Close menu




October 7th, 2022 | 12:35 CEST

First Majestic, Manuka Resources, Barrick Gold - Has the bottom been reached?

  • Mining
  • Gold
  • Silver
  • Commodities
Photo credits: pixabay.com

Fighting inflation at all costs is the motto of the various central bank members in the US at the moment. Despite recession worries in the financial markets, the FED is determined to curb inflation with a tight interest rate policy. The fact that this has already gotten out of hand and is difficult to contain by further interest rate steps without driving the economy to ruin should be obvious, not only to economists. The first voices calling for an end to interest rate hikes are already being heard. This could mean the starting signal for a sustained upward wave of the precious metals.

time to read: 5 minutes | Author: Stefan Feulner
ISIN: FIRST MAJESTIC SILVER | CA32076V1031 , Manuka Resources Limited | AU0000090292 , BARRICK GOLD CORP. | CA0679011084

Table of contents:


    Gold - Brightening chart picture

    FED Chairman Jerome Powell is determined to fight already runaway inflation by any means necessary. While he would like to do so without pain to the global economy, "there is no such way," Powell said. In addition to the FED, most of the world's central banks are also committed to a tight monetary policy with higher interest rates. Until recently, the European Central Bank was able to avoid the lively interest rate hunt, but now it followed its big brother's strategy. However, the dangers of this action are enormous. On the one hand, the European economy is already battered, partly due to the escalated Ukraine conflict, and is in danger of sliding straight into recession. On the other hand, many euro countries, especially the southern states of the continent, are heavily indebted and would be put in a dramatic situation if interest rates were raised further. In the US, the midterm elections are coming in November. President Joe Biden's Democrats must defend their narrow majority in the House of Representatives and the Senate at all costs. The accusation of the Republican opponents against the incumbent president was that they ignored the high inflation in the USA.

    Thus, the current administration will likely be willing to maintain the tight monetary policy until the mid-term elections. After that, an end to the interest rate spiral should become apparent. The first signals are already coming in that indicate a change of direction in the near future. Chicago Fed district central banker Charles Evans commented to TV station CNBC: "It is time for the Federal Reserve to slow the pace of interest rate increases. Monetary policy works with a lag, and we have been moving very quickly lately."

    If further signals come regarding an end to the interest rate cycle, this should signal the start of a strong upward movement for precious metals after a correction that has been ongoing since August 2020. From a chart perspective, the chart picture has already brightened considerably with the recapture of the important USD 1,680 per ounce mark. The next important step would be to break above the upward trend at around USD 1,797.00, which has existed since May 2021.

    Manuka Resources - Triple potential

    Despite recent successes, the negative chart picture has not yet been completely cleared. However, another dip would offer long-term anticyclical entry opportunities for gold producers and exploration companies. These act like a lever in longer-term trend movements of the base price, both upwards and downwards, and are suitable for any precious metals portfolio for diversification.

    One interesting player is Australia's newest precious metals producer, Manuka Resources. This Company owns two promising mining projects in the Cobar Basin with a total exploration zone of 1,150 sq km. With the Mt Boppy gold project, the Australians own one of the continent's historically richest gold mines, which mined 500,000 ounces of gold at an average grade of half an ounce per ton of ore in past production. After Manuka Resources went public in 2020, it was put back into production with a target of 24,000 ounces of gold. This target has already been exceeded by a factor of two. In addition, further insight has been gained into the exploration potential of the project. Experienced management expects the resource to have significant potential at depth. The Company expects to submit a new mine plan in the fourth quarter with a view to restarting production in early 2023.

    The second project is the fully permitted Wonawinta Silver project, which also contains gold. With a mineral resource estimate of 51 million ounces, the property is one of Australia's largest silver producers. In addition, 200,000t of existing lead has been estimated. Another asset is the processing plant available at the deposit, which can treat both precious metals. The project is currently in production and is processing the 515,000t stockpile on the ROM pad adjacent to the plant. Mining of silver is expected to resume as soon as the base price moves back up.

    The acquisition of the South Taranaki Bight (STB) project took the Australian company to a new level. The STB project, located off the west coast of New Zealand, is a VTM iron sands project with vanadium titanium and magnetite. The previous owners have invested more than USD 50 million, and a feasibility study has already been completed. The project has a granted mining license and an extensive JORC resource of 3.8 billion t. With a vanadium grade of 0.5%/t based on initial estimates of annual mining rates for the STB project, the estimated annual production of vanadium would be approximately GBP 55 million. That would make Manuka Resources the third largest vanadium producer after China and Russia and could produce 15% of the global supply annually.

    The market capitalization of the promising producer, which is already generating ongoing cash flow, is AUD 41.47 million. You can read an in-depth interview with Manuka Resources CEO Dennis Karp here https://www.kapitalerhoehungen.de/interviews/manuka-resources-interview-wo-cash-flows-und-blue-sky-potenzial-zusammenkommen.

    Barrick Gold, First Majestic - Has the bottom been reached?

