Why Gold Fields Stock Tumbled 8% Today
Gold Fields' production fell 20% in the first half of 2024, and earnings dropped 16%.
Gold Fields (GFI) to Boost Portfolio With Osisko Mining Deal
Gold Fields (GFI) to acquire Osisko Mining to become the sole owner of the Windfall Project.
Trade of the Day: Gold Fields (GFI) Stock Offers a Contrarian Opportunity
While the precious metals complex largely enjoyed a positive session on Monday thanks to gold's spot price rising, South African gold miner Gold Fields (NYSE: GFI ) suffered the opposite trajectory: GFI stock stumbled and quite badly, losing roughly 5% of market value. Driving the sentiment downward was the company's announced acquisition of Canada's Osisko Mining (OTCMKTS: OBNNF ) in a deal valued at $2.16 billion.
Gold Fields to acquire Osisko Mining for $1.57 billion
Michael McCrae is leading Kitco's coverage of the mining sector. McCrae, who has both an MBA and CMA, knows how to build digital media properties.
Gold Fields seals multibillion-dollar deal for Osisko Mining
Gold Fields Limited (ADR) (NYSE:GFI) has announced its acquisition of Osisko Mining (TSX:OR.WT) in a substantial $2.16 billion (US$1.6 billion) deal, underscoring its strategy to expand amid surging gold prices. The South African mining giant will acquire Osisko's Windfall gold project, paying $4.90 per share—a 66.7% premium over Osisko's closing price last Friday, as reported by Bloomberg.
Gold Fields to buy Canadian miner Osisko in $1.57 billion cash deal
Gold Fields Ltd has agreed to acquire Osisko Mining for C$2.16 billion ($1.57 billion), it said on Monday, barely two years after an attempt to buy another Canadian miner was scuppered by a rival offer.
Flight From Money
Anthony Bradshaw “Men in general are quick to believe that which they wish to be true.”- Julius Caesar Looking at the significant rally in all things metal related on Friday, such as copper, gold, silver to name a few, when it came to selecting our title analogy, we reminded ourselves of the economic concept of “Flight for Money”. It is a situation in which people in an economy start to lose faith in their paper money and as such start saving in the form of assets such as gold or silver. Traditionally, such a situation occurs during periods of “hyperinflation”. We are not surprised by the ongoing rally starting in silver as we hinted in our previous conversation based on our friend Geoffrey Fouvry’s advice in true John Law phase II fashion: first you see a rally in soft commodities (Cocoa, coffee), then in Precious Metals (gold and silver), then in Industrials (copper is waking up and traded through $11,000 a ton). When it comes to “Copper”, back in November 2022 we reminded ourselves with the “Scarcity Principle” in which we mentioned that China’s reopening would be extremely bullish for “Copper”: “Copper inventories are at an all-time low. That's 3 days of global consumption in visible inventories. As such, copper prices could rise very significantly” – Macronomics, November 2022 In this conversation, we would like to look at the trajectory of commodities in general and precious metals in particular given the US budget trajectory and our recurring theme of “fiscal dominance” and what it entails in terms of “allocation” and “money illusion” and “geopolitical games” as well as the change in the “behavior” of the US dollar. Flight from Money? The overall picture of the “inflationary boom” has been recently described by Gavekal in their most recent highly recommended podcast. In our humble opinion, this is worth watching. YTD, the rally in some metal has been significant and as of late, both Copper and Silver have been surging rapidly the most: Gold, Silver, Copper, Platinum, Palladium YTD (Macronomics - KOYFIN) We are not surprised by the rally in “silver” given in our February conversation entitled “Animal Spirits” we told you the following: “Both AI and Bitcoin depend on a silver for hardware to operate and uranium to power it. Both metals are in a huge deficit. Draw your own conclusions. This is why we also told you that we have been riding the Uranium play via ETF URNM and via Kazatomprom because we like long-term value play (hence our “cheap” December 2020 recommendation to OHM Research clients on coal laggards BTU and ARLP at the time” – Macronomics, February 2024. “Copper”, “Silver” and “Uranium” follow the “Scarcity Principle”: “The first lesson of economics is scarcity: there is never enough of anything to fully satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.” - Thomas Sowell But let’s return to “Flight from Money” because it has everything to do with the “Money Illusion” dear to Irving Fisher is when people have a tendency to view their wealth and income in nominal dollar terms, rather than recognize their real value, adjusted for inflation. When it comes to “Flight from Money” and “Money Illusion”, and, interestingly, the Nikkei index is rising in synch with Bitcoin as per the below three years chart: Bitcoin vs Nikkei 225 3 years (Macronomics - KOYFIN)The “Money Illusion” dear to Irving Fisher is when people have a tendency to view their wealth and income in nominal dollar terms, rather than