Here are my thoughts on gold.Inflation - running hot and not...

Here are my thoughts on gold.

Inflation - running hot and not falling fast enough. US economy, and ours, is still running hot with low unemployment. Supports interest rate rises which supports USD therefore gold downward pressure.

Unemployment - Covid got rid of most of the tourist workers. Inflation has forced more people to find work/increase hours worked/increased working more than one job to make ends meet. Inflation hasn't killed the economy yet i.e. people haven't stopped overpaying for stuff, but it will turn.

OPEX - Inflation is running hot twofold - Equipment/Materials are higher and Employment costs are higher.

USD gold price - takes precedence over AUD gold price. USD gold sentiment overrides AUD gold profitabilty. Sentiment always beats profitabilty in the market because sentiment is the future, profitability is the present.

M&A activity - No longer about grabbing the most ozs. NST asset sales:
Jul 21 - Kundana - MRE 2.4Moz - Producing mine.
Apr 22 - Paulsens 231kozs @ 2.5g/t and Western Tanami 493kozs @ 5 g/t. NST have sold a significant 5g/t resource, what does that say about the market. It's all about minimising costs and being happy with what you have. It's fine to overpay later if the market is in your favour.

MREs - The past couple of years have seen 0.5 g/t cutoffs (some as low as 0.3g/t) for a resource in the 1g/t range. In this inflation environment MREs will have to move out to 1g/t cutoffs for a 2g/t resource.

Spec end of town - Majors NST down from ~$13 to ~$10 i.e. -23% . NCM ~$26 to ~$22 i.e. -15%. I expect the Spec end of town to double the sp losses of the majors in a downturn, I also expect them to double the gains in an uptrend. NXM is on par for expected sp loss.

EOFY - I usually plan my EOFY selling to begin around the ides of March. The market is forward looking and I suspect that noone expects a turnaround in the general market until after EOFY and probaly more towards the end of the calender year, therefore the selling has started early this year.

NXM specific - we are not a producer, therefore the company gets no financial benefit when PoG rises, nor does the company bottom line suffer in a decline. It's all about percieved value/potential at this point in time until NXM put an MRE on the table that will at least help define the value of the company. Until you can finitely value the company, trend is your friend.

PoG chart - might see some support around 1815, but another test of the 1680-1630 range looks on the cards to me when taking everything into consideration.




Personally I think the time to go long gold is when the US decide to halt raising rates. A rising unemployment figure could be an early indicator.

I'm still holding here in hope of a +1Moz deposit under NSTs nose. $100/oz valuation on the MRE would probably be a good time to lock in any profits.

GLTAH