Sprott: Shaky Global Stock Markets Trigger Bid For Gold

Volatility in global stock markets is boosting demand for gold, which has stood “the test of time,” said Eric Sprott, billionaire precious metals investor and founder of Sprott Inc.

As central banks around the world stepped up gold purchases, shouldn’t investors follow suit, Sprott was asked during the company’s Weekly Wrap-Up segment.

“In India, the central bank bought some gold for the first time in over a decade. Hungarians increased their gold [tenfold to 31.5] tons. Poland also made purchases,” Sprott said. And that’s aside from continued purchases of Russia and China, he added.

In the meantime, physical demand is also picking up, with India importing 95 metric tons of gold in August, Sprott added.

These are all positive numbers that investors should be paying attention to because there’s significant risk in the markets and gold is a proven safe-haven asset, he explained.

“There are lots of reasons to think that the Federal Reserve will have to change. It is uncertain what the Fed will do. You should not automatically count on four rate increases next year,” Sprott said.

On top of that, most stock markets in the world are in a bear market, he pointed out.

“Look at China, [the stocks] was down 32% this year. There are a lot of liquidity issues in a lot of markets, and when you’re the last man standing, [investors] are going to be selling American stocks first, because they’re the ones that are theoretically liquid,” he said. “The structure of markets is very risky … [And] as things get shaky here in the markets, you see the safe-safe-haven bid coming into gold,” Sprott said.

On Tuesday, equities dropped for the fifth consecutive session. The Dow Jones Industrial Average is seeing its worst monthly decline in three years and the S&P 500 is seeing its worst monthly performance in seven years, according to reports.

Meanwhile, the December Comex gold futures touched a three-week high of $1,242 Tuesday on increased safe-haven demand.

“The yellow metal was boosted by safe-haven demand amid keener geopolitical uncertainty in the marketplace. Gold prices did back off their daily highs as the U.S. stock indexes moved up from their daily lows,” said Kitco’s senior technical analyst Jim Wyckoff. “Global stock markets saw risk aversion return to the marketplace today amid heightened geopolitical tensions. China’s stock indexes were sharply down after good gains posted Monday. South Korea’s and Japan’s stock markets were also sharply lower.”

- Source, Kitco News

Why RNC Minerals Stock Popped a Whopping 575% in Just 3 Months

The story of RNC Minerals (TSX:RNX), better known as Royal Nickel Corp, is getting interesting by the day. If you haven’t heard about the company, RNC Minerals is a junior Canadian miner that was, until some months ago, focused on developing its Dumont Nickel project, touted to be the world’s largest nickel sulphide deposit.

All of that changed in September when RNC discovered huge gold deposits from a mine it had put up on the block. Incidentally, the company changed its business name from Royal Nickel to RNC Minerals in 2016 to reflect it’s now a multi-asset company.

As luck would have it, in September, RNC found 9,250 ounces of high-grade coarse gold, including two big specimen stones from a single cut (the process of blasting to find mineral deposits) at its Beta Hunt mine in Australia. The company immediately put its Beta Hunt sale discussions on hold.

Now, here’s where things get interesting.

Gold grade from Beta Hunt showed a significant uptick well before September. However, RNC downplayed the development, and despite a solid 60% jump in gold production from the mine in July, it still considered the mine “non-core” and was keen to sell it by August.

The September development, therefore, came out of the blue and blew the markets away.

So, what’s next for RNC? Its just-released third-quarter earnings report may have the answer.

RNC’s gold production surged 199% year over year in Q3 to hit a record of 31,360 ounces. RNC sold off 75% of that and raked in solid revenue, which lowered costs and losses.

The biggest takeaway, however, is the impact on RNC’s balance sheet. RNC paid off debt worth $11.5 million in Q3 and held cash and equivalents of $18.8 million as of Nov. 12.

The Beta Hunt discovery is, however, a “once-in-a-lifetime discovery,” as RNC called it, and the company will need more of that gold coming in to keep its operations running.

What RNC needs to keep growing

As of the end of the third quarter, RNC had a working capital deficit of $27.4 million. In simpler words, its current liabilities exceed current assets by that amount. Because current liabilities have to be paid off within a year, RNC needs more liquidity.

The gold specimens RNC held at the end of Q3 should reduce its working capital deficit by only $14.5 million when sold. Its cash balance, which includes the value of gold specimens held for sale, is enough to support drilling activities only through the first quarter. That means RNC should have struck more gold by then or be able to raise external funds to support exploration. Higher gold prices would hugely help the company.

