We’ve been telling you there’s a gold boom coming… This surge in gold “megadeals” confirms it… In the mailbag: “Governments are rubbing their greedy little grubhooks together”…
This week, the most popular gold exchange-traded fund (ETF), the SPDR Gold Shares ETF (GLD), recorded its largest gain in almost three years.
And gold mining stocks are off to the races.
This chart is of the VanEck Vectors Gold Miners ETF (GDX) since the start of May. It tracks the performance of a basket of the top global gold mining companies.
And as you can see, it’s up 8% since the start of May. (Versus a 3% loss for the S&P 500.)
The main driver of this rally is what Casey Report editor Nick Giambruno calls the “re-monetization” of gold.
As we’ve been showing you over the last couple of days (catch up here and here)… gold is being used more and more as money again.
It’s gone under the radar of the folks in the mainstream media. But as Nick has been telling our Casey Report readers, we’re moving away from the dollar-based global money system.
And we’re moving toward a new money system with gold as its linchpin.
And Nick isn’t the only one here at Legacy Research who’s paying attention to what’s going on with gold…
| Recommended Link | |||
|
|||
Dave heads up our International Speculator advisory. His mission there is to uncover natural resource exploration companies with the potential to double or triple in 12 to 24 months.
And he’s one of the most clued-in natural resource speculators I’ve ever met…
Dave isn’t your typical desk jockey investment advisor. He’s a trained geologist. And he’s spent the last two decades searching for natural resource discoveries in far-flung corners of the world… and finding them.
Dave helped develop the sixth-largest platinum-producing district in the world. He’s found more than 1 billion pounds of copper in Asia and South America. And he was the first guy to get a modern exploration license in the hot new emerging market of Myanmar.
| Recommended Link | |||
|
|||
I found that out at our first annual Legacy Investment Summit in Bermuda last year.
I bumped into Dave at the hotel bar the night before the Summit. (This year’s Summit is coming up, and we’d love to see you there. Get your ticket right here.)
He’d just come back from Brazil, where he acquired rights to one of the highest-grade gold mines ever found on the planet.
But Dave wasn’t doing small talk. Instead, he was staring intensely at the Google Maps app on his phone.
I asked him what he was looking for. And he told me he was using satellite images of the Earth to hunt for ore deposits under the ground.
If you’ve used Google Maps before, you’ll know how crazy that sounds… And I have to admit, the details didn’t make a lot of sense to me.
But Dave showed me the kind of lines and shading on the map that tell him where an ore deposit is in the rock below.
And he told me he found a cobalt and nickel deposit this way in Nevada.
Dave “staked” the deposit. He literally went there with stakes and a camera to mark the area he’d spotted on the map.
And after claiming it legally in this way, he sold it for $370,000 just 48 hours later.
And I’m going to let Dave show you what that is today.
As he explains below, Nevada is the most profitable and productive state for the big publicly traded mining companies.
It’s also the center of a major mergers-and-acquisitions (“M&A”) frenzy, as the gold industry insiders position themselves for higher gold prices ahead.
Here’s Dave with the details – including how you can take advantage of it…
By David Forest, editor, International Speculator
In February, I visited the most important place on Earth for the gold industry right now.
Conditions were less than ideal, as you can see in the photo below. I’m stopped in the picture because our SUV’s engine nearly overheated after an hour of plowing through new snow that was a foot deep.
Now, most people don’t think of Nevada – largely regarded as a desert state – when they think of 12 inches of snow.
But that’s where I was.
And in today’s essay, I’ll show you why Nevada is critical for the gold business right now… and how to start profiting from this trend.
Let’s get started…
Below is a world map, showing the 25 largest mines controlled by some of the world’s top public gold mining companies. That’s Barrick Gold, Newmont Mining, and Goldcorp – as well as AngloGold Ashanti and Kinross Gold. (Note: Newmont and Goldcorp merged in April 2019.)
Source: S&P Global Market Intelligence
It looks pretty diverse. These gold miners have major mines on every populated continent except Europe.
