Learn from some of the most harmful gold investment frauds of all times Many investors want to profit from an expected long-term rise of the gold price or by using the asset class gold as a hedge to reduce the …
http://www.goldira.pw/the-greatest-gold-financial-investment-scams/
On August 4th 2020 the gold price for the first time surpassed 2,000 US dollars. Key milestones for gold over the last decades: 1971The United States effectively ends the Gold Standard with the official exchange rate of US$ 35 per …
http://www.goldira.pw/the-gold-rate-reaches-2000-united-states-bucks-for-the-first-time-in-history/
The Coronavirus and Covid-19 are shaking up not only society but also the markets. The economic consequences seem to be grave. For this reason, we have conducted a representative online survey among individuals in the U.S. at short notice. In …
Two new surveys give insights in the attitudes by Germans towards gold.
The term ‘Internet Investment Gold’ refers to vaulted gold, which is purchased online and which is stored professionally on behalf of investors. The Product Provider Guidance outlines practices which aim to protect investors by defining various minimum requirements and best …
http://www.goldira.pw/world-gold-council-publishes-guidance-on-net-financial-investment-gold/
New Year, new you? Regardless of how ambitious your resolutions might be, you should consider adding “set personal financial goals” to your list.
According to Fidelity’s 2022 New Year’s Financial Resolutions Study in October, people who set financial goals in early 2021 are more optimistic about their future. Eighty-one percent of people who made resolutions also believe they will be financially better off in 2022 than those who do not make any financial resolutions.
Setting New Year’s Financial Resolutions in 2022
If you haven’t done so yet this year, give yourself a financial checkup. Did you overspend over the holidays and possibly have debt? What is the current state of your retirement plan? Have you set a realistic budget for yourself? How much of your income went towards investments? These are all questions that can help you start the new year with a clear view of how you plan to improve your financial shape.
First thing’s first
The first stage in your financial checkup is to assess your financial objectives. Did you reach the financial goals that you set for yourself last year? If not, how did you fall short and why? Did you revisit or adjust your financial goals during the year? If so, taking note of that will better prepare you for any changes that might affect your objectives this year.
Have you experienced any changes in your personal situation? Possibly welcoming a new child into the family, purchasing a new home, moving, rent increases or decreases, marriage, divorce, and death of a loved one can significantly impact your income and lifestyle. If you haven’t already, you might have to adjust your budget — curb your spending habits, hold onto savings, and allocate more to investments. Remember — many lifestyle changes, such as a growing family, can impact your taxes. Preparing for these changes before they happen will make the transition much easier.
Death is never a fun topic. However, preparing a will and estate strategy can ensure your beneficiaries are taken care of and the proper distribution of your assets accordingly. If you don’t already have life insurance, you should look into it sooner than later. You’ll likely have lower premiums now vs in 5 years.
Let’s face it — 2021 was a rollercoaster, and like many other people who have invested in stocks, bonds, or mutual funds, you have probably felt the pang of anxiety watching your portfolio value drop. The thing to ask yourself, though, is how were your returns compared to the rest of the market? If you think your investments are a lost cause, it’s time to sell them.
Also, the end of the year is an excellent time to take advantage of tax breaks. The silver lining that comes with losses is that you can offset any capital gains. Do you know your 2021 RRSP contribution limit? You have until March 1, 2022, to top it up.
Millennials have the highest debt out of any other generation, and according to a study by Experian, personal debt hit a new record at the peak of the pandemic. Consider how well you’re doing with debt management as part of your annual financial assessment. Examine your debt-to-income ratio in particular. Is your credit card debt down this year? Stop leaks and pay off high-interest loans first. Investing is hard when you’re also paying credit card debt. Mortgage rates are low, so it might be worth it to explore refinancing. While it might not seem like a lot, even a slight reduction in interest rates can make an impact on the life of your mortgage.
Last year wasn’t much different than the year before. Some assets outperformed, while others underperformed. Rebalancing your portfolio to its original or updated asset allocation allows you to lock in benefits from the sectors with the strongest returns while purchasing shares in industries that lagged behind last year’s winners. With the emergence of Omicron, it’s hard to see what 2022 has in store. Investing in gold serves as an effective hedge against currency volatility and inflation. It is also an excellent strategy to diversify your portfolio because a falling stock market does not always signal a reduction in gold prices.
How Do You Keep Your Financial Resolutions?
