At time of writing, the share price of Saracen Mineral Holdings Limited [ASX:SAR] is up 2.97%, trading at $3.47.
After hitting an all-time high of $4.75 on 6 August, the Saracen share price has slumped over the last two months:
We look at the gold price outlook and whether Saracen shares will go back up in the short-term.
Highlights from Saracen quarterly
Here are the highlights from today’s release:
- Record quarterly gold production — 96,324 oz
- Solid All in Sustaining Cost (AISC) of $964/oz
- Record ore stockpile
- Cash and cash equivalents up 27% to $196 million
- Unaudited NPAT of $42–$45 million
The company also noted it had completed two acquisitions in the Thunderbox district.
One of which was acquisition of Bligh Resources in $38 million all-scrip off-market takeover.
The other one was Talisman Mining for $10 million cash and a Net Smelter Return (NSR) royalty of 2%.
Managing Director Raleigh Finlayson was particularly happy with how Thunderbox is performing saying:
‘The ramp-up at Thunderbox is exceptional, with the project enjoying some of the lowest costs in the industry thanks to the combination of high grades and low strip ratios…The benefits can be seen in our growing bank balance.’
Where does the gold price go from here?
The gold price currently sits at US$1483/oz.
As you can see below, it has been slowly moving lower as the trade war fears ease:
US Treasury yields have edged higher since the start of October, and DXY the US Dollar Index has subsequently arrested its slide.
With the narrowing range of late, it is possible a larger move is on the cards.
And it could be down.
More positive rumblings of a deal between China and the US could be the catalyst.
Alternatively, a no-deal Brexit could push it upwards.
Short term then, gold’s future is clouded.
Long-term however, the global financial system is becoming increasingly strained by debt-funded growth.
This should drive the price of gold up as a mid-cycle slowdown approaches and global growth becomes sluggish.
In short, despite Saracen’s recent slump — its prospects could improve if you have a longer investment horizon.
You can watch Jim Rickard’s strongly bullish case for gold here.
For The Rum Rebellion