The Gold Report

Covid19, Bear Markets and Gold

The Gold Report /

Source: Ron Struthers for Streetwise Reports   03/12/2020

Ron Struthers of Struthers’ Resource Stock Report discusses the current market meltdown and the longer-term outlook for the markets and gold.

Although I know of some great companies and stocks out there, it is best just to wait. Markets are going a lot lower and investors in the main indexes and techs won’t have a recovery in their portfolios for many, many years. Gold is being sold down too at times but the uptrend is still in place. We can expect a recovery in gold, gold stocks and junior miners this year and then off to new highs in a raging bull market. We will soon have zero interest rates and massive QE. The Fed announced they are pumping up to $175 billion per day in the repo market up from $150 billion. The Fed balance sheet is heading up again and will go at a faster pace now. The red arrow is where it’s headed, off the chart.

This crash will cause some investment bank failures and soon they will implement new rules in stock markets like 2008. I hope the computers melt down and get discarded.

It will be similar to the 2008 crash in some ways. All the liquidity and money creation will debase currencies, so gold and gold stocks will rally like they did in 2008 to 2011. In that period gold ran from $700 to $1,900 over three years. This time after a possible pull back, gold will run to a minimum $4,000 to $5,000/ounce and it could go way higher. I expect this recession will be worse than 2008 and even much harder to recover from. I don’t like to be so pessimistic, but you can get away with it in a bear market. Nobody listens to you until after it happens. I warned about this a month ago. V26 #4.0 Corona Virus, Gold:

Feb 12th – “So far the effects from the coronavirus are being mostly ignored by the markets. There seems to be hope that this virus will be contained or maybe it is denial of economic damage it will, and could cause. …….. The economic impact could be catastrophic. What if markets start to price in the worse. China and the world economies were already slowing ahead of this……………Slowing economies will results in more QE and a quicker move to zero interest rates. U.S. stock markets are frothy at record levels and the balloon is seeking a pin.”

You can be certain fund managers and such are going to put gold back in their portfolios. I am not sure how far a pull back in gold we will get, $1,350 to $1,500 somewhere between the two arrows that will put gold off the chart in the coming years. Just like 2008, gold started to rally about two years ahead of the crisis, from the 2018 low this time.

In simple terms Covid19 will run its course and infect 30% to 70% of the population worldwide. Everything is going to shut down for a while and this will cause a deep recession and a severe bear market. There is no escaping it, there is no denying it. Right now just look after your health and family, Try to obtain essential supplies if stores get shut down. It is already too late for this in a lot of cases as panic has already emptied a lot of shelves. Canned goods and dried goods like pasta, beans and rice will get you by if things go real bad. Don’t worry about face masks and hand sanitize, it will not help much. Keep healthy, eat well, get rest and frequent washing with hot water and soap is all you can really do.

Because we will end up in a bad recession most everything will crash. Real estate is another bubble seeking a pin. I warned about this bubble, last July. I have been anxiously waiting for the RLB Crane Index for year-end 2019, but still not out. All I can find is this article that Toronto will soon pass Chicago as the #2 city with the most skyscrapers..Over half of Toronto condos are owned by investors and they are reliant on travel and tourism for rentals, and you know what’s happening there.

Real estate elsewhere will be negatively affected by the recession and high mortgage leverage. As always with real estate, different locations will suffer less than others. It has been a seller’s market for many years where buyers bid up above asking prices. This will change abruptly to a buyer’s market. The first effect is that people will not even want to go out and look at homes, they will be staying where they are. Those who have to sell will lower prices and then the ball starts rolling down hill.

The last real estate bubble peaked in 2006 and declined into a bottom in 2012. I do not expect this decline to be as bad because lending requirements have been tightened since then, but thelow mortgage rates has inspired high debt levels.

This is an older report from Stats Canada. From 1999 to 2016, mortgage debt represented two-thirds of the overall increase in debt for Canadian families, while consumer debt made up the remainder. In recent years (2012 to 2016), mortgage debt was responsible for 100% of the increase in total debt. More recent, (March 2019) according to Bloomberg – “Household debt in Canada, a nation generally known for moderation, has reached levels that could be qualified as excessive. Canadians owe $2.16 trillion—which, as a share of gross domestic product, is the highest debt load in the Group of Seven economies. With the housing market cooling, a reckoning may be fast approaching.”

It is a debt party in the U.S. too, according to Reuters – “American households added $193 billion of debt in the fourth quarter, driven by a surge in mortgage loans, and overall debt levels rose to a new record at $14.15 trillion, the Federal Reserve Bank of New York said.” A big problem today is a lack of room for rate reductions. The Fed’s gun is about empty. In 2008 rates were cut from about 5% to near zero. This time it will be from 1.5%, so interest rate reductions will be useless this go around. Ignore the Fed, there is nothing it can do. Going to zero interest rates will do nothing in an economy already over leveraged. More QE keeps the financial system afloat; none of this solves the Covid19.

