Why Gold Prices Are About To Skyrocket Even Higher

Thursday, August 15,2019 /09:02AM / By James Stafford of Oilprice.com / HeaderImage Credit: Oilprice.com

The gold bears have finally caved under the deafening barrage of fiscal andgeopolitical catalysts, from Fed hints to intensely brewing conflict with Iran.But there is one key trend that stands to push gold up beyond$1,700--regardless of the day's news.

Of course, it's difficult for the bears to ignore a nearly $50/ounce gain forgold, which is now trading well above its 5-year high.

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Not only has the U.S.-Iran conflict reached a boilingpoint, with Trump readying to deploy an additional 1,000 troops to the MiddleEast, but the European Central Bank has issued a defiant, dovish tone, sayingit won't hesitate to provide further stimulus: That means rate cuts.

The icing on the gold cake is the US Fed, which has now clearly indicated thatit hasn't abandoned the idea of rate cuts for 2019.

But in this perfect storm for gold prices, EuroSun Mining (TSE:ESM, OTCMKTS:CPNFF) CEOScott Moore says we're overlooking a significant trend that will outlast thecurrent geopolitical meltdown and even the Fed's policies: It's a global pushfor de-dollarization.

"Government's around the world are becoming increasingly wary of thedollar's hegemony in international trade," says Moore. "And they'redoing their best to distance themselves from it by using their gold reserves tobuy more gold instead."

This process is already underway mainly in nations with strong anti-U.S.sentiment including Russia, China, Iran, Venezuela, Syria, Turkey, Qatar,India, Pakistan, Libya, Egypt and the Philippines among others.

Naturally, these countries are turning to gold since the yellow metal is notunder lock-and-key like the greenback and other electronic payment methods.

This trend is abundantly clear when you look at central banks' buying activity.

According to the World Gold Council, central banks purchased nearly 70 percent more goldduring the first quarter of the year than they did during the previous year'scorresponding period.

That's the most they bought since the first quarter of 2013.

For EuroSun's Rovina Valley project in Romania--thelargest in-development gold mine in Europe--the de-dollarization drive willbeen a boon for the 10 million ounces of gold equivalent they're hoping to getout of the ground in the simple geography of Romania's prolific Tethyan GoldBelt.

There are plenty of billionaire fund managers who think today's ‘crazy' goldprices are just getting started.

Not least among them is Paul Tudor Jones, whosays that gold "has everything going for it", and sees it pushing to$1,700 an ounce "rather quickly", as he noted in an interview withBloomberg.

And this is all just thanks to near-term trends wrapped up in the Fed and wildgeopolitics.

We're interested instead in the long-term trend that is says gold will be amajor winner of the global de-dollarization trend.

There's nothing like a sanctions frenzy to create a major uptick in momentumhere.

Most notably, Russia and China havepledged to accelerate their de-dollarization strategies because of Trump'ssanctions push. And they've reached a deal to use national currencies forbilateral trade. No more U.S. dollar, then.

So, we're carefully watching what the central banks are doing.

The latest countries to jump on the de-dollarization bandwagon are Serbia andthe Philippines. Serbia is boosting its national gold reserves, increasing themfrom 20 to 30 tons by theend of this year. It's shooting for 50 tons by the end of 2020.

Tudor is watching these developments closely, and to him, it suggests anunprecedented shift:

"Remember we've had 75 years of expanding globalization and trade, and webuilt the machine around the belief that's the way the world's going to be. Nowall of a sudden it's stopped, and we are reversing that," he toldBloomberg.

"When you break something like that, the consequences won't be seen atfirst, it might be seen one year, two years, three years later. That would makeone think that it's possible that we go into a recession. That would make onethink that rates in the US go back toward the zero bound and in the course ofthat situation, gold is going to scream. "

EuroSun's (TSE:ESM, OTCMKTS:CPNFF) Mooreagrees: "What's happening with Iran right now will only further thede-dollarization push. The dollar isn't necessarily king anymore, and gold ismore than ready to resume its rightful place on the safe haven throne."

Five gold companies to watch as more countries push forde-dollarization:

YamanaGold (NYSE:AUY) (TSE:YRI)

Yamana, has recently completed its Cerro Moro project in Argentina, giving itsinvestors something major to look out for. The company plans to ramp up itsgold production by 20% through 2019 and its silver production by a whopping200%. Investors can expect a serious increase in free cash flow if preciousmetal prices remain stable.

