On Thursday, Mar. 12, the Dow fell 2,352 points—its largest single-session point drop on record. The following day, on Mar. 13, the Dow powered nearly 2000 points higher, its largest single-session point gain in history.
This extreme volatility was inevitable. The longest-running bull market in history was driven by artificially low interest rates and accommodative fiscal policy (QE)… not fundamentals.
The policy response by central banks over the past decade has been to deal with every crisis by injecting liquidity, postponing the inevitable—kicking the proverbial tin can further down the road, except today, that can is bigger, heavier, requiring heavy machinery to kick proper.
The recent 50-point 911 rate cut, a move by the Fed—the gatekeeper of the U.S. economy—was intended to reassure us that our collective backs are covered. That worked for about five minutes.
Last Thursday and Friday, the Fed opened the door to another round of QE, announcing $1.5 trillion in short-term loans to banks to “address highly unusual disruptions in Treasury financing markets associated with the coronavirus outbreak”.
When the Fed meets Mar. 18, they could deliver a further 100 BPS cut.
I guess we need to ask ourselves, ‘how much in the way of economic stimulation should we expect from further rate cuts?’ I mean, have declining bond and note yields not already factored those cuts in?
This is a wild and wacky world we live in today. Someone oughta sell tickets.
As shrewd market observer posted the following tweet over on Tommy Humphreys ceo.ca yesterday…
Larry Kudlow, Director of Trumps’s National Economic Council, in a 2001 interview: “I don’t want gold to be a hot investment. The minute it is, I know the rest of the story is going to fall apart.”
Nope, a skyrocketing gold price would NOT be good. It would telegraph tidings of great trepidation to all concerned.
It might require a layer of tinfoil around the brim of your hat to see it, but it looks as though the gold price is being, ahhhh… ‘managed’?
Taking a closer look at Friday’s gain in the Dow 30, the largest point gain in history, it all happened in the last 25 minutes of trade, after Trump declared COVID-19 a national emergency freeing up $50 billion in federal aid to help contain the pandemic.
The following is a 5-minute intraday chart (each bar = 5 minutes of trade) – note the last five bars on the right of the chart (the final 25 minutes of Friday’s session) and the crazy gains registered.
This move also smacks of ‘management’, but WTF do I know?!
This just in…
“The Federal Reserve swept into action on Sunday in a new bid to save the U.S. economy from the fallout of the coronavirus, cutting its benchmark interest rate by a full percentage point to near zero and promising to boost its bond holdings by at least $700 billion.”
We characterized the first 911 interest rate cut as central bank ‘panic’. I’m not sure how to characterize this one.
You can’t make this shit up.
Futures open in 15 minutes overseas. I’m dying to see how the S&P 500 and Gold react to this latest attempt at stimulus.
A serious dose of what-for
Everything in the junior arena caught what-for during the market chaos last week. The following chart of the GDXJ might be the best example — a >50% hack job from recent highs…
I doubt this was retail at work. This had to be big money and hedge fund types getting blown out of their shoot-from-the-hip, over-leveraged positions. Idiots!
Companies with high-quality assets underpinning their already modest valuations suffered tremendous blows, despite their appeal as potential takeover targets—despite their endgame potential.
Fifteen minutes into overseas trading finds the S&P 500 futures off 98 points (3.70%) and Gold up $54 (3.65%).
(Highballer takes five…)
Just coming back from a short break, I see that the broader market indices are now locked limit down in overseas trade, the Dow 30 futures are currently off 1045 points (4.58%).
Fed chair Jerome Hayden “JAY” Powell regarding this (panic) one percentage point cut:
“The Federal Reserve’s role is guided by our mandate from Congress to promote maximum employment and stable prices for the American people, along with our responsibilities to promote the stability of the financial system. Today, we reduced the target range for our policy interest rate by 1 percentage point, bringing it close to zero, and said that we expect to maintain the rate at this level until we’re confident that the economy has weathered recent events and is on track to achieve our maximum employment and price stability goals. In addition, we took other actions to support the flow of credit to households and businesses.”
Commenting on a few of the companies on our list
There’s real intrinsic value in the companies we follow here at Highballerstocks.com.
Many of the companies we follow have real assets backstopping their market caps—real ounces or pounds in the ground that are becoming increasingly difficult to find.
It doesn’t matter what damage broader market volatility inflicts upon these entities, they all have the potential for an endgame—a takeover offer from a larger Producer desperate to replenish its mineral inventory (reserves and resources).
- 191.63 million shares outstanding;
- $18.2M market cap based on its recent $0.095 closing price
At Cartier’s Chimo Mine Project, the ounces-in-the-ground along the Central Gold Corridor currently stand at:
- 3,263,300 tonnes at an average grade of 4.40 g/t Au for a total of 461,280 ounces of gold in the Indicated category;
- 3,681,600 tonnes at an average grade of 3.53 g/t Au for a total of 417,250 ounces of gold in the Inferred category.
A resource estimate for the North Gold Corridor and South Gold Corridor could drop any day now.
This company’s shares have been discarded as if there is no real resource underpinning its valuation.
The company’s recent dime close represents multi-year lows.
