Vince Lanci: Gold Silver Bullion Banks Become Unabashedly Bullish
Summary
Transcript
And now here’s Vince. Good morning, everyone. Hey everyone, I’m Vince Lancey and in today’s market right now we’re going to talk about Citi’s new price targets. We’ll touch on that here and we’ll discuss it more at length in the premium section. We’re also going to talk about Barrick mines and a new problem that they’re running into and the implications for the mining industry in general. So let’s check on the markets first and then we’ll get to those items.
We have some news items as well, probably worth looking at. The dollar is down 20 at 106. 17. The ten year yield is down one basis point at 465. Stocks are stable up 15. Handles at 50 67. The VIX came off yesterday. It continues to come off a little bit. 17. 95 down 44 basis points. Gold is up six and change at 23. 88. Silver is up 41.
Undoing a lot of yesterday’s move at 28 47. Copper is at 432 up $0. 04. Oil is down thirty eight cents at eighty five eighteen. Natural gas is 163. We’re at the lower end of that range now. Bitcoin is down 800 1462, 995. Ethereum is 368 down 50 basis points. Platinum plateau are both up. Plating is stronger, 1027 and 960 respectively. Grains are, call it flat with wheat up $0.
04. Soybeans are flat. Corn is flat. 1144, 426 and 564. Soy, corn and wheat respectively. All right, what are we going to do? We’re going to talk about a couple things. There’s the Goldfix front page bank selling china. This is the preview of what we’re going to talk about today for premium and we actually have got our hands on a book or two. Subscribers will understand what I’m talking about.
You can check in, in the story itself. All right, let’s start with the main, with the topic, the money topic. Right. Citibank put out an update of report yesterday and they made sure that the news media hit it. Got it, I should say. And CNBC talked about it and the $3,000 was in the headline, we gave you that as well and we’re not diminishing that headline. That’s actually an appropriate headline.
We got the update yesterday and then we’re going to share that with premium subscribers and give you a little bit of a preview of it here. Okay. The bank upgrades its baseline gold price forecasts to bull case scenario from the two Q commodities outlook and wildcards 2024 report. What does that mean? The second quarter 202-420-2324 commodities outlook report which we have here, they updated their bull case, they raised their price targets wildcards 2024 report.
That’s something that Citibank does proprietarily. They have a geopolitical macro report that we don’t see that report. We see the updates on it once in a while and that report gives the if this happens then we could have a spike up to that or a drop down to that. Thats where their 3000 price wild card spike was last year. Golds going to go up but if this and this happened you could have a spike to 3000.
We covered that as well. However, this year, im sorry, this month theyve moved that wildcard out of the wildcard 3000 and into the commodities outlook update itself. So what you’re kind of seeing is a gradual raising of the target in steps or fits and starts. Anyway. Next sentence. For 2024 estimate, this means a 6. 8% bump, the 20 through 50 /oz for 2025. This means an admittedly massive 40% upward revision to 28 75.
Now we’ll talk about the 3000 and 2400 and what that means in the context of the rest of the report. But suffice to say that the major bullion banks are being unabashedly bullish. And if theyre looking to pull the rug on you, theyre going to have to pull the rug on their bigger clients first. I dont think this is, I think we’re looking at a cultural change in the bullion banks.
They may not be bullish all the time, they may not be long all the time, but they have clients who want to have gold on their books. And as we’ll see in the report, the client business is what drives the bank business. Let’s move on to Barrick now there’s an article on mining as adopted, adapted from the Globe and Mail. We’re going to read a paragraph or two of that and the whole thing will be here for you to read on your own.
But I think a lot, since a lot of people are in mining in this community, I’m going to give you some commentary that’ll help you hopefully guide through this in your decisions going forward without telling you what to do. Okay, so here’s the beginning. Barrick under pressure, and Mali as regime eyes control of. I’m not sure how to say it. Well. Oh, Goncourt. Oh, Barrick Gold. TSX, ABX NYSE Gold is under increasing pressure in Mali as the country’s military regime seeks to tighten its grip on the lucrative mining sector sector, the Globe and Mail reported.
