor trading liquidity, the drawn out sales process (largely due to COVID-19), and the word COAL in the Company’s name might be driving significant undervaluation, then it’s time to take a closer look at Colonial Coal.

teck

 

Peter Epstein is the founder of Epstein Research. His background is in company and financial analysis. He holds an MBA degree in financial analysis from New York University's Stern School of Business.

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Disclosures: The content of this article is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER], (together, [ER]) about Teck Resources and Colonial Coal International Corp., including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is not to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible under any circumstances for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market making activities. [ER] is not directly employed by any company, group, organization, party or person. Readers understand and agree that investments in small cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making any investment decisions.

The author, Peter Epstein of Epstein Research [ER] has no current or prior business or personal connection with any mgmt. or board member of Colonial Coal, nor does he or [ER] have any prior or current business relationship with the Company. Mr. Epstein owns shares of Colonial Coal, obtained in the U.S. market, via open market purchases. Mr. Epstein may buy or sell shares in the Company at any time.

Mr. Epstein is not currently, and never was, an investment advisor, stock broker, agent, legal advisor or investment professional of any kind. Nothing contained in the above article should be taken as advice or as an offer to buy or sell any security. All facts & figures, incl. commentary on indicative company valuations are believed to be somewhat accurate & reasonable, but might not be — therefore they are for illustrative purposes only. Facts & figures / calculations / valuations, etc. should not be relied upon without further investigation by investment professionals. Mr. Epstein is not providing any share price guidance or buy/sell recommendation. Mr. Epstein may or may not write about Colonial Coal in the future. He & [ER] are under no obligation to update readers going forward. The shares of Colonial Coal represent a high-risk investment opportunity that may, or may not, be suitable for readers. As such, readers are urged to consult with their own investment advisors before making investment decisions.

Readers understand and agree that they must conduct their own due diligence above and beyond reading this article. While the author believes he's diligent in screening out companies that, for any reasons whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. [ER] is not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts & financial calculations, or for the completeness of this article or future content. [ER] is not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. [ER] is not an expert in any company, industry sector or investment topic.

Streetwise Reports Disclosure:
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3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
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5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.  

 

( Companies Mentioned: CAD:TSX.V, TECK:TSX; TECK:NYSE, )

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