EVN chart, page-1461

Alternatively. we could see USD POG heading down towards the USD1500-1600 region (which is still a historically high gold price) while the AUD either stays around its current level of USD0.78.5 or heads towards USD0.85. That would give a range of $A1764-2040/ounce. In the meantime mining input costs are rising due to range of reasons, including COVID,

It is worthwhile to stress test ones resolve to remain goldie Hodlers in the face of further significant mine operating margin compression, especially Oz based goldies facing a rising AUD.

The USD POG is generally seasonally weak from the Chinese New Year, and gets weaker post the PDAC conference (the PDAC Curse), unless there are special factors in play to support the gold price.

The USD POG is facing headwinds from rising long term bond yields, without officially recorded inflation as real yields rise and this is the factor against which the USD POG is most heavily correlated (inversely). Think of a 1.8-1.9% yield on 10-year Treasuries compared to its low of 0.55 last August when the USD POG peaked.

Unfortunately Chindian gold demand has been weak since the gold price took off, and govt purchases of gold has also fallen off, while the GLD ETF (and possibly other similar ETFs) has been selling down its gold holding over recent months.

I just hope the gold price does not get below USD1500 or we will see mayham with the goldies much worse than what happened in March 2020. Back then the USD POG drop was largely offset by a falling AUD making Oz based goldies extremely cheap and a clear one way bet for those that bought them.

Another issue that we need to recognise is that Oz based companies have gone into more marginal ore deposits over the last few years and that while that was a winning move as the AUD POG rose with a low AUD, its a major negative for profitability when costs and the AUD both rise.

I am increasingly inclined to step back from the goldie market. It feels a lot like 2012, heading into 2013, and we all know what happened back then.

My best hope is that the US Fed undertakes measures to control the longer dated yields, which would put a stop to rising interest rates while hopefully inflation takes off so that real interest rates fall/turn increasingly negative, preferably a lot.

From what I have read it seems that the world economy is in a major expansion/recovery with rising business profitability until the middle of this year, which is positive for risk on assets and there is therefore movement out of gold.

I am cashed up and may sell more of my goldies (now just holding some overseas based and a very few explorers, but may sell them also) in anticipation of some bottom in mid year or later in 2021. My largest holding is a company that has a legal dispute with the Thai government and I plan to ride this one to its settlement.

My expectation is that quality companies such as EVN and SAR/NST will be on sale later on at lower prices - but anything could happen to make this a pipe dream.

Good luck to all.

loki (just saying, look at the downside - its potentially lower for us goldiebugs.)