I follow the Michigan Consumer Index for recession warnings and it is showing no problems yet. This virus thing came on very fast, so it will be interesting to see the March numbers. I expect a big plunge.

And finally my targets for stock markets as per the S&P index. My update last week when the S&P was still near 3,000 was a downside target just above 2,700. That only held two days. My next down side target is around 2,400 and we might hit that Friday as many traders will not want to be long over the weekend, then maybe a relief rally on Monday. This bear market will go down to at least the 2,100 area which is about a -38% decline. I could easily decline much more, depending on economic damage

Just one more very ugly chart of the TSX Venture Index. At 388 it is about 100 points below the early 2016 bottom. The index is now down -84% from the 2011 high. This is more than a bear market, it is a broken market. Regulators need to get off their behinds and make changes. There is no way computer trading should be allowed to short nickel and dime stocks.

There is an initiative underway to try and get regulation changes. It is called “Save Canadian Mining.” It is not just about mining companies but all penny stocks in Canada. Check out this short video on youtube.

In my opinion, every investor should signup and support the initiative. You can do so here. https://signup.savecanadianmining.com/

Ron Struthers founded Struthers’ Resource Stock Report 23 years ago. The report covers senior and junior companies with ample trading liquidity. He started his Millennium Index of dividend stocks in 2003 – $1,000 invested then was worth over $4,000 end of 2014 and the index returned 26.8% in 2016. He retired from IBM after 30 years in customer service, systems and business analyst, also developing his own charting software. He has expertise in junior start-ups and was a co-founder of Paramount Gold and Silver.

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Charts and images provided by the author.

Author’s Disclosures: All forecasts and recommendations are based on opinion. Markets change direction with consensus beliefs, which may change at any time and without notice. The author/publisher of this publication has taken every precaution to provide the most accurate information possible. The information & data were obtained from sources believed to be reliable, but because the information & data source are beyond the author’s control, no representation or guarantee is made that it is complete or accurate. The reader accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Because of the ever-changing nature of information & statistics the author/publisher strongly encourages the reader to communicate directly with the company and/or with their personal investment adviser to obtain up to date information. Past results are not necessarily indicative of future results. Any statements non-factual in nature constitute only current opinions, which are subject to change. The author/publisher may or may not have a position in the securities and/or options relating thereto, & may make purchases and/or sales of these securities relating thereto from time to time in the open market or otherwise. Neither the information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein. The author/publisher of this letter is not a qualified financial adviser & is not acting as such in this publication.

c. Copyright 2020, Struther’s Resource Stock Report

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Newfoundland Gold Project Zone ‘Showcases District Scale Potential’

Common Stock Warrants, The Gold Report /

Source: Streetwise Reports 03/07/2020 New drill results from Marathon Gold are reviewed in a Haywood report. In a March 2 research note, Haywood analyst Mick Carew reported that recent drilling at Marathon Gold Corp.’s (MOZ:TSX; MGDPF:OTCMKTS) Valentine gold project “continues to demonstrate the potential for another gold mineralized zone away from the four deposits that comprise the current resource.” Carew explained that the new results are from the first eight holes of Marathon’s 2020 exploration program at the Central Newfoundland project. The holes specifically targeted quartz-tourmaline-pyrite-gold veining over a 200 meter (200m) long strike length, where they demonstrated the emergence of a potential new ‘Main zone’ sequence in mineralization in a new area the company has recently named the Berry zone,” he wrote. The first eight holes were part of an overall 32,000m program of drilling in the 6 kilometer long Sprite corridor, situated between the Marathon and Leprechaun deposits. Carew provided some highlight assays. Hole VL-20-799 is notable for its width of 55m, he noted, given most of the other widths were between 2m and 6m. This hole intersected 55m of 2.24 grams per ton (2.24 g/t) gold from a downhole depth of 113m, including 3m at 15.17 g/t gold, 3m at 10.96 g/t gold and 1m at 9.25 g/t gold. Hole VL-20-801 intersected 8m at 3.92 g/t gold from a 146m downhole depth, including 2m at 9.63 g/t gold. “The recent results are encouraging,” commented Carew. However, more drilling is needed, he indicated, to assess the continuity of … Continue reading →

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Gold Terra Resource: ‘A Step in the Right Direction’

The Gold Report /

Source: Gary Sidhu of Intrynsyc Capital for Streetwise Reports   03/05/2020

The maiden Inferred resource estimate is discussed in this report.