After seizing power in a coup in 2021 and forming an alliance with russian mercenary Wagner group, the Mali junta has been focusing on the mining industry. They conducted an industry audit and introduced a new mining code aimed at expanding state control over mining companies. Recent reports suggest that the regime may be to seize control of barracks key mining complex. There’s that word again. One of the world’s largest gold producing mines.
Barrick has declined to comment. Now, here’s the rest of the report, rest of the news item, I should say. I’m going to read you some comments. These are my comments, these are my opinions. That will help you think for yourself, hopefully. Okay, first of all, for every financial sanction, we’re going to start geopolitically and work down to the company. Geopolitically. The BRICs are sanctioning us by restricting metals, by holding back on collateral, by saying, hey, we can’t use your monetary platforms, you can’t use our natural resources.
You can write a thousand words on that alone. Next bullet. Natural resource protectionism is a function or a feature of, as a feature of mercantilism. When people aren’t as friendly with each other, they tend to not share as much. Same thing goes for nations, and mercantilism and protectionism are the same thing. Now you will share. The price goes up for sharing. Which brings us to Mali in general.
How warlords operate. Warlords operate again, this is another long article that I’m not writing today. Warlords operate differently than democracies. Now, this is actually very material. Democracies like to create businesses and add value to those businesses. Their balance sheets, their income statements are earnings per share. Warlords operate with cash flow. Warlords sell the materials raw to get cash flow to support the empire. So both empires are supported different ways.
So warlords need to extract more money from natural resources because they’re not building things with them. Right. What they’re building is their military strength and their power. So Barrick is caught in a situation like that. Barrick is in a negotiation. That’s why they’re not commenting. It’s a blackmail. The price is being raised of doing business there. That’s how it works. In a warlord country. You either deal or you do not deal.
You either pass on your cost or you do not. The other reason Barrick is not going to comment right now, because it’s a negotiation is because other countries are watching. Other countries are thinking about doing this. Other countries are already doing this. Okay, this is a present. This is a present from Putin. That’s what this is. Okay. Mining specifically. Now, I started out as a fundamental analyst in training on Wall street at Lehman Brothers.
Now, I was never an expert in mining, but I understand businesses that depend on production scale and international in general. So I’m not going to pretend to hold out to you that I’m mining expert. But at this point in the world’s evolution, if you get the big picture right, that’s 80% of the work. The last 20%, which I’ve done hopefully, hopefully correctly, the last 20% is up to you to do.
And that 20% is find the right companies. So mining risk. Panama copper, Ghana gold, Mexico silver, russian gold. Every country that’s on the ideological border between the west and the BRICS is reevaluating its relationships, and that means it’s getting more out of it. If you’re a country like Mexico or a latin american country, you will tell your workers to go on strike for a pay raise. Boom. Or you’ll adopt some woke thing like Panama and say, oh, we don’t want to destroy the environment.
Pay us more for our copper, okay? If you’re in Ghana, you go to Newmont, you say, you know what, guys? We’re not using dollars anymore. We want you to sell your gold directly to us. Okay? A portion of it. If you want to keep operating here. Everyones getting their pound of flesh a different way. But the goal is the same. Make more money off of your natural resources.
G seven is doing it as well if you dont think they are. Italy is restricting export of its gold. You cant get your gold out of China, you cant get your gold out of the US unless youre approved. The point is there is, there is a need of appearances of a free market. The market’s not free anymore. A little bit cynical. Okay, going on now, we get into the industry itself.
All right. Much of this has already been discounted in stock prices. This has been going on for years, since COVID Everyone looks at these miners and says, theres other reasons, too. When everyone looks at these miners and says, international risk supply chains fragmented, I dont think these guys are in a good position to benefit from that. Good companies, however, are unfairly beaten down by across the board selling.
The people who play in the mining space, unfortunately are not very sophisticated. And because of that, many of the people, not all the people, because of that, they don’t sell the bad companies, they just sell it all. They don’t know who the bad companies are. Right. Okay, next. Who are the good companies? Well, I don’t know who they are, but I know what they have. They have strong ties to local government where the mine is.
Right. Whether it’s an american company overseas or an overseas company overseas, or a canadian company in Canada. An ability to scale distribution vertically. Now there are a couple of companies I have in mind that are doing that now, but it’s not easy and you have to have some good management to do that. Vertical integration plans. Actually, I would call it virtual vertical integration plans. You want to have your mining tied to your refining, tied to your distribution.
