RE:RE:RE:Corky is back!!I think what you are hearing is right on all accounts it is just a matter of timing Wmaver.
A great deal of people seem to think the worst is over and that we are going to avoid a recession. This optomism has caused the recent "dead cat bounce" the markets are seeing right now. It is also worth noting that the ai driven -bubble rally, teslas recent new of higher than expected deliviries, teslas recent charging deals with multiple manufacturers among other indicators investors see as bullish... Gold has pulled back a bit from ATHs... will it pullback down to 1800? I think that may be a little low but anything is possible as people go even more "risk-on" and FOMO into the momentum of this rally and ditch safe haven assets such of gold in the short term. The market may gain more ground from here into the next few months but i think the 3rd/4th quarter of this year will turn that around.
An official recession announcement is always a lagging indicator, we dont truly know we are in a recession until we have already been in one for a few months. Everyone is screaming recession cancelled but there are a few issues that are going to stoke the recession fire. (yes this all ties into LME, I will get there)
House prices are still relatively high while inventory remains limited but sales volume is down year over year and sellers expecting the high prices we saw last year are met with buyers who cant afford current interest rates or who cannot pass the stress test for financing approval. As canadians are hit with renewal notices there will propably be a modest decline in housing prices as some -(possibly many?) - people will be forced to downsize. I qualified on my mortgage at 1.92% which was great, I was only stress tested to 5%. The issue is mortgage rates are now closer to the 6% range on and the rumour is we will head a bit higher into the end of this year and hold at this level "until something breaks".
This will be when the general pain of the recession hits. Bank implosions? Theres a strong possibility we will see a lot more banks in the states go the way of SVB. In Canada? maybe but Canada bank regulations are mote strict on what banks can do with deposited funds. In the USA The FDIC is only required to have on hand 1.35% of all insured deposits; in 2020 during the covid crash, the amount of insured deposits was approximately $8.9 trillion and therefore the fund requirement was $120 billion, a very small drop in the bucket. If there is a "crisis" That means theres only cash available for 1.35% of people in the USA (source: FDIC website financial reports). Sure the government would probably enact some type of emergency act to keep the money printer going (this rings of 2020 vibes) but this would fuel inflation again, devaluing the dollar that us canadians are heavily tied to. The current FDIC reserve ratio has since decreased from 1.35% to 1.11% as of March 31, 2023. In Canada our percent coverage is even lower at 0.73%. "As at December 31, 2022, CDIC’s ex ante funding ($7,919,000,000) represented 73 basis points of insured deposits ($1,082,000,000,000)" (source: 2023 CDIC quarterly financial report).
I know that can paint a bleak picture and i do need to state i do not think it will be all out doomsday! But i do think there is a fair amount of economic pain coming and this is all incredibly bullish for gold and LME. As people realize the sky is falling they will panic. We will most likely see a broad market decline across all sectors, including precious metals (similar to 2008) however very shortly after the panic Gold will skyrocket as demand for the save haven asset soars. This will ultimately be a very profitable time for Senior producers as they will have assetts worth substantially more than they paid (think a senior who aquired a jr with an expected all in sustaining cost (AISC) of $1,200 per GEO in a market where Gold was $1,800) At a time where gold is now $3,000 their upside has increased substantially (granted an arguement can be made that extraction costs may go up as well). This will be incredible for juniors who have proven results and who have not been aquired yet. Hopefully LME is aquired before then and we are all sipping mai thais on a beach somewhere or taking advantage of further investing opportunites that arise, or both!
*** Please note the AISC of $1,200 per GEO is based on averages I have read but these numbers can vary greatly. The Ishkoday is poised to be a lower cost mine so they can fetch a higher premium for their resources ***
Anyone looking to purchase a mine wether it be a senior, family office or other group understands Gold trends and sees the Ishkodays value. I definitely think we will see a deal before the end of the year.