Good post by Ing. Mostly fundamental of miners. Thumbs up for merger of ABX and GOLD. Go to the bottom half.
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Gold’s bull market has just begun. Gold will benefit from the diversification away from equities.
From a low of $1,150 when Trump was inaugurated, gold has built a two year base and we expect
the rally to continue with a near term target at $1,275 an ounce. Short covering and hedge fund
demand will push gold to $1,340 an ounce with a $2,200 an ounce target within 18 months. Gold
will be a good thing to have.
Recommendation
The latest quarterly results for the mining industry were a mixed bag due in part to the lower gold
price and squeezed margins. Underlying this is the gold miners’ dilemma of replacing declining
reserves, since many deposits are past their peak. In the past five years, the industry has not
replaced their reserves due in part to the lower gold price, ill advised takeovers and rising costs.
In addition average mine grade has dramatically dropped from almost 4 g/t to under 1 g/t.
Moreover, many of the larger gold mines with open pit operations are or at close to the end of their
mine lives resulting in pit wall collapses. Detour, Alamos, Goldcorp’s Eleonore and Centerra each
had pit wall collapses. None have shutdown but finding gold has become more difficult.
Consequently, we believe the reserves of those producers with underground mines, possess longer
lives and will attract premium prices. To be sure, the low hanging fruit has been plucked as megadeposit discoveries are few and far between. One of the reasons for the Barrick and Randgold
merger is the shortage of long life assets at an all in cost of less than $1,000 an ounce. New Barrick
will have the most long life mines as well as the longest reserve life in the industry.

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