The market keeps getting rattled from big moves in US bond yields.
ASX futures have us going down 1% at the open. We have the Hamas/Israel conflict threatening to send oil mooning.
It’s a tough market.
Does this mean you can’t make money?
No!
Case in point: back in September I recommended a gold developer called Spartan Resources [ASX:SPR] for my service Small-Cap Systems.
It was around 31.5 cents at the time. Yesterday it closed at 41 cents.
That’s a 30% rise — in just over a month.
Spartan is moving towards production. Gold is also at a record high in Aussie dollars:
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| Source: Commsec |
Spartan is also doing further drilling at its Never Never deposit and wider Dalgaranga Gold Project.
This week it released more drilling results. The market liked what it saw.
I asked my good mate Hedley Widdup, chief investment officer for resource fund manager Lion Selection Group, for his thoughts on the results.
He told me:
‘Yes, this is very exciting news. Not only have Spartan continued to deliver intersections at Never Never that are indicating a juicy high grade gold orebody literally just off the edge of the existing pit, they are now finding other high grade areas that look like the start of other potential Never Nevers.
‘There should be little doubt that Never Never will be a mine and it looks like it’s not going to be the only one. It looks as if Spartan have a pipeline of areas they can drill to continue to deliver similar exciting news.’
I’m not saying you should buy Spartan.
Let me give you some context around this. Small-Cap Systems is a service that trades momentum.
We ride along while the uptrend is there.
In other words, we’re less preoccupied with the overall project dynamics and more so with the direction and movement of the share price.
If you’re looking for a long-term gold holding opportunity, I put my current favourite in my latest report here.
Gold stocks have been a good place to be in the last few weeks. Gold has leaped as the geopolitical uncertainty rolls around the world.
Here’s something even more interesting.
Gold is bucking the pressure coming from ‘real’ interest rates. In theory, gold should be lower. In reality, it’s not.
Here’s an interesting Tweet on that:
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| Source: X |
Go back to the top of today’s article. Bond yields are rising in the US because there’s less buyers than sellers.
We also know countries like China and Russia are trying to break out of the ‘exorbitant privilege’ behind the US dollar system.
One viable alternative would be a gold backed BRIC currency.
It’s interesting to note that Putin and Xi are currently meeting and declaring their shared mutual interests.
Today’s Australian Financial Review reports:
‘Russia’s Vladimir Putin and China’s Xi Jinping stressed the need for closer ties between their two nations in a ‘difficult’ world, as they met in Beijing on Wednesday in a sign of defiance to the United States and its Western allies.
‘Mr Xi said there was ‘deepening trust’ between China and Russia as the two leaders met for formal talks on the sidelines of a gathering of world leaders in Beijing to mark the tenth anniversary of China’s controversial Belt and Road Initiative (BRI).’
China is giving the FU to the West. But American isn’t bringing them closer to the fold, either.
Just this week, the Biden administration announced tighter controls on sales of US advanced semiconductors to China.
There’s a concerning historical parallel going on here.
Before 1941, the US started restriction Japanese access to natural resources.
Japan then proceeded to invade South-East Asia and lunge towards the oilfields of Indonesia.
You and I both know most semiconductor manufacturing is sitting in Taiwan. We also know China considers Taiwan a part of China.
History to repeat? That’s a concerning thought. It’s also why I think considering a constant allocation to gold and gold stocks makes sense now.
Investing is always a balance of prudence and opportunity.
Gold is a rare beast. It’s a mixture of both — in one. Do you have some?
Best wishes,
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Callum Newman,
Editor, Money Morning
