Thom Calandra writes that the physical demand from retail investors for gold and other precious metals has been strong
Thom Calandra | March 26, 2020 | SmallCapPower: Gold, and shares of precious-metals operators, and anything else “with a bid,” are getting flash-sold this week. Even the cryptos. Even the utilities. Tremendous price swings.
(Originally published on thomcalandra.com on March 13, 2020)
Bright side: plenty of volume. No vacuum yet in the paper markets. Terrific, some would say, terrifying, volatility in stocks, commodities, crypto-currencies.
That might not be so in future if volume were to evaporate.
Another bright side: far cheaper oil and fuel costs likely will slice metals producers’ energy costs; and for explorers and developers, lower drilling and project-buildout costs.
“Terrific volatility in physical gold … and that bodes well at some point for the gold equities.” That’s Rudi Fronk of Seabridge Gold. More from the Colorado-based CEO below.
Against that backdrop of free-falling metals shares, and vast swings in physical metals’ prices (including copper), coins and retail bullion this week are said to be in growing demand.
Also, just heard from our own Dana Samuelson of American Gold Exchange, a bullion dealer, in Austin, Texas: “Record high volume for 2020 these past two weeks,” says Dana, a regular Metals Panelist at our New Orleans Investment Conference. He’s referring to the sale of gold, platinum, silver coins, bars.
— Just here, Mr. Fronk and a few of the voices I still listen to. You know most of them if you take TCR/The Calandra Report. I quote by name.
— Personally: I suffer those metals equities, as most of us do right now. As a matter of record, this week, I added yet more Ivanhoe Mines (Africa); more accelerated gold derivative ETF NUGT; more Xtra-Gold Resources (Ghana). I intend this month to add one of the safest ‘physical’ gold-silver equities, one I follow regularly and have owned many times: the Canada gold and silver repository Central Fund of Canada (CEF/CEF.A), a closed-end fund now run by Sprott Inc.
Outside of the metals complex, or shall we say the complex and perplexing metals shares, I also added to our portfolios here at home more Oragenics (OGEN), a lantibiotics and peptide developer; I added yet more to immuno-therapy lab IMV Inc. (NASDAQ:IMV) (TSX:IMV), against the advice of many.
If you can handle the turmoil and don’t mind buying low and watching them all go yet lower — the gold, copper, nickel, platinum-palladium equities, and the physical commodities underlying the small metals-cos, (and select non-metals stocks) — no one needs me to say they’re all cheap and cheaper in this COVID-19 tumult.
On my add-add-add list, if I can convince our committee of two here at home, are metals operators EMX Royalty Corporation (TSXV:EMX) and Azimut Exploration Inc. (TSXV:AZM), and outside of the metals complex, Lindblad (cruise ship line getting crushed), and, (yes I know), IMV.
Boris Cukon, Belgium fund manager (publicly-traded fund Isatis):
“It’s complicated, Thom, if coronavirus (COVID-19) is more like SARS and the flu, we’re very close to a bottom I think. If it is more like MERS (Middle Eastern Respiratory Syndrome), hmmm, don’t know what will happen then. Anyhow, sadly, I think gold is a loser in both cases but I hope I’m wrong.”
Rudi Fronk, Seabridge Gold CEO, founder, credible econ-blogger:
“Gold equities being thrown out with the bath water. Over the past several months gold has done well compared to the general markets. Our belief is that lots of smart money has and continues to flow into the physical. On the other hand, gold stocks behaving like general equities and not recognizing what gold has done.”
He adds, “In my 40 years in the business, I have never seen gold stocks as cheap as they are today relative to the gold price. Clearly investors are running to cash in fear and selling anything that has a bid.” Rudi says all of the physical prices, or gold, silver, copper, will post leapfrog gains in coming months, and years. The stocks, too.
Edwin B. Tucker, writer, Metalla Royalty & Streaming board member:
If gold stocks, including ours, lag while gold surges, I’m not concerned. The eventual catch-up rally will not be the one you want to miss.”
Matt Geiger, MJG Capital fund manager (solely natural resources equities, convertibles & warrants):
“In this (current sell-off), I didn’t think the juniors would do all too well. Better for us to have a gradual run in gold; a sharp one means a panic and risk assets like mining equities are never spared in the immediate aftermath.”
Matt and I, and several investors, will be in Ecuador with Salazar Resources in six weeks. (I pray.) The two of us worked PDAC together — Matt for his MJG fund and I for my TCR audience.
Brett Heath, also Metalla Royalty — founder, CEO:
“We are witnessing the beginning of a monetary crisis that has been ignited by media-driven fear of COVID-19. The world is experiencing a significant economic contraction.” Like nearly all metals operators, Brett sees imminent, possibly flash gains in gold, silver, other metals.
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