Just a reminder for those long on RRL, the conference call for quarterly results is due 24th April 11am.
The Technicals
RRL is currently testing a strong resistance level ~$2.20 - $2.30. A break above this could see a new breakout rally take hold which could take us to the $2.40-$2.45 price point which is the next resistance level. Given the price of gold and the lack of a hedge, it's entirely possible to break that zone as it will be the third retest forming an ascending triangle (this time at the highest spot price of gold). The $2.45 zone also represents the 200 day MA and we could be in for a Gold cross formation leading up to that retest within the coming months. A break above this level which will also align with numerous trend following strategies, leading to a possibly more sustained price increase moving forward longer term.
The Positives
Regarding the interest rate decisions/ rate cuts being put on hold, there now eventuates a higher likelihood of recessional impacts and further system breakages. There was a report showing the number of insolvencies within small Australian business has sadly been increasing, and US banks are already on thin ice with liquidity problems, so there are a number of positives that the price of gold will continue upward. The ongoing wars are in support of Gold increases, with central banks gold purchasing at substantially high levels. BRICS employing the development of gold backed currency and the lack of utilisation for the US dollar in trade (particularly influenced by the Middle East Oil sales), all point to strong gold appeal in the coming years. Citibank has forecast gold to be in the 3000 USD/oz within the next 6 months, which would be inline and indicative of when some rate cuts should be issued.
All in all, there is a lot of upside potential left for RRL, with the potential to go as high (and back to) the $4 level if all plays out in it's favour. Given the sheer quantity of gold RRL produces, any increases to the spot price should have material benefits to the profitability of the company.
The Negatives
On the downside, McPhyllamys cost blow out, has stung RRL with the project now expected to be almost 1 billion to put forward, so capital raising must occur for the funding to be achieved. On an institutional level, State Street have been milking the company at least 3 times over when it has hit the current price point of $2.10-$2.20, so there is institutional profiteering going on, that can hold the price here unless demand picks up enough. The Perth Mint, who is the largest producer of newly mined gold worldwide and one top overall producers of gold worldwide recently reported gold sales declining 65% in March 2024 on a monthly basis and nearly 80% down on a YOY basis, so the ability to command the current spot price has declined. Whether this is temporary, or until the price of gold is sustained long enough that people realise it's not going back down, demand may continue to wane in the short term.
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(20min delay)