recognize their real value, adjusted for inflation. When it comes to the fight between digital gold (or tulips for some) and the “barbaric relic” aka Gold, since January 2022, as per the below 3 years chart, both have been moving in sync as well: Gold vs Bitcoin 3 years (Macronomics - KOYFIN) In a “Fiscal dominance” aka “Latam playbook”, equities perform much better than “fixed income”. As a reminder, “Fiscal dominance” occurs when a country’s debt and deficit levels are sufficiently high or concerning that monetary policy tools such as “interest rates” ceases to be an effective tool to control inflation when it becomes entrenched or “sticky”. If we are indeed in a “Flight from Money” context, then you should not be surprised to see the following relationship between Gold, Bitcoin and the S&P500 (3 years chart): Gold, Bitcoin and the S&P500 (3 years chart) (Macronomics - KOYFIN) When it comes to our recurring theme of “fiscal dominance”, we pointed out in one of our previous conversations “Structured criticality” the Turkish currency and the trajectory of the Turkish stock market as indicated by Gavekal quoted podcast (10 years chart), a clear illustration of “Money illusion” we think: XU100 Turkiye Stock Market vs USDTRY 10 years (Macronomics - KOYFIN) If one looks at the Gavekal Podcast as advertised by Louis-Vincent Gave on X/Twitter, you will find Charles Gave presentation embedded in the podcast. In this presentation, Charles indicates that when a central bank abandons the battle to maintain its currency as a reserve of value, the bond market collapses and equity rise exponentially (Venezuela, Argentina, Turkey to name a few). It happens, of course, in “fiscal dominance” fashion, hence our previous recommendations in brushing up on your “LATAM” playbook. In the case of Japan, the Bank of Japan has effectively “nationalized” its bond market and is as well as significant ETF holder. What we find of interest from the above is that Gold has greatly played its storage of value function relative to the Turkish currency (10 years chart): USDTRY vs Gold - 10 years (Macronomics - KOYFIN) Back in February in our conversation “Animal Spirits”, we indicated that “Money Illusion” is one of the 5 cognitive and psychological types of “animal spirits” identified by two economists: George A. Akerlof (Nobel laureate and professor of economics at University of California) and Robert J. Shiller (professor of economics at Yale University) in their 2009 book entitled “How Human Psychology Drives the Economy, and Why it Matters for Global Capitalism”. The 4 others cognitive and psychological types of “animal spirits” are: confidence, corruption, fairness and stories. In our February conversation, we argued: “These phenomena help economists consider answers to tricky questions such as "why do economies fall into depression" and why are financial prices and corporate investments so volatile?". “Animal spirits” often manifest as market psychology defined by either fear or greed. For the latter, the term "irrational exuberance" has been used to describe investor enthusiasm that drives asset prices far higher than those assets' fundamentals justify. Simply tacking on "dotcom" in 1999 and today “AI” to the name of a company increased its market value to extraordinary levels, with startups showing zero earnings commanding ever-higher share prices. Another example was the lead-up to the 2008-09 financial crisis and the Great Recession, when the markets were rife with financial innovations such as CDO (Collateralized Debt Obligations), CPDO (Constant Proportion Debt Obligation – ABN Amro “Surf” product made us chuckle at the time) and even CDO Squared. The “Animal spirits” thesis, like behavioral economics which we are fond of, essentially throws a monkey wrench into the assumptions of “efficiency” and “rationality”.” – Macronomics, February 2024 Wars are ultimately inflationary in nature, and we are seeing additional sanctions being taken against China which will lead to some sort of retaliation and “production reshoring” in some instances, such as with the US ban of Russian “enriched uranium”. When it comes to “enriched uranium” reshoring prospects, on a side note, we recommend reading Asia Times take on the subject. China selling of US debt (Bloomberg - X/Twitter) If China doesn’t want to hold US Treasuries, then why not holding other scarce resources such as “copper”, “gold” and “silver” as a storage of “value”? If the Chinese are in effect “hoarding gold”, then in the gold mining space we must confide we like South African mine gold mine GFI (disclosure) we are long and Chinese Zijin (5 years chart and YTD chart below): Gold vs GFI vs Zijin - 5 years (Macronomics - KOYFIN)YTD exposure to Zijin Mining Group is compelling as well: Gold vs GFI vs Zijin - YTD (Macronomics - KOYFIN) From an “inflationary boom” perspective, we will reiterate what was in our February 2023 conversation “Tantalean Punishment” that back in 1933, a group of young investors in Boston started to worry about inflation and how it would affect bonds and stocks value and after two years of study they set up the first commodity investment trust in the world