Gold is up another $16.90 today and just hit a new 21-week high of $1,255 per oz! From gold's medium-term bottom set on August 15th of $1,167.10 per oz, gold has rallied by $87.90 per oz in 16 weeks!
Considering that the Crypto bubble has burst, the NASDAQ bubble is beginning to burst, and the global housing bubble is showing signs of imminent collapse with prices beginning to decline in Sydney, Hong Kong, Vancouver, and London - the global economy is rapidly shifting to a period of wealth preservation.
On the most recent four occasions that the U.S. 10-2 yield spread has inverted, the effective Fed Funds Rate at the time has ranged from 4.16% up to 9.12% - averaging 6.14%. It is absolutely insane that the U.S. 10-2 yield spread is now 14 basis points away from inverting when the effective Fed Funds Rate is only 2.20%. During the next recession, the Fed will have very little ammunition to reinflate America's bubble economy - especially with $4 trillion already on its balance sheet! To battle the next recession, the Fed will need to engage in "helicopter money" by printing money that goes directly to U.S. citizens to spend, bypassing the banks!
When gold declined to a secular bear market bottom in December 2015 of $1,050 per oz, it was pricing in a real U.S. economic recovery that would allow the U.S. to balance its budget and the Fed to raise rates back up to normal levels. Following Powell's comments last week, the market is beginning to price in reality that the Federal Reserve doesn't have the ability to raise rates to normal levels - especially when America's budget deficit is rapidly approaching $1 trillion despite the economy supposedly being very strong!
Investors dumping tech stocks will begin loading up with gold mining/exploration stocks in the weeks ahead. At a very minimum, we believe Fiore Gold (TSXV: F) will soon be trading at a valuation of US$100 per oz of measured/indicated gold and $50 per oz of inferred gold. With 670,700 oz of measured/indicated gold plus 290,900 oz of inferred gold, this would value Fiore's gold resource at USD$81.615 million or CAD$108.548 million and after adding in its positive working capital of CAD$22.96 million, Fiore's market cap in our opinion will soon exceed CAD$131.508 million, which will value Fiore at $1.35 per share.
With Fiore's 2019 gold production likely to reach 50,000 oz, based on $1,255 per oz gold, Fiore appears set to generate 2019 revenue of USD$62.75 million or CAD$83.458 million. At $1.35 per share, Fiore's enterprise value would be CAD$122 million, which would only be 1.46X estimated 2019 revenue. Gold miners in Nevada like Newmont and Barrick are both currently trading with enterprise values of 2.73-2.79X revenue and as gold prices soar higher, we expect Newmont and Barrick to see their EV/revenue ratios rise north of 5. Fiore Gold (TSXV: F) is by far the biggest opportunity in the market today and we expect it to explode well above $0.50 per share next week!
Past performance is not an indicator of future returns. NIA is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This message is not a solicitation or recommendation to buy, sell, or hold securities. Never make investment decisions based on anything NIA says. This message is meant for informational and educational purposes only and does not provide investment advice.
Preparing Americans for Hyperinflation
