Perth Mint Gold Sales Double In September

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The Perth Mint reported sales of 46,415 ounces of Gold during the month of September. This is more than double the 23,130 ounces sold in August.

The Perth mint refines over 90% of newly-mined Gold in Australia and ships to investors world-wide.

As illustrated in the chart below, this trend in higher demand could indicate higher Spot Gold prices in coming months.

As mentioned in a previous blog post, Gold has rallied after the Chinese Golden week for the last four years.

This year, the yellow metal has traded $25.00 higher since the Chinese market has been back online and is now over $1300.00 per ounce.

At this point the local Gold mining names haven’t rallied in the same percentage terms as spot Gold. However, we consider this price lag to be temporary and to see higher share prices in the near-term.

Perth Mint Gold Coin Sales

Gold Trades Higher After Golden Week

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A few weeks ago, we posted a report outlining the correlation between the Chinese Golden week holiday and the price of spot Gold.

Over the last four years, the price of Gold has dropped into, and during, Golden Week and then traded higher once the Chinese markets came back online.

As the chart below illustrates, spot Gold posted a low of $1262.00 last Friday and has since lifted by over $30.00.

We continue to look for Gold to trade higher into the end of the year and re-test the the $1350.00 level.

As such, we like long positions in NCM, EVN and SAR. 

Spot Gold

 

Newcrest Mining

Evolution

Saracen

Gold Is Weak, Just Before Golden Week

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After trading as high as $1358.00 on September 8th, the spot gold price has dropped close to 6% posting a low of $1277.00 during last night’s London session.

Several global-macro reports suggest that higher US interest rates combined with a stronger US Dollar were primary drivers of the yellow metal’s move lower.

However, daily charts show that in the lead up to Chinese Golden Week, the price of spot gold has dropped between 5% and 8% every year for the past four years.

In each of those years, the Spot price rebounded to make new highs over the course of October.

On September 20th, we posted that Newcrest Mining was a reasonable buy in the $21.80 range.

Looking forward, we expect the $21.00 area to offer good support for a move back into the $24.00 area into the end of the year.

Newcrest Mining

 

Newcrest Goes Ex-Dividend Today

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Shares of Newcrest are trading lower in early trade as the company went ex-dividend today.

Shareholders will be paid a 9.5 cent dividend, fully-franked, which we expect to increase over the next 6-month period.

The share price has found good buying support in the $22.00 area in recent sessions and we consider the $21.80 to $22.00 levels a reasonable buy zone.

In addition, we have noticed a “higher low” pattern in Evolution Mining (EVN). Our ALGO engine has not yet triggered a buy signal and we will update when that happens.

With a positive base case for spot gold moving higher, we would look for the domestic gold mining sector to improve into year end.

Newcrest Mining

Evolution Mining

Looking For The Buy Zone In Newcrest

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Since posting a low of $1204.00 on July 10th, Gold has rallied over $150.00 to hit an intra-day high of $1358.00 on September 8th.

Geopolitical tensions, Political uncertainty, weather events and volatile global equity markets have all been drivers of the Gold price over the last three months.

And while these events are still very present in the market, changes in their impact can be difficult to forecast.

Shares of Newcrest hit an intra-day high of $23.85 on September 6th. Since then we’ve seen over a $1.50 pullback to $22.10.

Ideally, we would like to see NCM shares at or around the $21.90 area to re-establish long positions on a scale-in basis.

Newcrest Mining

 

Take Profits In Newcrest Mining

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On August 8th, Spot Gold posted a low during the New York session of $1254.00.

Overnight, the yellow metal posted a 10-month high of $1341.00, a 7% gain in less than a month.

Over the same period of time, Newcrest mining has rallied from $20.25 to post a high of $23.70 early in yesterday’s session. This move represents a bit less than a 17% gain.

Even though the heighten geopolitical tensions which have supported the Gold price are still very much a part of the market, technical momentum indicators are signalling that investors can expect a short-term correction lower.