Recently, Yamana signed an agreement with Glencore and Goldcorp to develop andoperate another Argentinian project, the Agua Rica. Initial analysis suggeststhe potential for a mine life in excess of 25 years at average annualproduction of approximately 236,000 tonnes (520 million pounds) ofcopper-equivalent metal, including the contributions of gold, molybdenum, and silver,for the first 10 years of operation.

The agreement is a major step forward for the Agua Rica region, and all of theminers working on it.

EldoradoGold Corp. (NYSE:EGO) (TSE:ELD)

This Canadian mid-cap miner has assets in Europe and Brazil and has managed tocut cost per ounce significantly in recent years. Though its share price isn'tas high as it once was, Eldorado is well positioned to make significantadvancements in the near-term.

In 2018, Eldorado produced over 349,000 ounces of gold, well above its previousexpectations, and is set to boost production even further in 2019.Additionally, Eldorado is planning increased cash flow and revenue growth thisyear.

Eldorado's President and CEO, George Burns, stated: "As a result of theteam's hard work in 2018, we are well positioned to grow annual gold productionto over 500,000 ounces in 2020. We expect this will allow us to generatesignificant free cash flow and provide us with the opportunity to consider debtretirement later this year. "

BarrickGold Corp. (NYSE:GOLD) (TSE:ABX) and Goldcorp Inc. (NYSE:GG):

All eyes are on the billion-dollar partnership these two giants are forming inChile's gold belt. Goldcorp is putting up $1 billion to get in on this deal asminers scramble for new sources of growth. This joint venture will see the twogiant miners operate three properties in Chile's Maricunga region, and thesewill be major catalysts for both.

Newmont Mining Corp (NYSE:NEM) Founded over 100 years ago, Newmont MiningCorporation (NYSE:NEM) is one of the leading mining companies in the world. Thecompany holds assets in Peru, Australia, Ghana, Indonesia, Mexico, and aroundthe United States. Primarily focusing on gold and copper, Newmont has steadilycarved out a name for itself among those in the industry. In Q1 2017 alone, thecompany secured over 1.2M ounces of gold. Definitely noteworthy for investors.

WheatonPrecious Metals Corp. (NYSE:WPM) (TSE:WPM)

Wheaton is a company with its hands in operations all around the world. As oneof the largest ‘streaming' companies on the planet, Wheaton has agreements with19 operating mines and 9 projects still in development. Its unique businessmodel allows it to leverage price increases in the precious metals sector, aswell as provide a quality dividend yield for its investors.

Recently, Wheaton sealed a deal with Hudbay Minerals Inc. relating to itsRosemont project. For an initial payment of $230 million, Wheaton is entited to100 percent of payable gold and silver at a price of $450 per ounce and $3.90per ounce respectively.

Randy Smallwood, Wheaton's President and Chief Executive Officer explained,"With their most recent successful construction of the Constancia mine inPeru, the Hudbay team has proven themselves to be strong and responsible minedevelopers, and we are excited about the same team moving this project intoproduction. Rosemont is an ideal fit for Wheaton's portfolio of high-qualityassets, and when it is in production, should add well over fifty thousand goldequivalent ounces to our already growing production profile."

CenterraGold Inc. (OTCMKTS: CAGDF) (TSE:CG)

Centerra Gold is a Canada-based gold miner with flagship assets, the MountMilligan Mine and the Kumtor Mine which are located in Canada and the Kyrgyz Republicrespectively. It also owns the Öksüt Gold Mine in Turkey, making it thesingle-largest North American gold company operating in Asia, with over 22years of experience in the region.

Centerra's biggest selling points, however, are its strong balance sheets. For2018, the company reported over $100 million in net earnings, generating over$217 million from cash operations, exceeding many analyst's expectations.

Scott Perry, President and Chief Executive Officer of Centerra stated, "Asa result of the strong fourth quarter operating performance at both operations,the Company exceeded its overall 2018 production and cost guidance producing729,556 ounces of gold at an all-in sustaining cost on a by-product basis of$754 per ounce sold, beating the low-end of our all-in-sustaining cost guidancefor the year.