Chris Temple from The National Investor – Mon 9 Mar, 2020

Oil Crashing and OPEC+ Fighting, This Could Be A Huge Issue For Markets Everywhere

Chris Temple joins me today to share his thoughts on the news that broke late Sunday regarding the Saudi-Russia alliance collapsing. Oil prices are being crushed and the rush to cash is hitting pretty much everything across the board.

This could easily take fears to another level over the Coronavirus and get the central banks acting aggressively sooner rather than later.

Click here to visit Chris’s site and follow along with his markets thoughts and trades.

Elites Have Destroyed a Possible U.S. – Russia Alliance to Contain China

This post Elites Have Destroyed a Possible U.S. – Russia Alliance to Contain China appeared first on Daily Reckoning.

There’s no need to rehash the sordid politics of the U.S.-Russia relationship since 2014. That relationship became collateral damage to gross corruption in Ukraine.

The U.S. and its allies, especially the UK under globalists like David Cameron, wanted to peel off Ukraine from the Russian orbit and make it part of the EU and eventually NATO.

From Russia’s perspective, this was unacceptable. It may be true that most Americans cannot find Ukraine on a map, but a simple glance at a map reveals that much of Ukraine lies East of Moscow.

Putting Ukraine in a Western alliance such as NATO would create a crescent stretching from Luhansk in the South through Poland in the West and back around to Estonia in the North. There are almost no natural obstacles between that arc and Moscow; it’s mostly open steppe.

Completion of this “NATO Crescent” would leave Moscow open to invasion in ways that Napoleon and Hitler could only dream. Of course, this situation was and is unacceptable to Moscow.

Ukraine itself is culturally divided along geographic lines. The Eastern and Southern provinces (Luhansk, Donetsk, Crimea and Dnipro) are ethnically Russian, follow the Orthodox Church and the Patriarch of Moscow, and welcome commercial relations with Russia.

The Western provinces (Kiev, Lviv) are Slavic, adhere to the Catholic Church and the Pope in Rome, and look to the EU and U.S. for investment and aid.

Prior to 2014, an uneasy truce existed between Washington and Moscow that allowed a pro-Russian President while at the same time permitting increasing contact with the EU. Then the U.S. and UK overreached by allowing the CIA and MI6 to foment a “color revolution” in Kiev called the “Euromaidan Revolution.”

Ukrainian President Viktor Yanukovych resigned and fled to Moscow. Pro-EU protestors took over the government and signed an EU Association Agreement.

In response, Putin annexed Crimea and declared it part of Russia. He also infiltrated Donetsk and Luhansk and helped establish de facto pro-Russian regional governments. The U.S. and EU responded with harsh economic sanctions on Russia.

Ukraine has been in turmoil (with increasing corruption) ever since. U.S.-Russia relations have been ice-cold, exactly as the globalists intended.

The U.S- induced fiasco in Ukraine not only upset U.S.-Russia relations, it derailed a cozy money laundering operation involving Ukrainian oligarchs and Democratic politicians. The Obama administration flooded Ukraine with non-lethal financial assistance.

This aid was amplified by a four-year, $17.5 billion loan program to Ukraine from the IMF, approved in March 2015. Interestingly, this loan program was pushed by Obama at a time when Ukraine did not meet the IMF’s usual borrowing criteria.

Some of this money was used for intended purposes, some was skimmed by the oligarchs, and the rest was recycled to Democratic politicians in the form of consulting contracts, advisory fees, director’s fees, contributions to foundations and NGOs and other channels.

Hunter Biden and the Clinton Foundations were major recipients of this corrupt recycling. Other beneficiaries included George Soros-backed “open society” organizations, which further directed the money to progressive left-wing groups in the U.S.

This cozy wheel-of-fortune was threatened when Donald Trump became president. Trump genuinely desired improved relations with Russia and was not on the receiving end of laundered aid to Ukraine.

