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  • China Continues to Show its True Colours: They Can’t Be Trusted

    Dear Reader,

    As China continues to show its true colours, the world continues to grapple with the revelation that the world’s next superpower isn’t playing by the rules. At least, not the rules as we know them.

    Below, Jim Rickards reveals just a few of the ways in which China is wreaking havoc around the world — and how investors should respond.

    Read on for more.

    Until next time,

    <!– [if gte mso 15]> <![endif]–>Shae Russell Signature

    Shae Russell,
    Editor, The Daily Reckoning Australia

    Why Investors Should Disinvest from Chinese Stocks

    What’s going on in US–China relations is more than just a fight over tariffs or exchange rates. The conflict has degenerated into a new Cold War.

    The tariffs that Trump applied in January 2018 were more of a symptom than a cause of this conflict. The Chinese Communist Party are running concentration camps where they round up dissidents and members of the Uighur and Catholic minorities for ‘re-education’.

    Unlucky dissidents have their organs removed while they are still alive and without the use of anaesthetics to supply a multibillion-dollar organ transplant industry. Once the victims die from the organ removal, their bodies are quickly cremated, as happened to victims of the Holocaust.

    China is now engaged in forced sterilisation and forced abortions on Uighurs as a form of genocide to wipe out the next generation.

    Market expert Shae Russell predicts five knock-on effects of the recent market crash that could be even bigger threats to the average investor’s wealth than the crash itself.

    Things will only get worse from here

    China has also passed a new ‘national security’ law that applies to Hong Kong in violation of the 1997 treaty between the UK and China, regarding the handover of Hong Kong to the PRC.

    The treaty was supposed to guarantee basic freedoms and the rule of law until 2047. China just tore it up and began arresting protesters, who will be sent to Beijing for trial and probably never heard from again.

    China is also threatening war with India over a disputed border in the Himalayas and is threatening war with Taiwan across the Strait of Taiwan. China continues to manipulate its currency, steal intellectual property, and pursue digital surveillance over every move of its 1.3 billion people.

    In the face of this relentless totalitarianism and anti-capitalism, the US is moving close to breaking ties and forcing China out of US capital markets entirely. Reuters reports on pending legislation that would ban Chinese companies from operating in US capital markets and cause the delisting of Chinese companies listed on US stock exchanges.

    Hopefully, investors have gotten out of their Chinese investments ahead of this wave of revulsion at Chinese business practices and suppression of human rights. It may not be too late to get out of China if you still own any of their stocks, but the hour is definitely getting late.

    Things will only get worse from here.

    When China is involved, even physical gold can’t be trusted

    I’ve said for a long time that the best way to own gold is in the form of physical bullion (coins and bars) held in safe, non-bank storage. (Don’t ever store your gold in banks. The day you want your gold the most will be the same day the banks are being shut down.)

    Of course, there is a place in a balanced portfolio for other forms of gold investments. Shares in well-managed gold mining companies offer investors the chance to realise gains even greater than gold bullion because of the interplay of fixed and variable costs, and the application of earnings multiples and takeover premiums to the miners.

    Gold streaming royalty companies are another way to participate in higher gold prices with less risk than investing in miners directly.

    Still, the safest way to invest in gold is with bullion — unless the Chinese are involved. As reported in the Nikkei Asia Review, the Chinese recently pulled off one of the greatest physical gold frauds in history.

    The fraud involves a gold dealer named Kingold, which is based in China but listed on the Nasdaq. Kingold borrowed $2.8 billion from a consortium of Chinese banks. It pledged 83 tonnes of gold bars held in its own vaults as collateral for the loans. There was only one problem. Many of the gold bars were fake. They were copper bars covered with a coating of gold.

    This was discovered when Kingold defaulted on loans to the Dongguan Trust Co Ltd.

    When Dongguan seized the gold collateral and began to liquidate it, it discovered the fake bars. The story is still playing out since the CEO of Kingold is a powerful figure in China and former military officer with deep connections to the Communist Party.

    The lesson for gold investors is to stick with reliable dealers who source their gold from reliable refiners such as PAMP, Argor-Heraeus, Valcambi, and the Royal Canadian Mint.