Create realistic goals for yourself and remind yourself why you made it in the first place. Transferring funds from your chequing account to separate, inaccessible savings or investment account, or having a portion of your income routinely put in a savings account, can also help to eliminate temptation.
Bottom line:
It would be a good idea to create a checklist to keep track of how you’re performing during the year so you can make any required changes. If you have a financial advisor, consider meeting with them to discuss your goals and objectives. Remember, gold mining stocks typically move in lockstep with the value of gold, and if 2020 told us anything, it’s that gold investment products are truly safe-haven investments. Contact our investor relations team for more information on how O3 Mining can deliver long-term value and returns. We would love to hear from you.
Sources: https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/about-fidelity/2022_Fidelity_FinancialResolutionsSheet.pdf
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Québec Mining companies benefit the economy both locally and on a federal level. But do Québec businesses offer investors an advantage? Many seem to think so, and some may even call it unfair. Investors can benefit from the fact that Québec mining companies appear to have an advantage over other mining companies in Canada and around the world. The strong support provided by the Québec government as well as the Canadian Federal government to these mining enterprises enables them to thrive and benefit their local and provincial economies. This robust backing, combined with the high grade of minerals and resources, makes Québec one of the world’s most attractive sites for mining — and investors.
As a mining investor, there aren’t many areas in the world where you’ll find abundant resources in a politically stable country with a thriving sector supported by the government.
According to the Fraser Institute’s Annual Survey of Mining Companies, Québec is a constant top competitor in terms of investment attractiveness. Behind its stability as a premier mining jurisdiction is a formula of government incentives, skilled labour, social licence, and a financial environment that make it a surprisingly favourable mining jurisdiction.
It also possesses the legal transparency and a high-quality geological information database that allow businesses to confidently explore the province’s rich endowment of minerals and metals, many of which are critical to powering the transition to a green economy.
The Ministry of Energy and Natural Resources (Ministère de l’Énergie et des Ressources Naturelles) is dedicated to mineral development in Québec, offering vital resources to mining corporations to promote exploration and development. These resources are specialized research and development centres, an extensive database including over 150 years of geological data, and various geoscientific data banks. Furthermore, they give financial assistance in stock and debt packages to mining firms, serving as a cornerstone.
Such broad government backing is exceptionally beneficial to Québec mining and exploration enterprises. This may appear to provide an unfair advantage over other Canadian or global mining regions, but that is precisely the goal.
Québec is also serving as a global role model in sustainable and responsible mining practices and ESG. In April of 2021, the federal government invested $730,096 in a clean mining technology project in Québec City and Ottawa on behalf of the Honourable Seamus O’Regan Jr., Minister of Natural Resources. The Québec government has additionally contributed $10,000 to the Université Laval in support of this research. Corem and Université Laval have also contributed to the project, bringing the total investment to more than $1 million.
The innovative pilot-scale clean technology led by Université Laval that removes the need for toxic cyanide in the gold extraction process, reducing the environmental effect of gold mining. Once commercially available, the technique has the potential to provide opportunities for skilled operators, technicians, and engineers in gold refineries.
Natural Resources Canada’s Clean Growth Program provides funding for clean technology research, development, and demonstration projects in Canada’s energy, mining, and forest industries. The initiative is a $155 million investment fund that assists new clean technologies in reaching commercial readiness so that natural resource operations can minimize their environmental impacts, such as greenhouse gas emissions while increasing competitiveness and creating jobs.
In addition to clean mining initiatives, Québec has made significant investments in the region’s infrastructure. This investment includes roads, electricity infrastructure, and even airstrips in northern Québec to serve the province’s rich mineral landscape, including the Abitibi.
The province also offers a favourable investment climate for mining firms, with some of the finest tax breaks in Canada for mining corporations in early-stage exploratory projects. Other advantages include the Québec government’s Plan Nord economic development policy. A proposal that calls for the government to spend CAD 80 billion on energy promotion over the next 25 years.
The Québec government, like any other institutional investor, expects a return on their investment. It evaluates the project’s viability, the likelihood of success, and long-term repercussions before investing. This due diligence encompasses sociological and technological research as well as comprehensive environmental impact assessments.