Gold Terra Resource Corp. (YGT:TSX.V) [which until February 2020 was known as TerraX Minerals] announced last November an overall maiden Inferred resource of 735,000 gold ounces (oz Au).

Incremental Positive: The company announced an overall maiden Inferred resource of 735,000 oz Au at an average grade of 1.79 gpt Au. The global resource is a combination of open pit and underground resources from four different deposits (Crestaurum, Mispickel, Sam Otto and Barney), all located within a 3-kilometer (3 km) radius. The resource is based on 90,751 meters (90,751 m) of drilling (463 drill holes), with spacing varying between drill holes from 25–100m apart. Recall, Gold Terra provides exposure to a district-scale land package with multiple high-grade targets and initial work focused mainly on exploration. The focus has now shifted to resource delineation which will be aimed at unlocking the multimillion ounce potential of the district.

Analysis

  • Optionality: The resource is separated into an open pit (OP) scenario and underground (UG) scenario based on the current limits of drilling. The OP Inferred resource is estimated at 523,000 ounces (523 Koz) at a grade of 1.4 gpt Au, and an UG inferred resource of 212 Koz at a grade of 5.7 gpt Au. The bulk of the OP resource (81%) is from the Sam Otto Pit at a grade of 1.23 gpt Au, whereas the UG resource (72%) is driven by Crestaurum at a grade of 6.56 gpt Au.
  • High Grade—At Surface: The Crestaurum deposit is proposed as a potential starter open pit estimating 38,000 oz Au at a grade of 9.41 gpt Au with an UG component. Mineralization has been identified over a 1-km strike length and significant potential remains to be tested at depth. The current resource only tests a fraction of strike length with no drilling at Crestaurum North; a new discovery on surface returning 2.0 m of 21.4 gpt Au. We believe additional drilling has the potential to increase the size of the open pit and show that the high grade extends at depth.

    • >

  • Bulk Tonnage OP: Sam Otto comprises a bulk tonnage target that has limited drilling along a 1.5 km mineralized footprint outside of the resource area. A recent three-hole drill program successfully extended mineralization along strike and at depth (an additional ~50 m vertical depth), returning an interval of 25.5 m of 1.26 gpt Au, including 10 m of 1.76 gpt Au and 3 m of 2.01 gpt Au. We believe additional drilling will continue to show the district-scale potential along the 2.5 km Sam Otto Trend and clearly illustrate the bulk tonnage nature of this target.
  • The resource was estimated using US$1,300 gold price; US$2.20/tonne for mining cost; US$16.00/tonne for processing and G&A (general and administrative) costs; 90% metallurgical recovery; 5% dilution (external); 5% mining loss and 55⁰ pit slopes. These parameters are inline with current operating OP mines and other resource estimates.

Takeaway

In our view, a common theme emerges from the recent maiden resource and our discussion, which is the significant upside of the property. This maiden resource, albeit small, is the first step toward unlocking the multimillion ounce potential of the district. Historical drilling has been spread out across multiple targets not fully testing any one target properly, but demonstrating that mineralization is still open ended. We view this resource as a positive step in the right direction, which will allow YGT to expand on each of the deposits with a clear focus towards resource growth and development.

Upcoming Catalysts:

  • Resource Expansion Drilling at Sam Otto and Crestaurum—Q1/20

Gary Sidhu, an analyst with Intrynsyc Capital Corp., has been involved in the mineral exploration industry for almost 20 years. Early in his career he gained extensive technical experience with “boots on the ground” knowledge of early to advanced stage projects including mapping, drilling, milling and mining experience. Until recently he worked as a sell side analyst focusing on early to advanced stage junior exploration companies.

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This publication is intended only to convey information. It is not to be construed as an investment guide and may be construed as an offer or solicitation of an offer to buy securities mentioned in it. The author has taken all usual and reasonable precautions to determine that the information contained in this publication has been obtained from sources believed to be reliable and that the procedures used to summarize and analyze such information are based on approved practices and principles in the investment industry. However, the market forces underlying investment value are subject to sudden and dramatic changes and data availability varies from one moment to the next. Consequently, neither the author nor Intrynsyc Capital Corporation can make any warranty as to the accuracy or completeness of information, analysis or views contained in this publication or their usefulness or suitability in any particular circumstance. You should not undertake any investment solely on the basis of this publication, but should first consult your investment adviser, who can assess all relevant particulars of your proposed investment. The author and Intrynsyc Capital Corporation accept no liability of any kind whatsoever or any damages or losses incurred by you as a result of reliance upon or use of this publication.

Disclosure:
1) Intrynsyc Capital’s disclosures are above.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
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 interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this interview, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Gold Terra Resource Corp., a company mentioned in this article.

( Companies Mentioned: YGT:TSX.V,
)

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