    The chart of the world's second-largest gold producer, Barrick Gold, has brightened considerably after the last sell-off. After the lows at the end of September at USD 13.97, the price was able to move away from the short-term downward trend that has existed since mid-August. The bottom formation would be completed when the price sustainably exceeds USD 16.68. The next target would then be the short-term 200-day line, which is currently at USD 19.52. On the downside, the positive formation would be broken with the break of the trend formed since 2015 at USD 14.40.

    An end of the bottom formation could also be seen at silver producer First Majestic Silver. After the formation of a double bottom in the area of USD 6.31, the price could successfully break away. A fresh buy signal could be generated if the resistance at USD 9.28 is exceeded. A sustainable overcoming of the downward trend from January at USD 11.10 would offer a follow-up potential to USD 14. The trend-following indicator, which recently generated a buy signal on a weekly basis, is positive.


    The precious metals markets suffered in recent months from the change in interest rate policy by the central banks. However, it is not unlikely that this will change after the mid-term elections in the US in November at the latest. This will likely give a solid boost to both the gold and silver markets. Barrick Gold and First Majestic Silver may have already found their bottom. Manuka Resources offers long-term potential with its three promising projects.


    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

    Risk notice

    Apaton Finance GmbH offers editors, agencies and companies the opportunity to publish commentaries, interviews, summaries, news and the like on news.financial. These contents are exclusively for the information of the readers and do not represent any call to action or recommendations, neither explicitly nor implicitly they are to be understood as an assurance of possible price developments. The contents do not replace individual expert investment advice and do not constitute an offer to sell the discussed share(s) or other financial instruments, nor an invitation to buy or sell such.

    The content is expressly not a financial analysis, but a journalistic or advertising text. Readers or users who make investment decisions or carry out transactions on the basis of the information provided here do so entirely at their own risk. No contractual relationship is established between Apaton Finance GmbH and its readers or the users of its offers, as our information only refers to the company and not to the investment decision of the reader or user.

    The acquisition of financial instruments involves high risks, which can lead to the total loss of the invested capital. The information published by Apaton Finance GmbH and its authors is based on careful research. Nevertheless, no liability is assumed for financial losses or a content-related guarantee for the topicality, correctness, appropriateness and completeness of the content provided here. Please also note our Terms of use.


    Der Autor

    Stefan Feulner

    The native Franconian has more than 20 years of stock exchange experience and a broadly diversified network.
    He is passionate about analyzing a wide variety of business models and investigating new trends.

    About the author



    Related comments:

    Commented by Juliane Zielonka on March 24th, 2023 | 07:55 CET

    First Phosphate, Volkswagen and Vonovia - Winners in climate poker

    • Mining
    • phosphate
    • Electromobility
    • climatechange

    On March 26, the residents of Berlin will vote on whether their city should become climate neutral by 2030 - 3.6 million inhabitants travel daily by car, bus and train. For mineral explorer companies like First Phosphate, the potential acceleration in demand is already a win-win, as demand for basic materials for batteries increases dramatically. Volkswagen, for example, may soon launch large-scale industrial production of cathode materials (CAM) and precursor materials (PCAM) in Europe, thanks to the go-ahead from regulators. Vonovia is also getting enterprising: the group owns 136,000 apartments in Berlin.

    Read

    Commented by Fabian Lorenz on March 23rd, 2023 | 08:00 CET

    Gold to USD 3,000? Barrick Gold and Desert Gold profit. What is going on at Vonovia?

    • Mining
    • Gold
    • RealEstate
    • Inflation

    Will the price of gold rise to USD 3,000 per ounce before the end of the year? That is what investment professional Leigh Goehring thinks is possible. He is a managing director at Goehring & Rozencwajg, manages a commodity fund, among other things, and expects a "decade of inflation." If the forecast comes true, gold stocks will at least be an attractive portfolio addition. In addition to industry heavyweights like Barrick Gold, explorers can be worthwhile as leverage to the gold price. One such explorer is Desert Gold. The share of the Canadian company reacted yesterday with a price jump of over 10% to a project update. In contrast, the outlook for "concrete gold" remains challenging. Vonovia, for example, was once again downgraded by analysts despite the significant share price losses of recent months. At the same time, there are also positive comments.

    Read

    Commented by Armin Schulz on March 23rd, 2023 | 07:58 CET

    Manuka Resources starts gold production. Can Varta and K+S manage the turnaround?

    • Mining
    • Vanadium
    • Gold
    • fertilizer
    • Batteries

    On March 22, all eyes were on the FED decision. Will the balancing act between fighting inflation and stabilizing the banking system succeed? The collapse of Silicon Valley Bank and the difficulties of Credit Suisse have caused plenty of uncertainty. The result has been significant premiums in the price of gold and cryptocurrencies as people try to protect their money. But regardless of the interest rate decision, there is interesting news on companies that have been under pressure recently and are waiting for a turnaround. We take a look at three of those candidates today.

    Read