Last Quarter, The Crux Investor interviewed three executives from the mining sector, one of whom being Jose Vizquierra, CEO of O3 Mining to weigh in their opinions. Jose Vizquerra might not agree that mining businesses in Québec have an unfair edge over companies in other regions. He appreciates the government’s recognition that by supporting mining they are contributing to the development of the nation and the strength of the Canadian economy.
“We are in one of the most stable jurisdictions in the world — and it is fair for the government to understand that by supporting mining companies, they are developing a nation.” Stated Mr. Vizquerra.
The Abitibi region of Québec is a prime jurisdiction for gold mining, producing more than 200 million ounces of gold. Despite the fact that the region has produced enormous resources, Vizquerra believes there is still gold to be found. As a result, numerous mining businesses will seek to locate here. He puts it like way:
“If you’re going to look for elephants, go to an elephant-rich country.”
As a result, it’s understandable that the Québec government will promote such businesses; by doing so, it secures growth for the benefit of Québec’s people. The support provided by the Québec government to junior mining businesses is critical. It enables juniors to develop assets, continue to de-risk them and get permits and resources before being acquired by a major mining firm.
O3 Mining has properties located in a prime area of the province and is working towards setting a new standard in gold production, as well as responsible and sustainable mining practices.
Now more than ever, investors are setting their sights on companies with actionable ESG initiatives. To learn how O3 Mining can deliver long-term value for its shareholders through sustainable practices, reach out to our investor relations team today!
Sources: https://www.canada.ca/en/natural-resources-canada/news/2021/04/canada-invests-in-clean-mining-technology.html
https://www.cruxinvestor.com/articles/investing-in-quebec-based-companies-what-investors-need-to-know
https://www.quebec.ca/en/government/policies-orientations/northern-territory-development/financial-support
https://www.fraserinstitute.org/studies/annual-survey-of-mining-companies-2020?utm_source=Media-Releases&utm_campaign=Annual-Survey-of-Mining-Companies-2020&utm_medium=Media&utm_content=Learn_More&utm_term=415
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Gold Price Outlook 2022
Aside from supply and demand, several significant factors, including monetary policy, Omicron and new COVID variants, and geopolitical events, can influence the price of gold. The result of several of these issues and the combined influence they produce will determine gold’s trajectory for 2022.
Monetary Policy
Monetary policy, particularly its impact on the US dollar, has been a significant driver of this year’s gold price. It will be a crucial concern for the gold price in 2022. The emergence of the pandemic threw the economy into a tailspin, resulting in unprecedented levels of money printing, with interest rates remaining near zero. These low-interest rates are negative in real terms, as are low bond yields, and fears of inflation/stagflation have increased. While central banks have indicated that they believe inflation is a transitory response to 2020’s deflationary pressures, is the continuous rise something we should be concerned about?
Experts predict the direction of monetary policy in 2022 will substantially impact the gold price, and analysts everywhere have factored this into their forecasts. If the economic recovery continues at its current pace and inflation continues to increase, we will most likely see investors turning to hedge assets. The current monetary policy and high inflation show benefits for gold, and the longer this continues, the more support the gold price will have in 2022.
We are into our second year of the pandemic, and most will agree that it potentially affects monetary policy. Despite somewhat effective vaccination programs in Canada, the US, Europe, and the UK, there is still a large disparity in vaccine rates globally. The emergence of the Omicron variant has already impaired the efficacy of current vaccines. With many people still unvaccinated, new variants that may emerge can pose a further risk as the year progresses. Covid, as the last two years have demonstrated, has the ability to surprise and do so swiftly. The rate of the global economic recovery, and hence the monetary policy decisions outlined above, will be affected by how the pandemic proceeds during Q1 and whether any additional limitations are required.
Geopolitical tensions
Geopolitical tensions have been a major concern for markets over the past 24 months. Trade disputes, foreign legislation and sanctions hamper economic progress, while the threat of civil unrest can cause gold prices to skyrocket. Relations between the United States and countries such as China remain strained. As geopolitical disputes continue, investors seek sanctuary from uncertainty, spiralling global inflation, the economic effects of the fast-spreading Omicron version, and geopolitical disputes between the US and China.
Central bank demand
After pausing in 2020 to respond to the pandemic, many central banks have resumed purchasing gold reserves in order to secure their national wealth. Many other countries have increased their gold holdings, and if this trend continues, it will keep demand strong and sustain the gold price in 2022.
