The Fed is assuring us that this isn’t the beginning of a return to the extraordinary, previously unprecedented policies of quantitative easing, suggests Brien Lundin, resource sector specialist and editor of Gold Newsletter.
I think it’s important to note that this is precisely what former Fed Chairman Ben Bernanke assured us on January 13, 2009, in an official speech entitled “The Crisis and the Policy Response.”
As Bernanke was careful to counsel back then, “The Federal Reserve’s approach to supporting credit markets is conceptually distinct from quantitative easing (QE), the policy approach used by the Bank of Japan from 2001 to 2006.”
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Five years, $4 trillion and two more phases of massive monetary pumping, and the acronym “QE” was forever burned into our consciousness.
Make no mistake, we would be foolish not to be prepared for a repeat performance. Except every bit of evidence argues that it will be an escalation of the previous policies — by a considerable margin.
Modern economies, built upon foundations of central bank proffered monetary adrenaline, are like addicts in need of ever-greater doses to get the same result. There seems little doubt that the trend toward easier money will only accelerate.
So what are the implications? How should we prepare? The most obvious answer is to make sure we have plenty of gold. I won’t pretend an ability to predict the exact path ahead.
But, if the last rounds of QE brought gold to a new nominal high of $1,920, these new rounds should take it past the old 1980 high in real, current-dollar terms. And that means a gold price in excess of $2,800, or about 85% above the current levels.
Whether gold declines into December or whether it’s already resumed its bull run, the current valuations in the junior mining sector are extremely attractive.
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Among our buy recommendations, SSR Mining (SSRM) followed the broader market up this summer. And while it’s given back some of those gains since August, its share price remains well up for the year.
That only makes sense, given this company’s penchant for delivering consistent production performance. SSR is an establish mid-tier producer, making it a first-off-the-shelf buy as general investors begin moving back into the precious metals space.
The company released its Q3 2019 production numbers recently and demonstrated, yet again, its ability to deliver results. SSR’s Marigold, Seabee and Puna Operations combined to generate more than 100,000 gold-equivalent ounces during the quarter.
The company’s Marigold Nevada mine produced 52,968 ounces of gold during the quarter. That production was the result of more than 19 million tonnes of material processed.
The news was even better at Seabee. The Saskatchewan project had another record quarter of production, generating 32,345 ounces of gold. Recoveries were a robust 98.8%.
Finally, the company’s newly consolidated stake in the Puna Operations allowed that division’s silver operations in Argentina to produce 1.7 million ounces of silver.
With these Q3 numbers, SSR Mining remains on pace to meet or exceed guidance for eight years running. That kind of consistency makes the company a go-to bet on gold’s bright future. The company is a key component of our portfolio, and a buy at current levels.
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