Hillary Clinton was supposed to continue the Obama policies, but she failed in the general election. Trump was a threat to everything the globalists, Democrats and pro-NATO elites had constructed in the 2010s.

The globalists wanted China and the U.S. to team up against Russia. Trump understood correctly that China was the main enemy and therefore a closer union between the U.S. and Russia was essential.

The elites’ efforts to derail Trump gave rise to the “Russia collusion” hoax. While no one disputes that Russia sought to sow confusion in the U.S. election in 2016, that’s something the Russians and their Soviet predecessors had been doing since 1917. By itself, little harm was done.

Yet, the elites seized on this to concoct a story of collusion between Russia and the Trump campaign. The real collusion was among Democrats, Ukrainians and Russians to discredit Trump.

It took the Robert Mueller investigation two years finally to conclude there was no collusion between Trump and the Russians. By then, the damage was done. It was politically toxic for Trump to reach out to the Russians. That would be spun by the media as more evidence of “collusion.”

IMG 1

Russian President Vladimir Putin (l.) has recently named a new Prime Minister, Mikhail Mishustin (r.). This is part of a complex government reorganization designed to extend Putin’s rule beyond existing term limits. This is a setback for democracy, but may be a plus for the economy because it adds stability and continuity to Putin’s programs.

This whirl of false charges, cover-ups, and deep state sabotage finally led to Trump’s impeachment on December 18, 2019. Fortunately, the Senate impeachment trial may soon be behind us with Trump’s exoneration in hand (although new impeachment charges and false accusations cannot be ruled out).

Is the stage finally set for improved U.S.-Russia relations, relief from U.S. sanctions, and a significant increase in U.S. direct foreign investment in Russia?

Right now, my models are telling us that Russia is one of the most attractive targets for foreign investment in the world. Just because U.S. policymakers missed the boat does not mean that investors must do the same.

Russia is often denigrated by Wall Street analysts and mainstream economists who know little about the country. Russia is the world’s largest country by area and has the largest arsenal of nuclear weapons of any country in the world.

It has the world’s 11th largest economy at over $1.6 trillion in annual GDP, ahead of South Korea, Spain and Australia and not far behind Canada, Brazil and Italy.

It also is the world’s third largest producer of oil and related liquids, with output of 11.4 million barrels per day, about 11% of the world’s total. The U.S. (17.8 million b/d), Saudi Arabia (12.4 million b/d) and Russia combine to provide 41% of the world’s liquid fuels. The latter two countries effectively control the world’s oil price by agreeing on output quotas.

Russia has almost no external dollar-denominated debt and has a debt-to-GDP ratio of only 13.50% (the comparable ratio for the United States is 106%).

In short, Russia is too big and too powerful to ignore despite the derogatory and uninformed claims of globalists. Importantly, Russia is emerging from the oil price shock of 2014-2016 and is in a solid recovery.

The stage is now set for significant economic expansion as illustrated in the chart below from Moody’s Analytics:

IMG 2

This graphic analysis from Moody’s Analytics divides major economies into categories of Recovery, Expansion, Slowdown and Recession. Economies revolve clockwise through these four phases. The U.S. is in a Slowdown phase with some risk of Recession. Russia is in the Recovery phase heading toward Expansion. The Russian situation is the most attractive for investors because it offers cheap entry points with high returns as the Expansion phase begins.

Russia has also gone to great lengths to insulate itself from U.S. economic sanctions. Their reserves have recovered to the $500 billion level that existed before the 2014 oil price collapse with one important difference. The dollar component of reserves has shrunk substantially while the gold component has increased to over 20%.

With the recent surge in gold prices, Russia’s reserves get a significant boost (when expressed in dollars) because of the higher dollar value of the gold reserves. Gold cannot be hacked, frozen or seized, as is the case with digital dollar assets.

Russia’s fortunes have been improving not only because of low debt and higher gold prices but also because of higher oil prices. The country is poised for a strong expansion, even if U.S. hostility caused by the Democrats continues.