Having closed a PP for $2.94M four months back (FT shares priced at $0.21 and $0.28), the company launched a Phase III drilling program designed to test multiple prioritized zones, particularly at depth below zones 5B4-5M4-5NE .
These ounces-in-the-ground haven’t gone anywhere.
The current valuation is absurd, but that’s not to say the shares can’t go lower. Stink bids below Friday’s sub-dime low, if filled, would be a gift (author’s very humble opinion).
- 46.26 million shares outstanding;
- $19.89M market cap based on its recent $0.43 close
Even with this current price weakness, Coral’s shares have held up fairly well.
Coral holds an uncapped sliding scale NSR of 1% to 2.25% on over 2.7 million oxide ounces at Barrick Gold’s Robertson Property located along the prolific Cortez Gold Trend of northern Nevada.
We haven’t seen much in the way of news out of this company in recent weeks, but significant exploration upside remains on both the Robertson property itself, and a number of projects within hiking distance of Robertson.
If broader market volatility continues in the days/weeks ahead (“IF”?), stink bids below the recent lows at $0.40 stand a chance of getting filled.
- 39.71 million shares outstanding;
- $3.97M market cap based on its recent dime close
Defense is developing its 1,708-hectare Wicheeda Rare Earth Element (REE) Project where the current resource stands at 11,370,000 tonnes averaging 1.96% LREEs.
A new resource estimate incorporating 13 drill holes from a recently concluded program is on deck. It’s important to know that ALL 13 holes from this program—stepout and infill—tagged mineralization that far exceeds the numbers backstopping this current resource.
A $4M valuation seems crazy—keep in mind that 1% LREE material is equal to roughly 2.5 g/t gold (assays from a recent drilling campaign tagged numerous thick intercepts of 3%-plus material).
Buying at current levels, or stink bids below last weeks $0.08 low should the markets continue to wane, could represent an extremely low-risk entry point.
- 40.21 million shares outstanding;
- $28.95M market cap based on its recent $0.72 close
As I keep insisting, HighGold is top-shelf stock.
The company’s Johnson Tract property in southcentral Alaska is the flagship asset. I covered Johnson Tract in some detail late last January in a piece titled A high-grade gold and base metal play with Tier-1 potential.
With $13M in cash, the company is teeing up a significant drilling campaign at Johnson Tract later this summer. In the meantime, a 5000-meter program was recently launched in the Timmins camp.
HIGH has been trading for barely six months on the Venture exchange. The lows registered on Friday represent THE lowest prices printed to date.
Stink bids below Friday’s low at $0.70 could see a fill, but anything around this current price level should work out well in the medium to long term.
- 124.68 million shares outstanding;
- $64.83M market cap based on its recent close at $0.52
White Gold is another A-list ExplorerCo.
The company has resources in two main areas—Golden Saddle and Arc:
- 1,039,600 gold ounces within 14,330,000 tonnes at 2.26 g/t Au in the Indicated category;
- 508,700 gold ounces within 10,696,000 tonnes at 1.48 g/t Au in the Inferred category.
The potential to grow these resources ounces is excellent…
Feb. 6 news – White Gold Corp. Intercepts Significant Gold Values on Multiple New Drill Targets Across the White Gold Property, Confirming and Extending Regional Scale Mineralization Surrounding the Company’s Flagship Golden Saddle & Arc Gold Deposits
There’s also 43-101 compliant resource ounces—some 230,000 Inferred—across the river at their recently acquired VG Zone.
Recent efforts to expand this zone with the drill bit have met with success…
Those who follow this stock understand that the real allure—the real excitement—lies in the discovery potential, on a grande district-wide scale.
WGO didn’t get going on the Venture exchange until 2016. The recent levels touched last Thursday and Friday represent multi-year lows—prices not seen since 2016.
The stock could always go lower. And the company will need to do a raise in order to kick off an aggressive exploration campaign in the coming months. Hopefully, we’ll see an FT (flow through) raise with one or more deep-pocketed entities.
Prices at or below current lows represent an attractive entry point. Successful stink bids, as with the others featured above, are possible here too.
Without question, global debt is at the center of this broader market rout. Debt at all levels—gov’t, corporate, personal—has taken on a life of its own.
If a too-large-to-fail bank (Deutsche Bank for i.e.) were to go down, it could trigger a processional effect, an event too frightening to imagine. It’d be Lehman Brothers all over again, but with all this debt, potentially worse.
The (debt-free) companies we follow here at Highballer stocks have real assets backstopping their current valuations—real ounces or pounds in the ground that are becoming increasingly difficult to find, especially in this age of diminishing resources.
It doesn’t matter what damage broader market volatility inflicts upon these entities, they all have endgame potential—a takeover offer from a larger Predator/Producer, desperate to replenish its mineral inventory (reserves and resources).
With Tier-1 deposits (5 million ounces and over) becoming increasingly difficult to find, and lean project pipelines threatening the long term survival of many producing entities, the companies highlighted here are sitting ducks for these larger co’s (author’s humble opinion).
‘Be right and sit tight’ might be the best advice I can offer.
Entering stink bids, well below the market, might also be a sound strategy if this extreme broader market volatility continues.
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