At the time of writing, BMO Capital Markets, UBS Global Wealth Management, and Reuters reported the gold price in 2022 will average between USD 1,700 and $1,800 per ounce, sustaining December 2021 levels.
Other analysts, such as Trading Economics, predict that gold will average $1,963 per ounce, while Goldman Sachs predicts that $2,000 per ounce will be achieved by the end of 2021. There is evidence that the global economic recovery is already losing momentum. At the same time, some warn that inflationary pressures will be considerably more difficult to alleviate than the Fed and others realize.
Gold’s role as a safe haven and inflation hedge is still bolstered by many factors, which will support this. Gold price forecasts range across the board — which shouldn’t come as a surprise, as it reflects the turmoil generated by the Covid pandemic over the last 24 months. While relying solely on commodity price predictions should be approached with caution, gold is far less volatile than other assets. It has far fewer risks given the current political and economic climate.
2022 Gold Price Prediction
Gold price forecasts for 2022 vary widely, but many analysts expect gold to increase, but not at the same rate as it did in 2020. While the price of gold might not see significant gains, there are numerous advantages to purchasing gold stocks in 2022 rather than the physical metal. Gold miners and exploration companies have the potential to deliver higher total returns than actual gold investments. The reasoning behind this is that mining businesses can increase production while decreasing costs or report high-quality drill results that indicate a high probability of valuable, unmined resources. These characteristics can help gold mining firms outperform the gold price.
Bottom line:
The past 24 months have allowed many industries, including mining, to better prepare themselves for what lies ahead. Despite these unprecedented times, advances in technology, ESG initiatives, and swift strategic business model changes show the light at the end of the tunnel.
To learn more about gold investing and how O3 Mining can offer long-term value to its shareholders, contact our investor relations team today.
Sources:
https://www.goldmansachs.com/insights/pages/outlook-2022-the-long-road-to-higher-rates.html
https://www.bnnbloomberg.ca/wall-street-strategist-forecasts-for-2022-differ-by-second-most-in-a-decade-1.1693079
https://www.reuters.com/markets/commodities/gold-trades-tight-range-countdown-fed-verdict-2021-12-15/
https://tradingeconomics.com/commodity/gold
The post Gold Price Outlook 2022 — factors that will affect gold stocks appeared first on O3 Mining.
http://www.goldira.pw/gold-cost-overview-2022-aspects-that-will-affect-gold-stocks/
Hedge funds are privately managed investment pools that use long/short funds to buy and sell stocks, engage in arbitrage, trade bonds, currencies, convertible securities, commodities, and unlisted derivative products. Long/short funds aim to supplement traditional long-only trading by profiting from securities identified as both under-valued and overvalued. Short hedging is often used in commodities markets, such as gold and other precious metals. As the name implies, the purpose of a hedge fund is to mitigate the risks to investor capital posed by market volatility through the use of alternative investment strategies.
Hedge fund investors are often high net worth individuals, wealthy families, pension funds, endowments, insurance firms, banks and other institutional investors. Unlike the United States, which has one regulatory body — the Securities and Exchange Commission (SEC), Canadian hedge funds must register with the province or territory they will operate in and adhere to national regulatory guidelines set out by the Canadian Securities Administration (CSA).
As many hedge fund managers provide investment advice, they must also register as financial advisors. Portfolio managers that sell securities must register as dealers and ensure that they register in each province or territory where they plan to offer the fund. Ontario is currently the leading jurisdiction in Canada for registering hedge funds and the oversight of managers.
A hedge fund can earn returns using a variety of tactics. Specializing in global macros is one strategy in which the fund takes long and short positions in broad financial markets based on economic patterns. Some funds pursue a market-neutral strategy. In this case, the fund manager’s purpose is to reduce market risk by investing in long/short equity funds, convertible bonds, arbitrage funds, and fixed income products.
Another form is event-driven funds, which invest in equities to profit from price changes caused by corporate events. This category includes merger arbitrage funds and distressed asset funds.
Some hedge funds specialize in the gold market, where the fund directly benefits from the price increases in gold. However, a hedge fund is as successful as the team that manages it. Successful hedge fund managers are well-versed in portfolio management and several other critical areas, namely economics and finance. A gold hedge fund manager must also know about the precious metals market and have a solid understanding of what may be driving the prices of precious metals and other market-specific considerations.