If Trump regains his footing after impeachment and wins a second term (which I expect), investors can expect warmer relations with Russia and an even more powerful Russian economic expansion than the one already underway.

Regards,

Jim Rickards
for The Daily Reckoning

The post Elites Have Destroyed a Possible U.S. – Russia Alliance to Contain China appeared first on Daily Reckoning.

Russia: The Lost Opportunity

This post Russia: The Lost Opportunity appeared first on Daily Reckoning.

The biggest story out of China right now is the coronavirus that I addressed in yesterday’s reckoning.

But while it’s important, the bigger story is the geopolitical dynamic between the U.S., China and Russia.

Today I’m going to address that dynamic and show you how Washington has squandered a major opportunity to turn it in America’s favor.

When future historians look back on the 2010s, they will be baffled by the lost opportunity for the U.S. to mend fences with Russia, develop economic relations and create a win-win relationship between the world’s greatest technology innovator and the world’s greatest natural resources provider.

It will seem a great loss for the world. Here’s the reality:

Russia, China and the U.S. are the only true superpowers and the only three countries that ultimately matter in geopolitics. That’s not a slight against any other power.

But all others are secondary powers (the U.K., France, Germany, Japan, Israel, etc.) or tertiary powers (Iran, Turkey, India, Pakistan, Saudi Arabia, etc.).

This means that the ideal posture for the U.S. is to ally with Russia (to marginalize China) or ally with China (to marginalize Russia), depending on overall geopolitical conditions.

The U.S. conducted this kind of triangulation successfully from the 1970s until the early 2000s.

One of the keys to U.S. foreign policy in the last 50 or 60 years has been to make sure that Russia and China never form an alliance. Keeping them separated was key.

In 1972, Nixon pivoted to China to put pressure on Russia. In 1991, the U.S. pivoted to Russia to put pressure on China after the Tiananmen Square massacre.

Unfortunately, the U.S. has lost sight of this basic rule of international relations. It is now Russia and China that have formed a strong alliance, to the disadvantage of the United States.

China and Russia have forged stronger ties through the Shanghai Cooperation Organization, for example — a military and economic treaty — and the BRICS institutions. Part of it is an anti-dollar campaign.

One leg of the China-Russia relationship is their joint desire to see the U.S. dollar lose its status as the world’s dominant reserve currency. They chafe against the ways in which the U.S. uses the dollar as a financial weapon.

But ultimately, this two-against-one strategic alignment of China and Russia against the U.S. is a strategic blunder by the U.S.

Russia is the nation that the U.S. should have tried to court and should still be courting. That’s because China is the greatest geopolitical threat to the U.S. because of its economic and technological advances and its ambition to push the U.S. out of the Western Pacific sphere of influence.

Russia may be a threat to some of its neighbors, but it is far less of a threat to U.S. strategic interests.

Therefore, a logical balance of power in the world would be for the U.S. and Russia to find common ground in the containment of China and to jointly pursue the reduction of Chinese power.

Of course, that hasn’t happened. And we could be paying the price for years to come.

Regards,

Jim Rickards
for The Daily Reckoning

The post Russia: The Lost Opportunity appeared first on Daily Reckoning.

The Coming Gold Breakout

This post The Coming Gold Breakout appeared first on Daily Reckoning.

I read headlines all day and focus extensively, if not exclusively, on gold. If gold is the best form of money (it is), and if gold had unique properties as money (it does; it’s the only form of money that is not also debt), then gold is well worth the focus.

With that said, it’s hard to surprise me on the subject. After a while, you think you’ve seen it all. Yet, there are exceptions. This headline stopped me in my tracks: “Bank of Russia may consider gold-backed cryptocurrency.”

The idea itself is not exactly new. I first suggested that Russia might be acquiring gold with a view to a new gold-backed currency at a financial war game hosted by the Pentagon at a top-secret laboratory in 2009.

