gold, gold, gold, crypto coins, blockchain and diamonds

What happened, what may happen

For those interested in the yellow metal, the World Gold Council recently released two documents on the 2017 gold market events and on the outlook for 2018. We all now how forecasts work (I have just read and quote “if you have to forecast, forecast a lot“). Even so, the more you read and know, the better (provided you have a critical knowledgeable mind). The documents are available for download at WGC’s website or from here:

In another issue, a World Gold Council report states that:

  • Cryptocurrencies are no substitute for gold. In a summary of their report, WGC says”Bitcoin’s parabolic price rise was the big story of 2017 – putting the spotlight on the cryptocurrency market. While gold’s performance was a solid 13%, it was a fraction of the 13-fold increase of bitcoin by the end of the year.
    Some commentators went as far as to claim cryptocurrencies could replace gold. Cryptocurrencies may become an established part of the financial system. But, in our view, gold is very different from cryptocurrencies, as gold:

    • is less volatile
    • has a more liquid market
    • trades in an established regulatory framework
    • has a well understood role in an investment portfolio
    • has little overlap with cryptocurrencies on many sources of demand and supply. 

    These characteristics underpin gold’s role as a mainstream financial asset that will likely continue to resonate in today’s digital world.

Diamonds as an investment is no longer news; it’s been around since the oil crises of the seventies. There has been some evolution recently, related to the blockchain technology and crypto coins:

  • De Beers, has announced that “it is progressing development of the first blockchain technology initiative to span the diamond value chain and provide a single, tamper-proof and permanent digital record for every diamond registered on the platform.” Read more here, at IDEX.
  • The Israel Diamond Exchange (IDE) unveiled a new diamond-backed digital coin at IDWI (international Diamond Week in Israel). “The Israel Diamond Exchange and startup CARATS.IO have unveiled a new diamond-based crypto currency called CDC (Carats.io Diamond Currency), which they created together. The new coin was unveiled yesterday (Monday) at the International Diamond Week in Israel (IDWI – February 5 – 7, 2018). The trade in the crypto currency will be based on a new index, presented yesterday for the first time, which will reflect the daily trends in the diamond trade at the IDE. The index will be updated daily on big LED screens, which will be set at the Trading Hall. The index will reflect diamond prices set according to 14 parameters for comparing diamond prices”. To know more, just read here, at IDE’s website.
    According to Founder and CEO Avishai Shoushan, CARATS.IO’s extensive ecosystem of products will elevate the entire diamond industry. CARATS.IO is creating two separate cryptocurrencies, each backed by diamonds purchased on the Israel Diamond Exchange. One coin, called CUT (Carat Utility Token), will be used specifically in B2B transactions between eligible diamond traders. This currency will enable safe peer-to-peer transactions, altogether eliminating the need for financial intermediaries. The second currency, called CARAT, is meant for the wider market of financial institutions and digital currency investors. Both currencies will be backed by diamonds, with a market cap coverage of 25 percent, significantly reducing their speculative level of investment.“, in previous news.

Lundin Mining Production Outlook 2016-2018

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(1) Production guidance is based on certain estimates and assumptions, including but not limited to; mineral resources and reserves, geological formations, grade and continuity of deposits and metallurgical characteristics.
(2) Tenke guidance has not yet been provided by operator, Freeport McMoRan Inc. (“Freeport”). Lundin Mining anticipates future production from Tenke to be comparable to expected 2015 production.

In a press release (Marketwired – Dec. 2, 2015) Lundin Mining Corporation (TSX:LUN)(OMX:LUMI) (“Lundin Mining” or the “Company”) provides the following production guidance for the three-year period of 2016 through 2018. Key highlights are as follows:

  • Annual attributable copper production guidance for 2016 and 2017 has improved from last year’s three year production guidance due primarily to the improved production profile at Candelaria.
  • Zinc production is expected to increase by 2018 due to a low-cost plant improvement project at Zinkgruvan.
  • This outlook does not include guidance for the Aguablanca nickel/copper mine. The mine is under suspension and recommencement of operations will depend on timing of receipt of environmental approval for underground operations and the outlook for nickel and copper prices.
  • This production profile does not incorporate any expansions for the zinc plant at Neves-Corvo or further debottlenecking at Tenke, each of which could further increase the Company’s production profile.
    Given current depressed market conditions, the Company continues to refine planned investments in capital programs and exploration.

The Company is also conducting a further review of operating costs and considering actions required in order to preserve healthy operating margins under a sustained period of low commodity prices. The 2016 outlook for cash costs, capital spending and exploration programs will be disclosed towards the end of January 2016.

Mr. Paul Conibear, President and CEO commented: “The Company’s near term strategy is focused on stable production with low capital investment and improving operating costs, in order to maximize profitability and cash flows, preserving a strong balance sheet. The stability of our producing assets combined with the strength of our balance sheet, ideally positions the Company to generate leading returns to shareholders in any commodity price environment.”