    Above all, keep away from any dealer or refiner with connections to China or controlled by the Chinese. They simply cannot be trusted.

    All the best,

    <!– [if gte mso 15]> <![endif]–>Jim Rickards Signature

    Jim Rickards,
    Strategist, The Daily Reckoning Australia

    The post China Continues to Show its True Colours: They Can’t Be Trusted appeared first on Daily Reckoning Australia.

    Posted: by Daily Reckoning Australia

  • Does the Renascor Resources Share Price Have Gold Fever?

    Renascor Resources Ltd [ASX:RNU] is a graphite explorer and developer, but its share price is up big today with a gold discovery announcement.

    RNU holds a number of tenements in key mineral provinces in South Australia.

    Its main project, the Siviour Graphite Project, now boasts the largest reported total ore reserve of graphite outside of Africa.

    And the second largest in the world.

    Though the RNU share price has been recovering nicely from the market crash in March, today’s announcement appears to have injected it with new vigour.

    At time of writing, RNU shares are up 23.08% to trade at 1.6 cents per share.

    ASX RNU Share Price Chart - Mining Stocks

    Source: Tradingview

    The rise of the hybrids

    Earlier in the year I noted what seemed like an increase in gold finds across Australia.

    It felt like there was no end to small-cap gold explorers announcing drilling results.

    Not surprising given the rise in the gold price.

    Now we could be seeing a new phenomenon unfolding:

    The rise of hybrid explorers and developers.

    With the record price of gold, other mineral explorers seem to be piling onto the gold train.

    Take Altura Mining Ltd [ASX:AJM] for example — which we covered yesterday.

    The reason why I bring this up is because the rush to uncover more gold in Australia could have big impacts on Aussie gold stocks.

    One gold expert is predicting big spikes in Aussie gold stock prices as this new gold rush heats up.

    Now that the gold price is nearing US$2,000 per ounce, even graphite miners like RNU are jumping into the ring.

    Do I want the gold RNU has?

    There are plenty of gold stocks to invest in on the ASX.

    Which means you need to be discerning, i.e:

    Do I want a graphite miner to become a gold miner?

    A fair question.

    As an investor you want a company to deploy its capital sensibly to get the greatest return possible.

    Are there any synergies between gold mining and graphite mining?

    I am unsure of the answer myself; but they are questions that must be asked.

    There are no guarantees RNU will become a fully-fledged gold miner.

    And going after gold is by no means a silly move.

    Its announcement today relates to some shallow, high-grade gold targets at its Carnding Project.

    Highlights include:

    • 7m at 5.14 grams of gold per tonne (g/t) from 26m, including 2m a 16.42 g/t from 30m
    • 6m at 4.94g/t from 14m

    Carnding is located in the Central Gawler Craton, which is currently experiencing increased gold activity.

    A potential move RNU could be looking at is hoping to discover a sizeable gold resource that can be sold to a gold developer.

    The sale would open up opportunities to further develop their graphite project.

    Though it is very early days for RNU, their gold discovery is just another example of how the Aussie gold scene is heating up.

    Discover why this gold expert is predicting a further spike in Aussie gold stock prices and why Australia is set to become the new gold ‘epicentre’. Download your free report now.

    Kind regards,

    Lachlann Tierney

    For The Daily Reckoning Australia

    The post Does the Renascor Resources Share Price Have Gold Fever? appeared first on Daily Reckoning Australia.

    Posted: by Daily Reckoning Australia

  • Investors in Chinese Stocks Will Be Collateral Damage

    Dear Reader,

    There’s no love lost between the US and China…but is it possible for their relationship to deteriorate even further?

    It seems the answer is yes. In addition to continual confrontation on trade, tariffs, theft of intellectual property, currency manipulation, and human rights, the two countries are finding new ways to strike at each other.

    As an investor, you need to tread carefully. Right now, the biggest no-go area is Chinese stocks. As shots continue to be fired between the US and China, Jim Rickards warns investors in Chinese stocks could find themselves caught in the crossfire.

    Read on for more.

    Cheers,

    <!– [if gte mso 15]> <![endif]–>Shae Russell Signature

    Shae Russell,
    Editor, The Daily Reckoning Australia

    Get Your Money out of China Fast

    US–China relations are going from bad to worse quickly. The deterioration in relations is playing out on many fronts, including currency wars, trade wars, battles over theft of intellectual property, and outright military confrontation in the South China Sea and the Straits of Taiwan.