Jim Rickards

Your correspondent at the Homestake Mine in Lead, South Dakota. Homestake was one of the largest and most productive gold mines in U.S. history, and was the foundation of the Hearst family fortune. Global gold output has flatlined in recent years while demand for gold remains strong.

In my upcoming book, Aftermath, I describe a more sophisticated monetary arrangement among Russia, China, Iran and other nations to use a gold-backed cryptocurrency for international settlements.

Still, theory is one thing, reality is another. Here was a real central bank taking real steps toward a gold-backed cryptocurrency. Of course, the announcement came with lots of caveats about the need to stick to hard currencies. This gold initiative involves review of a report, not a live plan at this stage.

Still, it was a significant moment in the move away from the hegemony of the U.S. dollar as the dominant global reserve currency toward another system that included gold.

By itself, this announcement is not a reason to load up on gold. In fact, the spot price of gold barely budged on the news. Gold prices are far more likely to be affected by strength or weakness of the U.S. dollar, real interest rates, inflation prospects and geopolitical stress.

But, the announcement is highly significant in another way. It signals that the demand for physical gold by major central banks is here to stay. Whether a new gold-backed cryptocurrency emerges next year or five years from now does not alter the fact that you need gold to have a gold-backed currency.

Neither Russia nor China has all the gold it needs for that purpose yet. Therefore, demand for physical gold will remain strong even as supply has flatlined.

This creates an asymmetric trading pattern where gold has good potential to rise, but only limited prospects of a material fall. Those are the best kinds of markets for trading and investment. Taking into account both these fundamental and technical factors, what is the outlook for the dollar price of gold and gold mining stocks in the near term?

Right now, the evidence is telling us that the dollar price of gold is poised to breakout to the upside after a prolonged period of range-bound trading.

Chart 1 below illustrates recent price action in gold and shows why the prospects are good for near-term price appreciation.

After a rally from $1,215 per ounce in late November 2018 to $1,293 per ounce in early January 2019, gold remained in a tight trading range.

Over the past five months, gold has traded between about $1,270 and $1,345 per ounce (as of yesterday after gold’s big run over the past week).

That’s a range of about 2.8% above and below a mid-point of $1,305 per ounce. A 2.8% range is not unusual when governments try to peg two currencies to each other. In effect, gold has been pegged to the dollar at $1,305 per ounce.

Chart 1

Chart 1

However, this trading range exhibits another pattern called “lower highs.” Each spike at the high end of the range is slightly lower than the one before. Conversely, the bottom in each gyration has been more tightly bunched forming a kind of floor under gold prices.

The combination of a strong floor and declining highs results in a compression of the trading range. What this pattern presages is a breakout. Of course, the question is whether gold will breakout to the downside or the upside. This week we saw gold break higher, to $1,345.

The evidence is strong that gold is poised for a sustained upside breakout. The reason for the floor around $1,270 per ounce has to do with fundamental supply and demand. Russia and China continue to buy gold at a prodigious rate.

Russia has been buying between 15 and 25 metric tonnes per month, sometimes more, for over ten years. Russia’s gold reserves now stand at 2,183 metric tonnes, over 25% of the U.S. total with a far smaller economy. China is less transparent in its gold buying but also has over 2,000 metric tonnes, perhaps much more.

Neither Russia nor China have their targeted amount of gold yet, which would be 4,000 metric tonnes for Russia and 8,000 metric tonnes for China to achieve strategic gold parity with the U.S.

Iran and Turkey have also embarked on major gold accumulation efforts.

What all of these gold buying strategies have in common is a desire to escape from dollar hegemony and the imposition of dollar-based sanctions by the U.S. The practical implication for gold investors is a firm floor under gold prices since Russia and China can be relied upon to buy any dips.

The primary factor that has been keeping a lid on gold prices is the strong dollar. The dollar itself has been propped up by the Fed’s policy of raising interest rates and reducing money supply, so-called “quantitative tightening” or QT. These tight money policies have amplified disinflationary trends and pushed the Fed further away from its 2% inflation goal.