called Commodity Corp. in 1935. It seems to us that China needs less and less USD and therefore doesn't need to hold US Treasuries. The US by its willingness in reducing “trade” through “tariffs” and “sanctions” effectively forces China to sell these US Treasuries and buy “commodities” (gold, silver, copper and soon iron ore). If trade barriers were to be removed and trade ballooned again with the US, then China would be once more, a massive buyer of US Treasuries. But not anymore, as explained by David P. Goldman on X/Twitter: China Exports (David P. Goldman on X/Twitter) “China's exports to developed markets are stagnant, but exploding to the Global South. That pulls the rug from under the "overcapacity" argument. China has had a plan for a dozen years to export its growth model to the Global South, and it is proceeding faster than I expected.” – David P. Goldman Therefore, could it be that the US is getting the “Latam disease” aka Fiscal Dominance, meaning equities to the moon and bonds to Dante’s inferno? We wonder. As you know by now, we have been tracking the Japanese yen depreciation in synch with the rise in US Treasury 10 years yield (6 months chart): US Treasury 10 years yield (6 months chart) (Macronomics - TradingView) When it comes to the trajectory of the Japanese yen in the coming weeks, we find it hard to see a change in the depreciating trend given the fiscal trajectory of the US budget in conjunction with the significant auctions during 2024 and the current stance of the Fed. Without any cut in interest rates by the Fed, we have a hard time seeing a strong appreciation of the Japanese currency versus the US dollar for the time being. Sure, some financial pundits point out to the massive overseas holdings of the Government Pension Investment Fund of Japan (GPIF) and other Japanese Life Insurance companies, but this would mean massive “liquidation”. Is the US dollar trading like a “petrocurrency”? Thinking about the “Latam playbook” and discussions about “Fiscal Dominance” we came about the relationship between oil and the US dollar. The U.S. has started to trade more like a petrocurrency. As the US has continued to grow the share of oil exports over imports, revenue from oil is playing a greater role in the U.S. economy and the U.S. dollar is behaving like a petrocurrency meaning when oil prices goes up, so does the USD: WTI crude oil vs DXY - 1 year (Macronomics - KOYFIN)Now let's play a little bit more. Let's add to our chart from above, the US Treasury 10 year yield and USD/JPY. See the result: WTI crude oil vs DXY vs USTs 10 year vs USD/JPY - 1 year (Macronomics - KOYFIN)It looks like we have more and more “positive correlations”. Crude oil and the US dollar used to have an inverse relationship, meaning that when the value of the US dollar decreased in the past, crude oil prices used to increase, and vice versa. It is because crude oil is priced in US dollars, so a weaker dollar meant it took more dollars to buy the same amount of oil. Most of the time, the US Dollar index and oil prices showed a “negative correlation”. In 2021, the U.S. became the world's largest oil producer, at 11.6 million barrels per day. Gold, on the other hand, tends to have an inverse relationship with the US dollar. When the US dollar was strengthening in the past, gold prices used to decrease. What does this mean? The inflationary boom is alive and well and as such, is indicated in a State Street Insight paper from October 2023, it means inflation is getting less “transitory” to paraphrase certain central bankers, or more “stick” hence our dislike for “fixed income” as such: “As the USD is the dominant trade invoicing currency, inflationary effects from a rise in oil prices have historically been partially offset by the depreciation of the USD, which helped lower prices for other imports for importing countries. However, a positive relationship between oil price and USD strength implies that this offset is no longer in place, which may lead to higher and stickier inflation. In fact the major oil importers have felt adverse impacts of this positive relationship in recent years” - State Street Fed supremo Jerome Powell said recently: "I don't see the stag or the flation" In our book, higher “sticky inflation” and “tighter financial conditions” which are starting to bite the US consumer means to us a high probability of seeing a stagflationary outcome with the growing geopolitical risks of exogenous oil shocks. All in all, we expect a secondary inflationary wave à la the 70s taking place in the second part of the year. This is the message coming from the commodities space, we think. Trade accordingly. “The only good is knowledge, and the only evil is ignorance.” - Herodotus You can join Macronomics on our Telegram Channel indicated in our Twitter profile as well you can join our Twitter feed. Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
Trade of the Day: Follow Michael Burry and Bet on Gold Fields (GFI) Stock
The precious metals ecosystem has been quietly rising to blistering highs. The push for investors to seek safe havens amid broader stability concerns has driven gold prices to record highs.
