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Update from Schroder Equities:

Good afternoon

big day for gold…opened at 1940 in Asia, to reach 1980 at about 3 am our time, and to trade 1937 at the time of the Australian close…tanked further to 1907 early morning here, and at 3 pm, it´s trading abck at 1940 US$, or 2710 A$…fun & games!

Australian gold equities sold off following a strong start, to close the day down 1-2-3-4%….marjet did not like the reversal! I reckon if we close at above 1940, Australian stocks will rally tonight!

Goldmans have raised their 12-month target to 2300 US$, as fear s are mounting, that the US$ is loosing it reserve currency status! I think as little sympathy I do have for the US - that would be potentially very destabilizing!

Base metals are seeing little change today - equities are slightly weaker.

Gold explorers and developers are raising funds left, right& center!! I have heard about 2 weeks ago, that it starts to become difficult to get drill rigs - at least for surface drilling. I think this will intensify, and very soon, prices for drilling will go up again. One should have a good look at Mitchell Servies, or Swick Mining ( the latter I know much better). When something trades at 2,4x EV/EBITDA, it´s cheap indeed! In the old days, drilelrs and service companies used to trade at 3-4 x EV/EBITDA - and in the bull market, got up to 7-8x EV/EBITDA ( which was a crazy valuation, as these type of companies need to reinvest in equipment all the time ). But I see no problem for valuations to go back to say 4x EV/EBITDA, which would equate to 70% upside for Swick. This is before valuing their new assaying business, which is a new technolgy, into which SWK have invested heavily for quite a few years. Not sure, what it might be worth - but this could well add another 20% to the valuation, if IPO´d. Both companies are not very liquid - but there are indeed a few insto´s on the register ( including my little fund! ). Rates for drill rigs will go up, and utilisation will go up as well - a perfect storm!!

Source: https://www.schroeder-equities.com/market-update