However, the Fed reversed course on rate hikes last December and has announced it will end QT next September. These actions will make gold more attractive to dollar investors and lead to a dollar devaluation when measured in gold.

The price of gold in euros, yen and yuan could go even higher since the ECB, Bank of Japan and People’s Bank of China will still be trying to devalue against the dollar as part of the ongoing currency wars. The only way all major currencies can devalue at the same time is against gold, since they cannot simultaneously devalue against each other.

A situation in which there is a solid floor on the dollar price of gold and a need to devalue the dollar means only one thing – higher dollar prices for gold. A breakout to the upside is the next move for gold.

Regards,

Jim Rickards
for The Daily Reckoning

The post The Coming Gold Breakout appeared first on Daily Reckoning.

If Gold Was Just a Barbarous Relic…

This post If Gold Was Just a Barbarous Relic… appeared first on Daily Reckoning.

There’s nothing new about the Russian accumulation of gold bullion in their reserve position. It began in a material way in 2009 when Russia had about 600 metric tonnes of gold.

Today, Russia has 2,183 metric tonnes, a stunning 264% increase in less than 10 years. Russia is the sixth-largest gold power in the world after the U.S., Germany, IMF, Italy and France.

Russia’s gold hoard is over 25% of the U.S. hoard, but Russia’s economy is only 8% the size of the U.S. economy. This gives Russia a gold-to-GDP ratio over three times that of the U.S.

While these developments are well-known, the question of why Russia is accumulating so much gold has never been answered.

One reason is as a dollar hedge. Russia is the second-largest energy producer in the world. Most of that energy is sold for dollars. Russia can hedge potential dollar inflation by buying gold.

Another reason has to do with the avoidance of U.S. sanctions. Gold is nondigital and does not move through electronic payments systems, so it is impossible for the U.S. to freeze on interdict.

Yet a deeper reason is that Russia has a long-term plan to subvert the dollar’s role as the leading global reserve currency. The Russian ruble is not positioned to be a reserve currency, but a new cryptocurrency backed by gold would be a good candidate.

The Central Bank of Russia will consider a new study that suggests just such a gold-backed cryptocurrency to settle balance of payments among willing participants. This plan is in its preliminary stages and is a long way from reality at this point.

Still, the Russian endgame has now been revealed. The dollar’s days as the leading reserve currency are numbered.

Of course, Russia is not the only nation accumulating gold as a means to move away from the dollar. You can certainly add China to that list, and many others.

The latest move comes from Malaysian Prime Minister Mahathir Mohamad. He promoted the idea of a common trading currency for East Asia that would be pegged to gold. “The currency that we propose should be based on gold because gold is much more stable,” he said.

I’ve actually advised Mahathir Mohamad in the past and he’s very familiar with my writings on gold. So I’m not surprised he’s issuing this call.

The global monetary regime has collapsed three times over the past 100 years, in 1914, 1939, and 1971. They seem to happen about every 30 to 40 years on average. It’s now been over 40 years since the last collapse, so we’re due.

Got gold?

Below, I show you why gold is heading for a powerful breakout. And yes, it involves the world’s central banks. Read on.

Regards,

Jim Rickards
for The Daily Reckoning

The post If Gold Was Just a Barbarous Relic… appeared first on Daily Reckoning.

Mapped: Who owns the world’s gold reserves

Central banks around the globe have been on a gold buying spree this year, with Russia and China leading the pack.

In the first three months of 2019, gold purchases by the country’s top banks hit the highest level in six years, as nations diversify their assets away from the US dollar.

Global gold reserves, in fact, rose 145.5 tonnes in the first quarter, a 68% increase from a year earlier, based on figures released by the World Gold Council earlier this month.

To better visualize where most of the world’s gold is sitting these days, the experts at How Much.net came up with this map, which shows exactly that:

Mapped: Who owns the world’s gold reserves

Read more about it here.