But now, let’s take this a step further – and show where gold miners’ cash comes from.
Below is the same map of major gold mines – but this one shows the revenues derived from each operation. The larger the circle, the more cash generated from the mine.
Source: S&P Global Market Intelligence
That’s a telling picture. You can see how Nevada’s operations (the large orange circles) tower above the rest of the world.
Nevada’s production costs are extremely low… and this allows miners to max out their profits by having the lowest possible all-in sustaining cost (AISC).
[AISC is a comprehensive measure of mining expenses, including on- and off-site costs, plus capital required to keep the mine in production.]
First, just being in the U.S. in general is advantageous. U.S. highway infrastructure is among the best in the world – meaning that moving equipment to site and moving product to processing and sales points is easier and cheaper than in, say, Africa or South America.
That infrastructure also means good access to crucial mining supplies such as fuel.
Power costs in Nevada are very reasonable, at 6.5 cents per kilowatt hour (kWh). Compare that to other big mining locales like Chile, where industrial power prices are double, at 13 cents per kWh.
Nevada also has major economies of scale when it comes to mining services. With several large mining complexes in the state, there are lots of companies offering drilling, engineering, and construction services in towns like Reno, Elko, and Winnemucca. That competition drives down costs.
Beyond just operating costs, Nevada also offers major advantages when putting a new mine into operation… the biggest one being there aren’t many people around.
All these advantages in Nevada are acknowledged by the global mining industry. In fact, the influential Fraser Institute survey of global mining jurisdictions released in February voted Nevada the best place on the planet in which to explore, develop, and mine.
For all these reasons, Nevada is the center of the mining universe – and the core for production and profitability for the world’s largest gold companies.
We’re going to see more of this focus on core jurisdictions like Nevada as gold companies continue to combine and rationalize. There just aren’t any mining jurisdictions – anywhere in the world – that compare in terms of production and profits.
There is an influx of money pouring into the mining sector… prompting some key M&A deals – notably in the gold sector, with some huge deals in Nevada.
Just in the first three months of 2019, we’ve seen over $76 billion flow into the mining sector, already well over a third of what we saw in 2018.
The current year in mining M&As got off to a big start when major gold miner Newmont announced a friendly $10 billion takeover of fellow major gold miner Goldcorp.
But that megadeal was eclipsed when the world’s largest public gold miner, Barrick, jumped into the takeover fray. It unveiled a hostile bid for Newmont, worth up to $18 billion. That’s a huge bid… and between Barrick, Newmont, and Goldcorp, the world’s top gold executives tabled nearly $28 billion in deals within the span of a few weeks.
In the end, Barrick and Newmont combined all of their substantial Nevada gold mining operations, assets, and reserves into what Newmont has called a “historic joint venture.”
This spells out money-making opportunities for us as speculators in these volatile times.
Money flows are rising in the mining sector, more companies are consolidating… and the gold price is on the rise as investors rush into the safe haven of gold during volatility.
Besides the fact that the big amounts of money involved here show that mining executives see something happening in the gold market (the Barrick-Newmont proposal coincided almost exactly with a sudden surge in the gold price – which took bullion to a year-high of $1,345 per ounce), our research proves that gold is the way to go during times of uncertainty.
According to our research, during the last four major financial crises, gold increased in value during a crash, gaining an average 3%.
And it delivered gains before and after the crashes – rising an average 4% in the year prior to a crash, and 10% in the year after.
So consider gold and gold mining companies if you haven’t yet… especially those that are ripe for a takeover bid by having solid exposure to leading, in-demand jurisdictions like Nevada.
In addition to major gold producers active there, I also follow a slate of junior companies developing new deposits and exploring for major new gold discoveries. All of these are going to be in demand as consolidation in the gold sector continues.
Regards,
David Forest
Editor, International Speculator
Chris note: Save the date… This year’s Legacy Investment Summit will take place from September 23-25 in Southern California. And we’d love to see you there.
