Market Update

Gold - Strike - West African - Berkeley

Good afternoon

I think there is every chance, that Yellen will be proved as being behind the curve! Real short term interest rates will most probably stay negative this year, and that´s helping gold, while the world economy seems to be on a pretty sound footing this year - well sound for as long as interest rates stay low! Beware of the day, when indebted governments around the world will have to pay more meaningful interest on their massive debt-positions! And as one commentator said the other day - the US$ could be in for some more weakness, given negative rates and probably fewer rate increases than the market feared.

On the charts, the US$ gold price has clearly gone through the 50-and 100-day moving average, next target could be the 200-day MA at around 1260 US$/oz. 

In A$, gold seems to be stuck in it´s trading range of 1570-1630 A$/oz, which has been in place since the year started. A nice price for Australian producers, but not very incentivising to increase positions in gold stocks!

The GDXJ-and GDX-reweighting at the market clsoe today created a lot of turnover, and some distortions. In general, it has been supportive for Australian stocks today.

Strike Energy - received 2 Mill of the 24 Mill A$ South Australian government grant to support additional gas production. That´s positive in itslef, but we had hoped for 4-6 mill A$. An additional round of 24 mill A$ has also been announced, and Strike is hopeful of getting some of this as well. In any case, the company has now about 10 mill A$ to play with, as at 31.12.. This should give them another  few month to prove up commerciality, or/and to find JV-partners, and find new management until say July, when they will have to raise some more - unless a deal happens until then.

Berkeley - some nice drilling results from their high-grade resource Zona 7, most notably beeing 12 m with 1000 ppm uranium. Zona 7, which is forming the cream of their resource ( and which contrary to their mine deposit, does not have mining approval as yet ), looks pretty certain like growing further. The company is in negotations with offtake-partners as well as financiers to bring the mine into production. Following their capital raising a few month ago, initial contsruction activities as well as orders for long lead items have started. Negotiations with power stations are nothing you can do overnight - but if and when the company will find a deal - presumably in the 2nd Quarter - we could have some fun here again.

West African Resources - some highly unusual turnover this week, totalling 17 mill shares over two days. Looks like a large overhang has been removed. I am very surprised, that a large shareholder has sold down here...but sometimes there are funny reasons for somebody selling! In the low twenties, the stock is very good value for money, while analysts have valuations in the forties for the company. This could be further enhanced, once the company is progressing drilling and feasibility study on the underground mine. Should gold hold at current levels or even go higher, confidence in the developers should come back quickly. 

Have a nice weekend


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