The post Mapped: Who owns the world’s gold reserves appeared first on MINING.com.

Historic Siberian mine to become automated

The Siberian Coal Energy Company or SUEK has partnered with Zyfra Group’s subsidiary VIST Group, to develop an unmanned drilling technology at the Tugnuysky coal mine, located on the border between the Buryatia and Chita regions in south-central Siberia.

Officially created in 1989, the open-pit operation has an annual output of approximately 12.5 million tonnes of low-nitrogen hard coal, which is mainly exported to China and Japan.

SUEK, however, has said it has plans to increase the total capacity of Tugnuysky and the neighbouring Nikolsky mine to reach about 13.6 million tonnes a year with the idea of raising deliveries to Asian markets by 50% by 2021.

The system incorporates an on-board computer with independent control software which contains the basic logic of the drill control, I / O controllers for controlling analogue and discrete signals, and a set of environmental scanning sensors.

In the miner’s view, these growth plans require modernizing the way work is done. Thus, management engaged VIST to develop a custom, unmanned drilling technology that only requires direct human interaction once, when the drill operator moves the equipment to the required stack in manual mode. Once this is done, another employee remotely sets a drilling plan for the drill rig and starts the independent operation mode.

According to VIST, the system’s built-in safety algorithms will be responsive to equipment and employees performing auxiliary work in its surroundings, which means that the drill’s movements will vary depending on whether there are nearby elements or not.

If necessary, a remote operator can take control of the equipment during any process operation. “Specialists will be able to remotely control the engines, compressors and controllers, moving, turning, mast raising and lowering mechanisms, assembly of the drilling unit, the braking system, drilling itself, etc. In addition, the dispatcher will deal with security issues such as the admission of equipment and people to the automated site,” the tech firm explained in a media release.

VIST also said that the automated system includes satellite navigation and special drill control programmes that are activated when directly approaching a specific location and that are able to provide pointing accuracy of up to 10 centimetres. Routes for the drill’s movement between the wells can also be developed.

To create such a solution, the Moscow-based company will equip a conventional Epiroc Pit Viper 27 drill with sensors to ensure accuracy and reliability. Then, it will record the entire data set on its operation, and the initial and changing conditions will be compared with the drilling parameters and the driver’s commands. The resulting information will be the input used to configure and optimise the drilling algorithm.

“The newly developed solution will become a part of the Intelligent Mine system, making it possible in the future to centralise control over several drills simultaneously, including simultaneous operation of these rigs in the same stack,” VIST’s press release reads.

The post Historic Siberian mine to become automated appeared first on MINING.com.

To the Brink

This post To the Brink appeared first on Daily Reckoning.

The cannons are readied, bayonets are fixed… the bugle is ready to blow.

Diplomacy has failed.

The trade war will resume this Friday — should 11th-hour negotiations fail.

The 10% tariff on $200 billion worth of Chinese wares becomes 25%.

And President Trump threatens to order 25% imposts on an additional $325 billion “soon.”

Existing tariffs are “partially responsible for our great economic results,” he justifies.

Meantime, Chinese negotiators have dallied, dithered and dawdled.

The president, Sunday:

For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars… of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%. The Tariffs paid to the USA have had little impact on product cost, mostly borne by China. The Trade Deal with China continues, but too slowly, as they attempt to renegotiate. No!

So Mr. Trump drops the carrot… and seizes the stick.

He undoubtedly hopes to pummel China into last-minute concessions.

Then he can thump his chest about a “wonderful” trade deal… wrested only in the nick of time.

Export-driven China needs the United States more than the United States needs China, he believes.

Following Sunday broadside, China threatened to back away from scheduled talks this week.

But it has since come around… and discussions will evidently proceed on the timetable agreed.

Goldman Sachs believes the feuding parties will come to terms before Friday. Sixty percent odds, they give, for a peaceful resolution.

But a dangerous game is underweigh…

China takes its honor very heavily. Will it be publicly shoved around?

