Here's some fun reading for the weekend. McEwen Mining's CEO Robert McEwen believes we may see $1,900 gold before the end of this year. McEwen Mining plans to begin mine construction in 2017 at the old Atlas Gold Bar pit north of Eureka. Finalization of permits is expected for the first quarter of next year. This is beyond exciting for us old timers that remember the Atlas mining days of yore. Here's the article that appeared in Bloomberg News this week:
Gold Bull McEwen Sees Prices as High as $1,900 by End of Year (Bloomberg News, 9/20/2016)
Comex gold $1,313.4 per troy ounce
Comex silver $18.850 per troy ounce
Comex copper $2.1475 per pound
Astrological influences aside, things could get crazy for gold next week. My input to this morning's Weekly Kitco Gold Survey:
Next week, the summer will close with an epic battle of King Kong and Godzilla - the U.S Federal Reserve and Bank of Japan have [separate] 2-day meetings on the 20th-21st that could significantly impact gold price in either direction. The FOMC will decide the pace of future rate hikes which could include one next week; the BoJ is desperately trying to weaken the yen and will be reviewing their few remaining monetary tools to do so.
The most bullish outcome for the yellow metal would be a Fed delay in interest rate hikes until December or beyond and a bold move by Japan that some believe could include "helicopter money." The hotter than expected CPI this morning adds another boost to this scenario since inflation expectations reduce the magnitude of real interest rates*.
The bearish outcome is a September rate hike and a BoJ that follows the ECB path earlier this month - talk a good game but forestall further accommodation decisions. Gold could take out its September high for the bullish case, bouncing above $1,360 per ounce. The bearish scenario test will surely shock test the $1,300 floor. A mixed outcome puts gold somewhere between these extremes.
As the Sun crosses the celestial equator on the 22nd, I'll wager with the bulls. If this proves wrong, any dip below $1,300 is a buying opportunity. It doesn't get more exciting than this.
My vote is Up. Target price for gold is $1,360; target for silver, $19.7
* real interest rates are approximately the nominal rate (what you read in the paper) less the expected inflation rate. Rising real rates are a significant headwind for gold. The Consumer Price Index (CPI), a measure of inflation, rose 0.2% for August versus an expected 0.1%. Core inflation for the year is 2.3% compared to the Federal Reserve target of 2.0%
(more commentary below...)
Fall Edition 2016 - Mining Quarterly
The Colonel remains bullish on gold
As I mention in my Kitco News brief (above) and in the last several reports, the meetings of two major central banks next week could be a big driver for gold - up or down. My thoughts on gold going forward are in the latest Mining Quarterly (also above) and a recent commentary for Kitco News:
In the Quiet of August, a Troubling Spike (September 8, 2016)
The bottom line is a fairly shiny future for the yellow metal in the light of the latest central bank monetary policies. Things may not bode so well for the commodity complex - on this point, I hope I'm wrong. Watch copper price for clues. More on this in the weeks to come.
Have a good weekend!