Join Dave and me – along with all our other analysts at Legacy Research – for three days of presentations… world-class entertainment… and conversation. Learn more right here.
READER MAILBAG
Yesterday, we showed you gold is going digital, thanks to gold-backed cryptocurrencies… And it got at least one of your fellow readers thinking…
I’m so happy to see the action in gold prices today. It really shows there is something big happening. I am locked and loaded to ride it intraday with micro-futures contracts, as well as a heavy portfolio of gold mining stocks (only the best!).
Also, I absolutely believe cryptos can replace fiat currency. Although I agree in part with Richard B. that there are many terrific uses for blockchain, many of which will disrupt industry applications (in particular, Big Tech via decentralization of the internet and source codes), I do think that cryptocurrencies have a very bright future.
Here is why:
1) You will have a devilishly hard time knocking them down, due to decentralized protocols. Smaller ones, perhaps, but bitcoin is certainly here to stay, in my view. They would have the same amount of luck shutting down the internet (which was a control experiment that got out of control, by the way).
2) There is ongoing demand for them, and in a more digitalized world, everyday people will begin to use them when fiat fails. They are more accessible than gold and silver in crippled economies.
3) The governments of the world will actually be happier if we use cryptocurrencies vs. fiat cash. Although coins like Monero might be an exception, in general, the vast majority of cryptocurrency is fully transparent, public, and on an immutable ledger, which can be audited. This means the anonymity of cash transactions is largely eliminated with crypto.
Governments are rubbing their greedy little grubhooks together at this prospect already, which is why the central banks voiced enthusiasm for a “global central banking of digital currency.” I think the cat is out of the bag and crypto is here to stay.
– Brendan V.
While another reader believes the traditional banking system will soon go the way of the dodo…
It’s one of the reasons banks won’t be around in a couple of years… They’re moving way too slowly.
I remove money from my bank instantly in Australia through a facility provided by Australia Post. Once I can make deposits, I won’t need a bank.
Bye bye, banks. It was nice while it lasted.
– David S.
Are you looking forward to no longer needing a bank, like David S.? Do you agree with Brendan V. that governments will try to co-opt cryptos for their own ends? Write to us at feedback@legacyresearch.com.
Regards,
Chris Lowe
June 5, 2019
Barcelona, Spain
IN CASE YOU MISSED IT…
Legacy Research’s go-to tech analyst, Jeff Brown, has made many successful predictions…
In 2016 and 2018, he picked the top-performing stocks on the Nasdaq and S&P 500. As an angel investor, he’s put his money into 111 early-stage tech companies… 95.3% were successful. And now, Jeff’s about to reveal four tech companies that could change the world…
Tune in on Wednesday, June 12, at 8 p.m. ET, as he reveals the name of one of the companies, live and on air. Reserve your spot here.
Do You Have What It Takes to Join the Legacy Research Team?
Bill Bonner, Doug Casey, Teeka Tiwari, Jeff Clark, and the rest of our Legacy Research Group experts need your help…
We’re looking for three rock stars to help shape the future of our investment research… and you may be one of them.
So – if you think you have the chops to be part of our elite group – check out the job links below.
But first ask yourself…
-
Am I independent, driven, and not a stuffy corporate type?
-
Am I tenacious, adaptable, resourceful, and capable of handling a heavy workload without breaking?
-
Am I intensely curious and able to teach myself whatever I need to know to get the job done?
-
Do I innovate and try new things that haven’t been imagined yet?
-
Do I demand excellent results from myself and the people around me?
-
Am I honest, even-keeled, and easy to work with?
If you answered yes to all six, then you could be one of the outstanding people we’re looking for… and we want to hear from you ASAP.
Your opportunity is waiting…
-
Investment Director – Be the master of market knowledge and help take our already world-renowned research team to the next level.
-
World-Traveling Investment Writer – Create, develop, and launch your own bylined investment advisory; micro-cap specialists to the front of the line.
-
Equity Analyst – Support our team of brilliant investing experts as you learn everything you need to know to write your own letter someday.