Trump’s country hardball, explains Rabobank analyst Michael Every:

Puts [China’s]chief negotiator Liu He in a very awkward position. While it may be Trump’s style to be impulsive in the final stages of a deal, the Chinese government will lose face if they cave in to his demands following a public threat on Twitter. It could be perceived as a breach of trust and the Chinese may conclude that the U.S. has been negotiating in bad faith after all. 

What if China walks away from the negotiating table? Does Trump go chasing after it, sobbing for peace?

Or does he let them slip away — knowing retaliation ensues?

But only when they decide to walk away and announce their retaliation will we truly know Trump’s intentions. Is he really willing to cancel trade talks and to put the recent rally of his beloved stock market at risk? And this with just 18 months left before the U.S. elections? Or will he somehow regain control over his emotional intelligence and still find a way around this strong May 10 deadline?

These are the questions that rise before us. For the moment, no answers are issuing.

But Jasper Lawler — who heads research at London Capital Group — fears the Great Negotiator may be overplaying the cards in his hand:

“We know from experience that this could be one of Trump’s infamous negotiating tactics, but there is a good chance that this time it will backfire.”

We shall see… soon.

But what about the all-important stock market? How did markets take yesterday’s news?

Dow futures plunged 500 points Sunday evening. And the major indexes opened the day deeply in red.

But by mysterious coincidence, eager buyers soon fell upon Wall Street in throngs.

Stocks clawed their way back… and the Dow Jones regained some 300 points by midmorning.

Who came rushing in at the fatal moment?

We have no specific answer at this time.

But the wags at Zero Hedge pointed a jeering finger at the Plunge Protection Team.

By the closing bell the Dow Jones closed to within 66 points of even.

But should diplomacy fail, Friday’s tariffs will represent the largest increase since hostilities commenced last year — some $30 billion.

And the American consumer would bear the blast this time…

Previous tariffs centered largely on capital or intermediate economic goods. But perhaps 25% of Friday’s tariffs target consumer goods.

Can the consumer absorb the blow?

Renegade economist John Williams of ShadowStats believes the economy is already sunk in recession — damn the official statistics.

We have a recession in place. It’s just a matter of playing out in some of these other funny numbers… The economy is tanking, and I’ll contend it already has, although we have not seen it in the GDP reporting. 

And the sting in the tail:

“The underlying weakness is with the consumer.”

That is, the very consumer likely to absorb the worst of the tariffs… should they proceed Friday.

The clock ticks.

Regards,

Brian Maher
Managing editor, The Daily Reckoning

The post To the Brink appeared first on Daily Reckoning.

RANKED: Top 10 lowest cost gold mines on the globe

In 2018, global gold mining companies' average all-in sustaining costs (AISC) fell 6% across the board as miners reacted to a gold price in steady decline for most of the year.

The AISC metric serve as a benchmark of a mine’s operating efficiency. They provide a more comprehensive look at mine economics than the traditional "cash costs" approach that many companies may interpret arbitrarily – and it includes important expenses such as overhead outlays and capital used in ongoing exploration, mine development and production.

Mining Intelligence, a MINING.com sister company, looked at costs at primary gold mines and ranked them based on AISC. Primary gold operations are defined by Mining Intelligence as “mines where gold contributed to 80% or more of revenues from operating activities generated last year.”

The data used by Mining Intelligence represents companies reporting quarterly production and listed on the following stock exchanges: TSX (+TSX-V), ASX, LSE (+LSE-AIM), NYSE, and JSE. The ranking excludes privately-owned mines, tailings, re-processing operations, mines where the precious metal is produced as a by-product, and operations where companies report gold-equivalent output.


Falling out of the top ten list compiled by Mining Intelligence in 2018 are two Barrick mines that were on the Mining Intelligence list compiled in 2018: Lagunas Norte in Peru, where costs have gone up from $483 to $636/oz, and Pueblo Viejo, in the Dominican Republic, where costs rose from $525 to $623/oz. The Barrick mines made way for two recently commissioned mines: B2Gold's Fekola mine in Mali, and Atlantic Gold's Moose River mine in Nova Scotia.