But virtually partnership with government would be a good idea if you could do that. You also want to have a grasp on technological implementation to do those things. These are big picture things. The management’s got to be good. They got to know how to do that. Number two, their finances have to be secure. That’s it. Now, if I were a big mine, I’d be looking for one of those companies to buy.
If I were a medium sized mine who could do those things, I would be just doing them and building out my distribution. Because you want to be self sufficient. It’s all about self sufficiency. Now, unsophisticated investors are the problem. Mining and they create the opportunity, which is what I alluded to before. Banks do not promote miners for a reason. It’s about the metal price. So I’m going to say about that.
You can read the rest of that story below. Price action. Moving on to price action. Beach ball. Time for gold. I said that yesterday. Yesterday I said silver is leading the pack, but it’s not so obvious now. I might not be right about that. Looking at a couple of charts, I’m rethinking that I think silver is. Silver will lead the pack when we go up, but it will chop around.
It’s a hardcore. I’m not sure miners, we already talked about this. Oil touch and go. Bitcoin still looks weak. Stocks. There’s a problem. Vix manipulation. If I were the government, I wanted to keep stocks up to keep everyone happy, especially going into election. I make sure the price of VIX goes down. The easiest lever to prop up the stock market since 2009 is the VIX. If you sell the vix and you keep the vix low.
If the VIX is low, whether it be legitimately or artificially, then you make protection of the downside easier and cheaper to buy, which means fun guys are less nervous. As a barometer, you basically take the tail and wag the dog with it. And you can do that for months, years at a time. I lost a lot of money between 2009 and 2011, selling rallies instead of buying dips bonds.
YCC is coming. I still believe that dollar 2025 will not be kind if YCC comes. That’s just something on my radar. Market news. Out with the old Wall street gains at Main Street’s expense, offshoring services, onshoring of manufacturing. So as we build manufacturing here, our service companies are going to go overseas. There’s a rotation industry wise. Okay, out with the old commercial real estate’s just going to continue dying.
Wall street gains at Main Street’s expense. When you hear bank earnings are doing really well, that’s because Wall Street’s gaining. And when you hear your buddy down the street is getting laid off from Microsoft because they’re going overseas, that’s because it’s at Main Street’s expense. There’s a lot more in that as well. We’ll do data and we’ll just take a quick look at the charts. Okay. Data today.
Is the beige book important? Little understood these days and not digested immediately. So you shouldn’t expect a, a knee jerk reaction on it. However, the Silver Institute report is supposed to be out today and people are looking for that to drive silver higher. Thats already in the market. I mean it could, dont get me wrong, but these things dont stay private. If it comes down in the market rallies, thats great.
And in premium, which stay with me. Were going to talk about that in a second. We’re going to talk about the Citibank report. Okay. Gold. Here’s an hourly chart on gold. See the hourly chart on goal. There’s your trendline. Lower this line here. I’ll tell you why I drew it. This is where technical analysis comes from. The market goes up gold, right? No. Test it. Test it. This is the first hour that it makes a decision.
It wants to try it. And of course it finds more selling up here. But the point is, this is the area. It pauses, looks left, looks right and makes a decision. So this is my area now. Okay. Until we get above that, you’re not a buyer if you’re already long, you’re long. But until we get above that, you’re not a buyer. We get below this, you should be short term bearish.
But this buying down here? No way, man. If it goes down here again, maybe it won’t hold. But I have a feeling that this line isn’t crucial, but it is someone who’s buying it. There’s buying in here, very algorithmic type buying, and there’s probably fundamental buying down here. Moving to silver, similar structure, but not as steep on the line, right? If same idea here. But if I were a bear and I wanted to crack gold, I’d crack silver.
Because the line’s not as steep, the market’s not as algo driven, and doesn’t have far to go to test that area again. That’s it. Okay. Thanks for watching this morning’s markets and metals update with Vince Lancey, brought to you each day by Miles Franklin Precious metals, where this week’s special is junk silver for only $2. 75 over spot. Junk silver is the pre 1965 dimes and quarters, and one of the products where we did see premium spike in the past couple of years.
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