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July 19th, 2022 | 14:01 CEST

Gold price close to long-term buy signal - Desert Gold, Newmont and Barrick Gold in waiting position

  • Gold
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Gold reached a new low for the year with the interim slide below the psychologically important mark of USD 1,700 per troy ounce. Thus, the precious yellow metal, which is supposed to act as a crisis currency, completely lost the gains since Russia's invasion of Ukraine. In the short term, there is now the threat of another test to the downside in the area of USD 1,600 per ounce. In the long term, gold should regain its role as an inflation hedge and a currency against major crises. It is, therefore, slowly time to build up anticyclical positions.

time to read: 4 minutes | Author: Stefan Feulner
ISIN: DESERT GOLD VENTURES | CA25039N4084 , NEWMONT CORP. DL 1_60 | US6516391066 , BARRICK GOLD CORP. | CA0679011084

Table of contents:

    Newmont Mining - Dependence on the base

    Since its peak in August 2020, when the price made its high at USD 2,074.70 per ounce, gold went into a consolidation that resulted in a test of the USD 1,676 per ounce mark several times. On the upside, Russia's invasion of Ukraine tested the high again but missed it by a total of USD 4 at USD 2,070 per ounce. Currently, the price is preparing to test the underside at USD 1,676 again. The next result of a breakthrough would be the level in the area of USD 1,600. According to technical analysis experts, this could also be the level from which the gold price could start a long-term upward wave with new highs.

    The largest gold producer, Newmont, will present its figures for the second quarter on 25 July. Looking at Barrick Gold's preliminary numbers, Newmont may have had a better second quarter too. However, this is not reflected in the share price due to the negative overall market. The share performed much better in the first few months than the broad gold market and marked a new all-time high at USD 84.82. However, this was not confirmed, and the share has so far lost disproportionately, almost 40% to USD 54.73. Thus, Newmont is facing a decision in the next few trading days. In the event of a break of the support at USD 52.88, the next support would only be found at USD 45.

    Desert Gold - Powerful results

    It is more the rule than the exception that smaller exploration companies like Desert Gold underperform in a longer falling overall market. Because, it is precisely such stocks that are likely to outperform the gold price several times on the upside and therefore act like a warrant compared to the overall market. Desert Gold shares, for example, have lost more than 80% since the high of the gold price. A paradox if you look at the fundamental development of the past months.

    With the SMSZ project in Mali, the Canadians own one of the largest non-producing land areas in West Africa, with 440 sq km. In close geographic proximity are several producing Tier 1 gold mines, including those of Barrick Gold, Allied Gold, Endeavour Mining, and B2Gold.

    Yesterday, Desert Gold Ventures announced results from the first RC/core hole drilled to test the Linnguekoto West Deposit, a metallurgical hole drilled into the Barani East Deposit and the first 2 holes drilled into the Mogoyafara South Deposit. The results showed high grades and demonstrated once again the potential of the SMSZ project.

    Immediately with the first hole at the Linnguekoto West target, the Canadians drilled 1.83 g/t Au over 27 meters, including 2.25 over 20.7 meters and 26.5 g/t Au over 1.0 meter. True thickness is estimated at 13 meters. The Linnguekoto West Zone, which hosts an Inferred Mineral Resource of 66,200 ounces of gold in 1.39 million tonnes of gold mineralization grading 1.48 g/t gold1, is located in the south-central portion of the SMSZ property. In addition, 2 additional holes were drilled on Mogoyafara South. Further north, a drill hole was drilled on the Barani East target to verify previously measured gold grades. A further drill program is currently being planned for the Gourbassi West North, Mogoyafara South and Linnguekoto West deposits.

    Desert Gold's President & CEO, Jared Scharf, commented, "I am very pleased that we have drilled our first three holes at Mogoyafara South and Linngeukoto West. The drill results confirm and support historical drilling conducted by Hyundai around 2002. Obviously, much more drilling is required at these deposits as they have only been tested to shallow depths and are mostly open at depth and along strike to the north and south. The metallurgical test hole at Barani East returned much higher grades than expected, which bodes well for when or if mining is undertaken in this area."

    A total of 20,000 meters of drilling is planned this year. In light of the surprisingly good results, a resource increase may not be unlikely. The stock market value of Desert Gold Ventures is currently just under EUR 12 million. If the gold price picks up, the share should become a candidate for outperformance, as mentioned above.

    Barrick Gold - Strong quarterly figures fizzle out

    In the wake of the strong US dollar and the associated weak gold price, the shares of the largest gold producers are also being dragged down. Even the very robust figures for the 2nd quarter of the world's largest gold mining company, Barrick Gold, did little to help. At USD 15.66, the value is trading at the Corona level of March 2020. The upward trend formed since August 2018 was broken with high volumes in recent weeks. The next support lies only on the vertical at around USD 12.70.

    The American company, which operates nine mines in Africa, North and South America, and Australia, reported preliminary sales of 1.04 million ounces of gold and 113 million pounds of copper for the second quarter. As previously announced by the Company, its 2022 gold production is expected to increase during the year. With the more robust performance in the second quarter, the Company remains on track to meet its 2022 gold and copper guidance.

    Barrick management said the improvement in gold production was due to better operating performance at its Carlin, Turquoise Ridge, Valedero, Bulyanhulu and North Mara mines, the latter two in Tanzania. However, Cortez, a mine in Nevada, had a poor quarter. Barrick Gold plans to provide further explanation and analysis of production and sales on 8 August.

    Currently, the correction in the gold market is in full swing. In the long term, the geopolitical uncertainties and the macroeconomic data speak for significantly rising prices. Barrick Gold and Newmont are to be observed; Desert Gold could provide a positive surprise.

    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.

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    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

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