1 Svetloye – $425/oz

Svetloye mine. Image from Polymetals.

Polymetal’s Svetloye mine is an open-pit gold operation that located in the far east region of Russia. Despite the remote location and lack of infrastructure, high-grade ores and heap-leaching technology help this mine to produce gold at the lowest costs possible.

2 Fosterville – $442/oz

Fosterville mine. Image from Kirkland Gold.

Fosterville is the largest gold producer in the state of Victoria, Australia. The underground mine is owned by Toronto-based Kirkland Lake Gold. Production in 2018 totalled 356,230 ounces. Recently the company raised the production guidance to 550,000-610,000 ounces for 2019-2020, up from the previous guidance of 390,000–430,000 ounces.

3 Olimpiada – $468/oz

Olimpiada mine. Image from Polyus.

Located in one of Russia’s most prolific gold mining provinces, Olimpiada is Polyus’ largest operation.To treat Olimpiada’s sulphide ores, Polyus employs BIONORD, the company’s proprietary bio-oxidation technology. Successful exploration activities in the area indicate the potential for substantial extension of the life of this mine.

4 Voro – $477/oz

Voro mine. Image from Polymetal.

Voro is one of Polymetal's very first key gold assets, acquired in 1998. The mine and processing facility is located in the Sverdlovsk region of Russia. The open-pit and heap leach operation started in 2000 and has another nine years of life.

5 South Arturo – $478/oz

South Arturo mine. Image from Premier Gold Mines.

The South Arturo open-pit gold mine in Nevada is a high-grade oxide deposit amenable for highly efficient heap leaching mineral processing and extraction technology. This deposit is of the prominent Carlin-type widely known as being one of the most productive and cost efficient geological formations worldwide. Premier Gold Mines holds a 40% interest in the South Arturo property with Barrick owning the remaining 60%. Barrick processes South Arturo ore at its Goldstrike plant 5 km south of the mine.

6 Long Canyon – $505/oz

Long Canyon mine. Image from Newmont.

Newmont’s Long Canyon open-pit mine is of the same mineralization style as the South Arturo deposit, and the only significant discovery made in Nevada in the last decade. The nature of the deposit, application of a heap leach technology and tapping into existing infrastructure keep costs at Long Canyon at some of the lowest levels in the industry.

7 Fekola – $533/oz

Fekola mine. Image from B2Gold.

B2Gold first acquired the world-class Fekola gold project in Mali through a merger with Papillon Resources back in 2014. First gold pour at the Fekola mine took place three years later. The company recently decided, based on a positive PEA study, to invest $50 million into expanding the mine's capacity.

8 Cerro Negro – $535/oz

Goldcorp’s Cerro Negro mine.

Sitting 600 metres above sea level on the Patagonian plains in southern Argentina, Goldcorp’s Cerro Negro underground mine has 4.86 million ounces in proven and probable gold reserves. Commercial production began on January 1, 2015.

9 Blagodatnoye – $547/oz

Blagodatnoye mine. Image from Polyus.

Polyus commissioned Blagodatnoye in Krasnoyarsk, eastern Siberia in July 2010. Processing capacity at the open pit, located 25 km from the Moscow-based company's flagship Olimpiada mine, is 8.1 million tonnes of ore per year, which makes it one of the largest facilities of its kind in Russia.

10 Moose River – $564/oz

Atlantic Gold's Moose River mine.

Atlantic Gold’s Moose River open-pit mine is located in Nova Scotia that has a long history of gold mining. Commercial production was declared in March 2018, and in the first year production reached 90,500 ounces. Atlantic expects its phase two expansion plans will have gold production ramping up to more than 200,000 ounces per annum.

(Based on research compiled by Vladimir Basov of Mining Intelligence)

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