We believe the medium-term price trajectory in Gold will remain intact after the overbought conditions are alleviated.

As such, we suggest taking profits today in NCM, along with the smaller Gold miners: EVN, SAR, NST and OGC.

Newcrest

Gold Jumps Higher On Heighten Tensions Over North Korea

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Spot Gold has started the week close to a 10-month high of $1338.00 as North Korea’s test of a hydrogen bomb triggered the usual shift to safe haven assets, while stock futures are pointing to a lower day for global equities.

Local Gold stocks have opened higher with Newcrest posting a 4-month high of $23.78 in early trade.

With the US markets closed for Labor Day holiday, we could see some consolidation as technical levels now seem stretched.

Over the medium-term, we expect both the price of spot Gold and the local mining stocks to continue with an upward trajectory.

However, we do see near-term scope for a technical pullback in Newcrest to the $23.20 level, and to the $2.38 level in Evolution Mining.

Newcrest

Evolution Mining

 

Gold Jumps On North Korean Missile Launch

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Earlier this morning, North Korea launched a ballistic missile that flew over the Northern part of Japan and landed in the Pacific near Hokkaido.

The missile was fired from the Sunan region around 7:30 am, Sydney time, and flew approximately 2,700 km at an altitude of about 550 km.

Both South Korea and Japan responded with a strong statement denouncing Pyongyang’s sharp escalation of tensions in the region.

Gold was already $12.00 higher after the US session and added another $8.00 after the news broke this morning. As illustrated on the chart below, spot Gold broke above  a 7-year downtrend line and reached a high of $1324.50.

In an environment of global economic uncertainty and heighten geo-political tensions, we still prefer the long side of Gold and see the next resistance level at $1340.00

We still see scope for more upside in the local Gold names. Both Newcrest and Evolution are trading over 2.5% higher in early trade. We consider an upside target of $23.60 in NCM and $2.95 in EVN as reasonable price targets.

Spot Gold

Newcrest Mining

Evolution Mining

 

Gold Tops $1300 Intra-day

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Gold prices touched their highest intra-day level of the year on Friday, temporarily topping $1,300 an ounce before pulling back to settle unchanged on the day.

Gold had traded up to $1,303 for the first time in 2017, getting a lift from safe-haven demand on the back of weakness in global equities, a terrorist attack in Barcelona and concerns about President Trump’s pro-business political agenda.

Despite the late pull back into the weekend, the technical picture in Gold looks constructive. On a “measured move” basis, the break above $1300 points to the November highs near $1340.00 as the next area of resistance.

We still prefer the long side of NCM, along with smaller-cap miners EVN, SAR and NST.

Our medium-term price target for NCM is $23.10 and $2.80 for EVN.

Spot Gold

Newcrest Mining

Evolution Mining

Newcrest Mining Profits Jump 22%

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Australia’s biggest gold miner, Newcrest Mining, has recorded a full year underlying profit of $394 million, a 22 per cent jump on the previous year.

The strong rise in profit still missed analysts expectations of around $434 million, which has seen the share price slip to $21.65 in early trade.

The company will pay a final dividend of US7.5 cents per share (70 per cent franked) – for a full year dividend of US15 cents.

Further, NCM outlined a new policy under which the company’s dividend payout would be at least 10-30 per cent of that financial year’s free cash flow.

In a statement to the ASX, Newcrest said that under the new policy, the dividend would be “no less than US 15 cents per share on a full year basis”.

Newcrest said its healthy profit came from gold production of 2.38 million ounces, at a “Group All-In Sustaining Cost” of $787 per ounce.

The gold producer recorded free cash flow of $739 million, and reduced net debt by 29 per cent to $1.5 billion.

We maintain an upside bias to NCM and look for rising Spot Gold prices to lift the share price into the $22.60 area over the near-term.

Newcrest Mining