Hedge fund strategies are typically based on the needs of the investors and the investing team’s approach. The strategy’s ultimate test may be how well it succeeds in real-world market situations. One of the main benchmarks for gold hedge funds is gold itself, where the returns of a gold hedge fund correlate to the returns on the yellow metal. Another possibility is to compare the performance of gold hedge funds to the risk-free rate. In other words, the question in this circumstance is whether or not a specific gold fund is profitable.
While the primary focus of investing is usually the return on investment, there is some risk involved, just like any asset category. A combination of risk and return measures can produce metrics showing how well funds performed in relation to how stable their returns were. The Sharpe ratio is a standard metric in this area. Over a given period, funds with higher Sharpe ratios outperformed funds with lower ratio values in terms of both returns and stability. Seasoned fund managers should see the bigger picture, aiming to make profits without excessively volatile fund returns and to exceed the traditional buy-and-hold approach. Gold hedge fund managers can improve the risk-return characteristics of your gold portfolio, for example, generating higher returns with less volatility, even after fee deductions.
Another advantage of gold hedge funds is that they eliminate the need for you to monitor the market continually and can ease some of the anxiety that strikes when you see your portfolio value decrease intraday. One of the primary purposes of a hedge fund manager is to provide you with more peace of mind than you would have if you traded and invested on your own.
Hedge funds often use the “2 and 20,” structure which implies that the fund charges 2% of the fund’s assets annually (annual management fee) and 20% of the fund’s profits (performance fee), which, in turn, impacts the fund’s after-fee performance. Performance fees are basically the manager’s cut for making you (a LOT of) money. The annual management fee covers any costs associated with running the fund, including establishing a fund and legal fees.
These expenses have an impact on the fund’s after-fee performance. When selecting a gold fund, consider whether the fund offers value in the sense that it can increase the risk-return characteristics of your investment or that it provides you with the peace of mind that you cherish. The performance fee appears to be self-explanatory – it is the fund’s “reward” for making money. The annual management fee ensures that the fund can cover various running costs such as the price of establishing a fund, legally mandated fees, software licences, and other expenses.
As we mentioned earlier, hedge fund investors are either institutions or wealthy people, making sense that they are expensive. Fund managers need a lot of money to make money so that the hedge fund stays in the black. Investment amounts usually start in the low six figures, making hedge fund investing inaccessible to individual investors.
Bottom Line:
Whether or not a gold hedge fund is right for you might depend on finding the right fund manager. Perform your due diligence and keep an eye out for hedge fund managers with successful track records that can outperform the buy and hold gold technique in terms of return on investment and risk. With a sound investing plan and substantial capital to commit, gold hedge funds may turn out to be another comfortable way of investing in the gold market.
To learn more about alternate investing, contact the O3 Investment Relations Team!
Sources:
https://www.sec.gov/files/ib_hedgefunds.pdf
https://www.securities-administrators.ca/news/canadian-securities-regulators-implement-eight-initiatives-to-reduce-regulatory-burden-for-investment-funds/
https://corporatefinanceinstitute.com/resources/knowledge/trading-investing/global-macro-strategy/
https://web.stanford.edu/~wfsharpe/art/sr/SR.htm
https://www.investopedia.com/terms/t/two_and_twenty.asp
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https://www.goldira.pw/hedge-funds-as-well-as-the-gold-market/
If you’re new to gold investing and just starting your research, you will almost likely come across a number of words that describe the price of gold. While novice investors may feel that viewing the live gold price provides enough information about the gold market, it is important to understand the differences between gold spot and futures prices, how they are derived, and what each represents. While spot prices are time and specific to certain regions, the spot price of most securities or commodities, such as gold tends to be reasonably uniform in a global economy.
The spot gold price is simply the current market price of gold at which traders can perform over-the-counter trades with each other. It is the cost of one troy ounce of gold, and the greater the price, the higher the demand.
Gold futures are regulated public exchanges where gold (in the form of contracts) trades for its expected value at a later date or in the future. The future price represents that although the buyer is willing to buy and set now, the actual transaction will not occur today.
Futures traders most commonly use the time between the first contract and the final exchange to sell or buy back any contracts they have purchased. When the exchange (or settlement) day approaches, they will have to settle their earnings and losses.
The term “spot price” most commonly refers to the price of commodity futures contracts, such as those for oil, wheat, or of course, gold. Hence stocks are continually trading at the spot price. You cash out after buying or selling a stock at the quoted price. The primary distinction between spot and futures prices is that spot prices are for immediate purchase and sale, whereas futures contracts postpone payment and delivery to predetermined future dates.