    Now a new front has emerged, which we might call ‘accounting wars’. As described by the South China Morning Post, many Chinese companies have listed shares on US securities exchanges, and many US-listed companies have extensive operations and revenues from subsidiaries or affiliates in China.

    This means that the US reporting entities, even if incorporated in China, must adhere to US regulatory accounting standards established by the SEC and the exchanges themselves. This can include GAAP and, in some cases, International Accounting Standards, if they are widely recognised. Some exceptions may be granted by regulators.

    The problem is that Chinese companies are not coming close to these standards. Chinese companies use accounting methods that are opaque and inconsistent, and which do not fairly present the revenues and profits of the companies involved.

    After years of negotiations on these points, US regulators are about to lower the boom. They may require that Chinese companies delist from US exchanges and cannot offer shares to US investors. Penalties may be imposed on US companies that do not accurately consolidate the financial results of Chinese operations.

    This could start a cascade of share price devaluations that will hurt both direct US investors and holders of ETFs that contain contaminated Chinese shares. The best move for investors is to get out of these stocks now while there’s still time to capture whatever value remains.

    Market expert Shae Russell predicts five knock-on effects of the recent market crash that could be even bigger threats to the average investor’s wealth than the crash itself.

    The breakdown in US–China relations will get worse…

    In the past, a lot of the confrontation between the US and China was more about rhetoric than action. Despite the problems regarding trade, the US and China did reach a Phase One trade deal in early 2020 that supposedly solved the trade problem, in part.

    Despite conflicting claims in the South China Sea, no shots have been fired and neither Chinese fortification nor US rights of passage have been impeded.

    In short, the war of words has been worse than the actions taken between the two superpowers.

    Now, according to Reuters, that’s starting to change. The US has imposed sanctions on three high-level Chinese Communist Party officials including Chen Quanguo, the Communist Party Secretary for Xinjiang province. These sanctions are because of human rights abuses against Uighur Muslims, including concentration camps, forced organ removal without anaesthetic, and forced sterilisation as part of a genocide campaign.

    This will make life more difficult for Chen, but it may be just the beginning of a long line of sanctions. US litigants may seek damages for Chinese criminal negligence in the handling of the coronavirus outbreak. Those damages could range into the trillions of dollars.

    The Chinese will retaliate by reneging on their part of the Phase One trade deal and refusing to buy the promised quantities of US soybeans, aircraft, and other important exports.

    The new Cold War between the US and China has moved past the talking stage and is turning into real economic actions. Investors in Chinese stocks will be collateral damage in this new Cold War.

    All the best,

    <!– [if gte mso 15]> <![endif]–>Jim Rickards Signature

    Jim Rickards,
    Strategist, The Daily Reckoning Australia

    The post Investors in Chinese Stocks Will Be Collateral Damage appeared first on Daily Reckoning Australia.

    Posted: by Daily Reckoning Australia

  • Lucky 13 Sends Altura Mining’s Share Price Higher (ASX:AJM)

    The share price of lithium producer Altura Mining Ltd [ASX:AJM] has moved higher today on the news of gold being discovered at its Lucky 13 Prospect.

    The AJM share price was flat last week despite the release of its quarterly activities report.

    With the gold fever that seems to be sweeping across the ASX, AJM’s share price is up 3.23% to 6.4 cents per share.

    The AJM share price has rebounded softly since the market crash in June.

    Potentially weighed down by a weak lithium price.

    ASX AJM Share Price Chart - Altura Mining Ltd

    Source: Tradingview

    Altura lines up for potential gold play

    Today’s announcement could be the first of a series of gold related announcements from AJM.

    The lithium producer said it had recently recovered 37 gold nuggets at its Lucky 13 Prospect.

    Collectively, the nuggets weighed 25 grams.

    Unlike gold explorers, who usually seek out mineralisation via geological survey and drilling, AJM appears to have come across the gold by happenstance.

    AJM said its exploration team had discovered the gold nuggets in or beside a set of creek beds.

    Lucky.

    Perhaps what is more interesting is the geology of the surrounding area.