RNC explicitly says that its “ability to operate as a going concern is dependent on its ability to raise financing.”

Insider buying and RNC’s future

Of course, Beta Hunt has been a great discovery, and RNC expects it to eventually be a large gold mine. Let’s hope that happens, because beyond Beta Hunt, RNC’s future depends on Dumont — a mine that aims to exploit the growing market for nickel and cobalt — which has yet to start operations.

Meanwhile, billionaire and gold bull Eric Sprott upped his stake further in RNC Minerals in September to 10.1%. Reportedly, Selby also bought 100,000 shares each in October and November.

For now, RNC Minerals should deliver another good quarter in Q4 that should keep investors upbeat, but the path to growth thereafter will decide its long-term fate.

- Source, The Motley Fool

The Trend is Beginning to Reverse, Gold to Move Higher

“The Boys—the commercial banks—when gold first moved back up into the 1230s, they sold every contract that the hedge funds who were short wanted to buy… 

There was just a huge reversal of roles there. A little bit again last week. And then all of a sudden, now we’re back up through the 100-day moving average. 

And undoubtedly, the hedge funds have to buy again. It’s like: man, they got double-crossed here, you know? 

They’re just getting b-slapped around by the commercial banks. It’s sort of interesting to watch.”

- Source, Eric Sprott

Sprott: Gold Setting Up For Late December Rally

With gold once again seeing some traction on the upside, the yellow metal could be setting up for a late-December rally, said Sprott.

“[During] the last four years, once we got to mid-December and the tax loss selling, the December FOMC meeting was behind us, we had rallies in late December and into January. Looks like we are setting up for that again,” TF Metals Report's Craig Hemke said during Sprott’s weekly wrap-up segment with Eric Sprott, billionaire precious metals investor and founder of Sprott Inc.

Starting Wednesday, the December Comex gold futures began to climb, rising from just below the $1,200 an ounce level to above $1,220, as the precious metal benefitted from increased safe-haven demand amid falling U.S. dollar index. The December gold was last trading at $1,222.90, down 0.01% on the day.

With the possibility of the year-end rally, investors should be thinking about what is currently not priced into the market when making their holiday trading choices, Sprott and Hemke said.

And the more important factor likely being overlooked at the moment is the U.S. “housing Armageddon,” noted Sprott.

“The whole interest rate thing is by far the more important one. The fact that mortgage rates have gone from 3.6% to 5.2%. The last time I checked that, that is about a 45% increase in interest costs,” he said.

The U.S. housing market is also in the spotlight next week, with the U.S. housing data being released and analysts warning that the reports could add some volatility to an already skittish marketplace.

On top of that, there’s extra stress in the bond market that investors should be keeping an eye on, added Sprott.

“Some of the best commentators are suggesting there are fundamental weaknesses. In fact, one of the better ones say; ‘You know, we all knew it was phony. Zero interest rates and the printing of money.’ The whole nine-year rally from ’09 to today, we knew it was phony. It was the elephant in the room. But because the markets kept going up, we didn’t worry about it. Now, that we’ve reversed things, we see the elephant in the room, which is: higher interest rates and restricting money growth,” he explained. “We are seeing things that suggest that the market that we have been used to for the last nine years is not the market we are in today.”

- Source, Kitco News

Where Are The Experts Investing In 2018?

Where are the experts investing in 2018? Watch as Rick Rule (Sprott US Holdings Inc.), Frank Curzio (Curzio Research), Brent Johnson (Santiago Capital), Nick Hodge (Outsider Club) and Brent Cook (Exploration Insights) discuss what markets they are watching and where they see the most potential for growth.

- Source, Cambridge House

Gold is a Safe Haven Asset and This is Why You Need to Own it, Now

Most markets in the world—most stock markets—are in bear markets, save the North American markets, almost. Look at China. It was down 32% this year. 

There’s a lot of liquidity issues in a lot of markets, and when you’re the last man standing, they’re going to be selling American stocks first, because they’re the one that are theoretically liquid.

- Source, Silver Seek

Eric Sprott: Good News is Not Necessarily Good News

The Boys—the commercial banks—when gold first moved back up into the 1230s, they sold every contract that the hedge funds who were short wanted to buy… 

There was just a huge reversal of roles there. A little bit again last week. And then all of a sudden, now we’re back up through the 100-day moving average. 

And undoubtedly, the hedge funds have to buy again. It’s like: man, they got double-crossed here, you know? They’re just getting b-slapped around by the commercial banks. It’s sort of interesting to watch.

- Source, Silver Seek