Contango is the term you’ll encounter when you see that the spot price is typically lower than the futures price. Contango is quite common in the case of commodities with high storage costs. On the other hand, backwardation is a situation in which the spot price exceeds the futures price.
In either case, it is expected that the futures price will eventually converge with the current market price.
Some factors that are used to determine the spot price of a commodity include expected changes that could affect supply and demand, the risk-free rate of return for the commodity holder, and transportation costs in relation to the contract’s maturity date. Futures contracts with longer maturities typically have higher storage costs than contracts with close expiration dates.
Spot prices are constantly changing. While the spot price of securities, commodities, or currency is essential for immediate buy-and-sell transactions, it has a more significant impact in large derivatives markets. Buyers and sellers of securities or commodities can use options, futures contracts, and other derivatives to lock in a specific price for a future time when they want to deliver or take possession of the underlying asset. Buyers and sellers can mitigate the risk posed by constantly fluctuating spot prices using derivatives.
Futures contracts are also an essential way for agricultural commodity producers to protect the value of their crops from price fluctuations.
While gold investments are the primary driver of the gold market, people also purchase gold for various other uses, including use in the technology and medical industries and jewellery production. Many factors influence the spot price of gold, however, the following are key factors that are driving the value of gold right now.
In bearish markets, the stock market can significantly impact spot prices. If the stock market falls and investors lose confidence in their investments, there may be a trend toward increased gold sales, affecting the spot price.
Gold is the ultimate safe-haven asset, and historically, its value goes up during uncertain times, including economic crises, so geopolitical factors play a significant role. Economic and political unrest conditions are continuously contributing to the rising spot price of gold. (After all, gold is known as a “crisis commodity” for a reason.) Whether you’ve purchased gold bars or other forms of gold, a weaker economy will add value to your investment due to the increase in gold’s spot price.
As previously stated, even though gold is traded internationally, the spot price is usually expressed in US dollars. As a result, as the value of the dollar rises, gold becomes more expensive for those purchasing it abroad. This has the potential to lower the spot price. However, if the US dollar falls in value, foreign investors are more likely to buy, causing the spot price to rise again.
Other significant factors that can influence the spot gold price are:
You should now have a better understanding of the spot price of gold, which will help you if you’re considering investing in gold or gold stocks. As gold and gold investment products should make up at least 5-10 percent of your portfolio, it is helpful to know that the best time to buy is when spot prices are low. This is especially true if you’re using gold as a hedge against inflation or economic uncertainty, as the value of gold will inevitably increase during these times.
To learn more about other gold investment products and how O3 Mining can help strengthen your portfolio, reach out to our investors team today.
Sources:
https://goldprice.org/spot-gold.html
https://corporatefinanceinstitute.com/resources/knowledge/trading-investing/spot-price/
https://www.cfainstitute.org/en/research/cfa-digest/2013/05/the-fundamentals-of-commodity-futures-returns-digest-summary
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http://www.goldira.pw/gold-place-cost-explained-spot-price-vs-futures/
Junior mining stocks are small, early-stage mining companies that are typically still in the exploration and development phase and have yet to mine any resources. Unlike large-cap companies, junior mining companies are new to the market and often have smaller asset bases. Investing in junior mining companies offers the potential for lucrative returns, making them attractive to investors seeking a high yield in a short period. Many investors have proven that the rewards in investing in junior companies can outweigh the risks in recent years. Historically, gold is a very safe investment, holds its value, and performs well in times of uncertainty — last year, gold reached record highs when the rest of the stock market was falling. Experts predict that the value of gold will continue to climb by the end of the year, opening a rare window of opportunity for investors to buy junior mining stocks. We have some tips on what to look for when investing in junior mining companies and why now is the best time to add them to your portfolio.
Updated January 4, 2022 — For junior mining companies, 2021 was just as much of a learning year as 2020, and investors will be looking for companies that place ESG standards as a top priority, focusing on energy transition. As the tech sector and the market for EV (electric vehicles) grow, mining companies will be tasked with navigating the increase in demand for gold while addressing ESG concerns. Gold mining stocks performed strongly in 2021, and demand for precious metals and minerals continues to outweigh supply in the pos-pandemic economy of 2022. The threat of new COVID variants and inflation are two key drivers in the value of gold as a safe-haven asset.
