A number of offsetting negative and positive catalysts are making it
difficult to project where gold prices are headed over the next year or
so. Here's a look at what is the most likely scenario to play out in 2018 and possibly 2019 for gold prices.
Brien Lundin, the editor of Gold Newsletter, President and CEO of Jefferson Financial, said recently at the New Orleans Investment Conference, which he is responsible for, that over the period of an eight-year term by a President, the Federal debt doubles.
Assuming that's how it plays out this time around, it means the current $20 trillion in debt will soar to $40 trillion in about seven years.
The reality is raising taxes and cutting government spending has no chance of dealing with these growing liabilities.
In the end, it means a significant depreciation of the U.S. dollar, which also means precious metals in general, and gold in particular, are guaranteed to increase, according to Lundin.
Trevali Mining (TSX:TV) started the week by releasing a preliminary economic assessment for its Halfmile and Stratmat zinc-lead–silver deposits in New Brunswick’s Bathurst Mining Camp.
The report was led by SRK Consulting and looks at two different scenarios, both of which indicate positive economics, the company said in a statement on November 6.
“This PEA study on Halfmile-Stratmat provides a strong, initial foundation for Trevali’s future plans in the Bathurst Mining Camp,” said Mark Cruise, Trevali’s president and CEO.
Trevali is already a top zinc producer.
The base case looks at a scenario in which material from Halfmile and Stratmat is fed into a new 3,000-ton-per-day concentrator plant located at the Stratmat site.
This study includes annual payable peak production of approximately 117 million pounds of zinc, 35 million pounds of lead, 2 million pounds of copper and 766,000 ounces of silver over a mine life of 13 years.
It also points to pre-production capital expenditures of C$231 million, a post-tax internal rate of return (IRR) of 19 percent and a post-tax net present value of C$99 million at a discount rate of 8 percent.
The other scenario looks at the feasibility of transporting pre-concentrated dense media feed to the concentrator plant at the company’s Caribou mine, also located in the Bathurst Mining Camp.
Under that plan, pre-production capital expenditures are estimated at C$156 million, with the post-tax IRR coming in at 25 percent and the post-tax NPV sitting at C$116 million at an 8 percent discount rate.
“The study contributes significantly to the Company’s continued interest in the region and … demonstrates the optionality for future planned production on either a stand-alone basis or by leveraging our current Caribou operational team and infrastructure,” Cruise added.
The Halfmile deposit includes four sulfide zones and consists of 73 claims covering an area of 1,104 hectares.
Stratmat is composed of 95 contiguous claims spread across an area of 1,827 hectares.
The mineral resource estimate for Halfmile was updated as part of the PEA.
Aside from the Halfmile and Stratmat deposits, Trevali owns two commercially producing operations.
Its zinc-lead-silver Santander mine in Peru produces 2,000 tons per day, while its zinc-lead-copper-gold Caribou mine in New Brunswick produces 3,000 tons per day.
Earlier this year, Trevali acquired a portfolio of zinc assets from Glencore (LSE:GLEN) and now also owns an 80-percent stake in the Namibia-based Rosh Pinah mine and a 90-percent interest in the Perkoa mine in Burkina Faso.
The company has moved up nicely since the beginning of 2017, jumping over 31 percent.
With expectations of the stock market's bubble bursting, Peter Schiff recently provided his thoughts on how to protect our wealth during that period of time.
First, he said it has to be understood that there has already been three stock market bubbles since the turn of the century that were inflated by the Federal Reserve. This one is by far the most dangerous to the market.
Schiff doesn't believe there will be a fourth market the Fed can successfully inflate. He may be right. My view is this is why the Fed is entering into a period of quantitative tightening, so it can clear the way for another round of quantitative easing when the next bubble hits.
The problem is there is a very good chance the bubble will burst before it is able to clear the way for another round of inflating the money supply. Under that scenario, there is little it can do without having an enormous impact on the value of the dollar.
The answer to Schiff is to invest in physical gold and gold stocks in order to preserve buying power. He believes the gold market doesn't “really reflect all the potential for inflation, the potential for dollar debasement."
Schiff believes investors in general are overly optimistic about the future, and have entered into a state of complacency concerning their stock positions. He thinks that's why the market continues to soar to record levels.
He also cites the relatively low price of gold as another example of the market being overly exuberant about the future.
That said, he does admit investors will have to be able and willing to take on some risk, and not make rash decisions to sell when the current volatile market takes significant swings.
He sees investors doing well if they have a long-term investing horizon. If they do, he sees a lot of opportunity in the sector. Schiff thinks that opportunity isn't far away.
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