Ground Breakers: Gold will shine amid FTX crypto doom, say big miners
It’s barely been two weeks since crypto exchange FTX went belly-up, and plenty of folk are already parading over its rotting corpse.
Two of Australia’s biggest gold miners say the “unravelling of cryptocurrency” will add to bullish conditions for the precious metal in the coming year as it looks to reclaim its status as the world’s standout non-currency store of value.
The vast bulk of gold price moves are driven by demand from investors, an area where cryptos like Bitcoin have proved a disrupter in recent years at a time when the degeneration of global diplomatic relations between Russia, China and the West should have been a tailwind for gold prices.
They have been held down this year by a rising trend of interest rate hikes in an attempt by the US Fed and other central banks to tame inflation.
But gold has enjoyed a mini-run of late, with weakening economic signals in the USA including a slight bounce in jobless claims overnight and lower inflation prints boosting hopes the severity of rate rises will decrease.
Gold prices were up ~1% overnight to US$1750/oz.
Evolution Mining (ASX:EVN) boss Jake Klein, who chairs Australia’s third largest gold miner, told shareholders at the company’s AGM today the FTX platform’s multi-billion dollar collapse reinforced gold’s place as the superior store of wealth globally.
“A stronger US dollar and the Federal Reserve’s aggressive monetary tightening, particularly since June, have until recently been a key headwind for the gold price whilst inflation has concurrently put upward pressure on costs,” he said.
“Looking forward though the outlook for gold is stronger with the Fed expected to ease interest rate increases within 12 months as inflation reduces and the global economy is expected to slow significantly.
“The recent developments in the crypto space, with significant losses incurred by investors in FTX and other crypto assets, have also reinforced gold’s worth as a superior storer of value.
“In uncertain times like this, we believe that Evolution is well placed to prosper through these headwinds the sector is currently experiencing.”
The assault from the gold sector on the beleaguered crypto industry continued in Regis Resources (ASX:RRL) chairman James MacTier’s presentation to its AGM in Perth today.
“Recently, buying of gold by central banks, a weaker USD, stabilising bond yields, continued geopolitical risk and the unravelling of crypto “currencies” are combining to give renewed support to the gold price and gold equities,” he said.
“This, combined with our own improving performance and growth initiatives, bodes well for the future of our company.”
Regis shares rose 1.32% this morning, while Evolution was up more than 6%.
It came amid a broader rally in gold equities, with Northern Star (ASX:NST) up 2.96%, Silver Lake (ASX:SLR) 3.77% higher and St Barbara (ASX:SBM) up 7.44%.
Evolution was buoyed by significant new intersections at its Ernest Henry copper and gold mine in Queensland both within and below its PFS mine life extension area, including 157m at 1.26g/t gold and 1.62% copper, 102m at 1.06g/t gold and 1.39% copper and 90.8m at 1.42g/t gold and 1.54% copper.
This should lead to an uptick in mineral resources at the annual update in June.
Coal miners have been heavily sold off, with Whitehaven Coal (ASX:WHC) , New Hope Corp (ASX:NHC) and Yancoal (ASX:YAL) all among the largest large cap losers today.
Energy stocks fell over 1% as oil prices dropped on info about Europe’s higher than expected price cap on Russian oil.
On the other hand materials stocks are up 0.97%, with gains of a similar size for iron ore blue chips BHP (ASX:BHP) , Rio Tinto (ASX:RIO) and Fortescue Metals Group (ASX:FMG).
The big triggers were a lower US dollar and more news of property and economic support out of China, fighting to revive its economic growth amid a wave of Covid lockdowns..