As gold continues its upward trajectory, profit margins are increasing. There is long-term demand for gold and other precious metals, as many industries rely on these commodities in order to grow and scale. Junior mining companies have massive growth potential, and when you factor in the increasing price of gold, your return on investment could be huge.
The mining industry has changed drastically over the past decade, and junior mining companies new to the game are leveraging mining technology trends to create infrastructures more efficiently. Projects supported by technology-based research, quality geoscience surveying, and in-depth analysis and feasibility reports make commercial permitting processes more streamlined. The speed at which junior mining companies move into the production stage would have been unheard of 20 years ago, translating into quicker and more significant returns on investment.
Although junior mining companies are new to the market, they are after precious metals that have been in production for years. Commodities like gold go into growth cycles — take a look at gold’s performance over the past year. Junior mining companies present early investment opportunities with the potential to deliver substantial profits.
Gold and other precious metals are rare, and their prices reflect that. Powerful countries such as the United States are in dire need of rare metals such as platinum, gold, rhodium, and cesium. The technology, medical, and defence industries rely on precious metals and having a steady supply can make the difference between global technological dominance or the loss of superiority. And, because resource deposits are only in certain parts of the world, countries have to rely on the import of these commodities, which means a consistent demand.
For many investors, gold is the go-to safe-haven asset, especially during times of financial uncertainty or when the threat of inflation looms. The demand for gold from investors inevitably drives the value of the precious metal up. When a junior mining company reports positive drill results with the potential of gold on the horizon, investors who bought in early can expect favourable returns.
The gold mining industry has established well-defined trends and patterns with historical data that allow for accurate predictions (major economic crises aside). This data enables junior mining companies to forecast an orebody’s prospective earnings before going into production, giving investors and the firm confidence to proceed. When backed by a strong management team that has experience with large-cap miners, you have a recipe that leans towards the potential for success.
Junior miners typically trade below their net asset value, meaning acquiring junior mining stocks doesn’t require deep pockets. When junior mining companies start producing consistent results, they attract larger mining companies looking to take over. Junior miners do all the leg work of exploration and discovery, and financially, it makes more sense for larger mining companies to take on junior mining companies via acquisition. For established mining companies, acquiring junior mining companies entering the development phase eliminates the time and legwork associated with new exploration— this can translate into massive gains for shareholders of the junior companies.
Gold is a rare commodity that can’t be printed on demand. Gold has been a strong performer over the past year and a half, and we can expect it to rise in value towards the end of the year. With gold receiving consistent gains, junior mining companies could be the best-kept secret for tactical investors who act quickly. However, if you are considering buying junior mining stock, be sure to do your due diligence. Keep an eye out for mining companies that value ESG, transparency, and have reputable management with successful track records. With strategic execution, investing in junior mining can be very lucrative and is one of the best ways for independent investors to bring in huge profits.
O3 Mining is a Canadian Junior Mining company that delivers superior returns to its shareholders and long-term benefits to its stakeholders. To learn more about our ongoing projects and investment opportunities, book an appointment with our Investor Relations Team today!
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https://www.goldira.pw/junior-mining-stocks-potential-for-huge-benefits/
An assay is a chemical analysis that identifies the amount of metallic or mineral elements in a rock sample. Gold assaying is the process of determining the amount of gold in rock located within a mineral deposit. Rock samples are obtained through drilling and sent to a laboratory, where they will go under further examination to identify the presence of gold and other minerals. The findings from assays help gold exploration companies determine the quality and potential of a mineral deposit and assist in mapping out targets for future drill programs. When a mining company reports positive drill results, this is good news for investors as this increases the possibility of gold production for a specific area.
While there are many different methods of assaying, the fire assay method is the industry standard for assessing analytical gold element data from high-grade ores. Fire assaying dates back centuries and was the most common technique used by goldsmiths who sought to discover or make precious metals by heating base metals and minerals. Pyrometallurgical processes today use high-temperature electric lab furnaces to process precious metal ore samples, secondary scrap metals, and most platinum group metals. While complex and time-consuming, modern fire assaying is the most accurate way to assess low yield/concentration ores.
