Is Gold A Leading Indicator?
The great Fed Chairmen of the past were like gods. Paul Volcker and Alan Greenspan were the most godlike of them all. Since then, it has not been quite the same. But perhaps yesterday’s 3% decline for gold suggests that the new Fed Chair, Kevin Warsh, could be influential. This comes at a time when we have been told of the $40tln US debt, which rather dwarfs our self-created £3tln debt. Self-created by successive governments giving handouts to people to vote for them. Or to make sure that they are so skint they are dependent on the government from cradle to grave. It is a shocking state of affairs, and highlighted by the migrant crisis and events in Middlesbrough. At some point we shall have to have a reset, although clearly not in the manner of former Prime Minister Liz Truss.
But getting back to Mr Warsh. Gold tanking on Friday ahead of his speech that evening, rather suggested that there are fears that there will be an interest rate cut at the next FOMC meeting. What was interesting is that while gold fell, indices did not. Indeed, they remained strong until the end of the session. Perhaps gold will prove to be a leading indicator on stocks in coming days? One has to look back and see how often in the past gold has led stocks down. Certainly, the corelation between gold and stocks rather goes with the strength of the dollar. We shall see. The financial markets always stimulate the brain, one way or the other. For instance, I note that wheat was up 12% this week, cocoa up 9% and coal up 6%. What could possibly go wrong, especially as far as the cost of living crisis? Of course, I call this the cost of taxation crisis, as
This Week’s Risers
It is perhaps fortunate that the fall in gold came too late in the week to affect the share prices of stocks in the space. This is especially the case given how the London small caps are seemingly awash with explorer / developers these days. Indeed, it will be interesting to see what percentage actually make it to production. This is especially the case that like Kodal Minerals (KOD), even if this happens the market does not go mad with excitement. One thinks of the Lassonde Curve in such circumstances. Even for companies like Andrada (ATM) when the share price adulation is year’s late, most investors will have already left the party, or died waiting for the transformational rally. For Tungsten West (TUN) which now has the government as an investor, one hopes that the government’s appalling record with taxpayer money will not be repeated here. One thinks HS2, or the North Sea. It is almost as if it wants to lose money. I also hope that the comment from a mining expert who wonders whether Hemerdon mine can be developed successfully. As he said to me a few months back, there are some geological set ups that cannot be developed even if money is no object. At least for the time being though, the great and the good are long and strong in TUN, and good luck to them.
80 Mile (80M) was an enjoyable riser, bouncing over 40% on the week, after the hiccup seen earlier in the month off the back of a badly received Jameson drilling update. The company received plenty of flack in the wake of that share price decline, and name calling. However, as it turned out it was an almost perfect buying opportunity. Who’d have thought? All of this shows how much like a school playground the small cap area is, and how management need to be able the menaces of the bullies and psychos that lurk in this space. Apparently, nothing can be done about them.
Sunda Energy (SNDA), the AIM-quoted exploration and appraisal company focused on gas assets in the Asia-Pacific region, has not exactly been top of the pops in terms of its stock market history. However, this week it noted the announcement made by New Zealand Resources Minister, the Hon. Shane Jones, that regulator New Zealand Petroleum and Minerals have granted Matahio NZ Onshore Limited a 10-year petroleum mining permit in the onshore Taranaki region. SNDA restarting production from Puka and drilling the Oru-2 exploration well are key components of its investment plan in New Zealand following completion of the conditional acquisition of MNO’s parent company Matahio Energy NZ Limited. Shares of SNDA were up 36% on the week.
Halo Minerals
This week saw the release of Interim Results and an Operational Update For the six months ended 30 June 2026 from Halo Minerals (HALO). Here the prize is the Playa Verde asset, a massive tailings play. As the company said, “This has been a transformative period for the Company. We have completed our Admission to AIM, strengthened our balance sheet and significantly progressed our flagship Playa Verde project closer towards development and production. We have a number of strategic priorities for the remainder of the year including completing the remaining DFS optimisation and BFS-level workstreams and, following this, bringing the funding process to a final conclusion. Playa Verde is a low-risk project with very robust economics. We look forward to continuing to progress this project towards production whilst also building a portfolio of similar assets.” It would appear that there has been some decent accumulation in the shares in recent weeks. All that is left is a proper breakout towards 15p over the next month to follow through.
Disclaimer & Declaration of Interest:
The information, investment views, and recommendations in this Zaks Traders Cafe interview are provided for general information purposes only. Nothing in this interview should be construed as a promotion or solicitation to buy or sell any financial product relating to any companies under discussion or referred to or to engage in or refrain from doing so or engage in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the commentator but no responsibility is accepted for actions based on such opinions or comments. The commentators may or may not hold investments in the companies under discussion.