    AJM say the gold find is located within a favourable geological and structural corridor.

    Which lends its self to a fully-fledged gold exploration project, according to the company.

    The nuggets were identified at three newly discovered gold prospects on AJM tenements.

    The tenements are located approximately 4.5km south-southeast of the Altura lithium mine at Pilgangoora in Western Australia’s Pilbara region.

    An area famed for its gold production.

    The area is located near the mineralised Lynas and Cleopatra-Hazelby Faults.

    The Lynas fault was identified by Lynas Corporation Ltd [ASX:LYC] in in the mid-1990s.

    The Cleopatra-Hazelby Fault was recently mapped by Altura.

    This mapping turned up two more gold prospects, Venta and Khasanah.

    Lithium to gold

    With soaring price of gold, it seems that more and more miners are making a play for gold.

    Just look at Rio Tinto last week.

    While AJM did not explicitly state it was making a direct play for gold, it did say it planned to explore the prospects further.

    Altura said it plans to complete a systematic soil-sampling program along the Cleopatra-Hazelby corridor.

    The program will target the areas that indicate gold mineralisation at the Lucky 13, Khasanah and Venta Prospects as well as the previously defined Lynas Prospects.

    Though its very early days for AJM, their gold discovery is just another example of how the Aussie gold scene is heating up.

    Discover why this gold expert is predicting a sustained spike in Aussie gold stock prices and why Australia is set to become the new gold ‘epicentre’. Download your free report now.

    Kind regards,

    Lachlann Tierney

    For The Daily Reckoning Australia

    The post Lucky 13 Sends Altura Mining’s Share Price Higher (ASX:AJM) appeared first on Daily Reckoning Australia.

    Posted: by Daily Reckoning Australia

  • Saracen Boosts Gold Reserves and Updates Guidance (ASX:SAR)

    Saracen Mineral Holdings Ltd [ASX:SAR] is an Australian gold company with all of their projects located in Western Australia.

    Their ‘Flight to 400’ plan aimed to increase mine life and gold production to 400,000oz per year from 2021 at both, Carosue Dam and Thunderbox Operations. I mean, it’s a good idea considering that gold prices have been making record highs throughout the pandemic. At time of writing, gold in US dollars is trading at US$1,974 an ounce.

    Today, Saracen said they’ve made some headway on their Flight to 400 plan.

    What did Saracen announce today?

    In a 422-page update, the company announced they have increased their reserves by 12%, to 3.7 million ounces. This is up from 3.3Moz on 30 June 2019, and a four-time increase since 2013.

    Saracen also updated their FY21 production guidance to 380,000–400,000oz at an all-in sustaining cost of $1,200–1,300 per ounce.

    The company said they expect that production will increase to 450,000oz per annum from FY23, with 250,000 ounces per year coming from Carosue Dam and 200,000 ounces per year coming from Thunderbox.

    Saracen Managing Director Raleigh Finlayson said: ‘These robust Reserves ensure we have long-term, sustainable production in what is almost certainly the best place in the world to be a gold miner.

    The company will also be investing $43 million in exploration during this financial year.

    Following the announcement, Saracen shares moved higher early in the day but…

    …at time of writing the SAR share price has lost 2.57% from yesterday and are trading at $6.03.

    It’s not the only gold miner recording loses today. Evolution Mining Ltd [ASX:EVN] shares are also down by 2.64% and Northern Star Resources Ltd [ASX:NST] is down by 0.44%.

    Still the S&P /ASX 200 is trading close to 2% higher even with the announcement of more restrictions in Victoria that will increase unemployment. Investors seem to be ignoring risk.

    But there’s certainly plenty of risk around.

    Gold feeds on uncertainty. It’s one of the reasons why so far this year gold has increased by over 30%.

    One way to get exposure to the gold rally is by owning physical gold.

    To find out more about how to do this check out Shae Russell’s step-by-step guide ‘Best Way to Buy, Sell and Store Gold’ here.

    To read this free report, click here .

    Best,

    Selva Freigedo

    The post Saracen Boosts Gold Reserves and Updates Guidance (ASX:SAR) appeared first on Daily Reckoning Australia.

    Posted: by Daily Reckoning Australia

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