A fire assay begins with pulverizing rock samples into a fine powder. Sometimes samples undergo XRF (X-ray fluorescence) analysis to determine their elemental composition. Precision weighing samples and process controls (proofs) at each stage of the assaying process is critical in achieving the most accurate result possible. Reputable bullion assayers in North America adhere closely to the ASTM E1335-08(2017) for fire assay cupellation analysis.
Assayers introduce a fluxing agent to the sample as well as a collector metal, such as lead or nickel. The mixture is then subjected to extreme heat (1150 –1450ºC) in a furnace to melt and fuse the sample. The gangue material separates from the collector material during the fusion process, leaving behind a “button” containing the gold. Due to its weight, the button settles at the bottom while the insoluble slag floats to the top.
When the button separates from the gangue, it is removed from the furnace to cool.
Next, assayers extract the gold from the button in a process called cupellation. Cupellation converts the collector (in this case, lead) to lead oxide, where it is absorbed by the porous cupel, leaving behind a gold bead or a “prill.” The prill’s gold content is determined by weighing (gravimetrically) or mixed with a parting solution to dissolve silver, leaving behind gold which assayers analyze further for purity.
Once gold assaying is complete, gold mining companies use the results to determine the grade and concentration of the deposit. Grades that use gold assay results from drill cores must be expressed in metal concentration over a certain length — e.g., g/t over m. While this provides a two-dimensional snapshot of a mineralized area, combining assay results from different locations in the deposit can help create a three-dimensional graph of a gold deposit’s tonnage and grade.
The Canadian Certified Reference Materials Project (CCRMP) is a NRCan program that ensures the reliability of measurements at mineral analysis labs in Canada and around the world by certifying reference materials.
For investors, gold assay results and the grade of a gold deposit play a critical part in the financial analysis of a mining operation. All mining operations have costs, which vary significantly depending on various factors.
When calculating economic feasibility, exploration companies often compare two essential metrics: the average grade of a deposit (derived by a sampling and assaying program) and the cut-off grade.
The cut-off grade is the lowest material grade at which mining is economically viable. Calculating the cut-off grade requires a pre-feasibility study that accounts for all known and projected project expenditures. The cut-off grade is a dynamic figure that can change, often in response to a change in the metal’s market price. The greater the difference between the average and cut-off grades, the more profitable the mine.
Investment-quality gold bullion requires assays to ensure bullion bars produced by a gold mint fulfil the necessary purity and content standards (>99.5% purity). Given that the price of gold per ounce is based on one (1) troy ounce of pure gold, the assay for 1 ounce coins must indicate the same purity level.
Assaying is not only important for gold stocks — it is an equally critical process in futures markets. Gold must meet the delivery requirements of futures contracts to verify they meet the futures exchange’s high quality and purity criteria. Physical delivery of metals contributes to price convergence between the futures and spot markets.
The mining process can last several years, translating into long-term returns for savvy investors. Positive drill results, combined with substantial financing, demonstrate a mining company’s ability to see a mining project from exploration to production. To learn more about investment opportunities, or to discuss how drill results affect your investment, contact our Investment Relations Team today!
Sources:
https://commodities.bureauveritas.com/metals-minerals/trade-services/fire-assay
https://www.investopedia.com/terms/a/assay.asp
https://www.astm.org/e1335-08r17.html
https://www.nrcan.gc.ca/mining-materials/resources/canadian-certified-reference-materials-project/7827
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ESG Investing in 2022 — The world faces several crises and concerns, such as climate change, humanitarian risks due to political tensions, and inequality. While these issues are not new, the rise of the COVID-19 pandemic has amplified the need for solutions from leaders at both corporate and government levels. Such responses will result in massive yet difficult-to-predict impacts on the global economy. Over the past two years, more investors have been using Environmental, Social, and Governance (ESG) data to assess growth opportunities and higher profitability in long-term investment strategies. By facing ESG challenges, investors have bold visions of the future and acknowledge that their strategic capital allocation decisions can make a tangible impact on the world.
When people think of ESG initiatives, the environmental pillar is often at the forefront. Companies across all sectors understand the need to implement greener practices and assess current sustainability initiatives to decrease carbon footprints in response to climate change. However, from a corporate standpoint, societal issues also highlight the need to ensure a support system for employees that prioritize diversity and inclusion policies surrounding race, colour, gender identity, and differing abilities.
From a company’s board structure and management team to its carbon footprint and waste reduction strategies, individual and institutional investors are looking for public and social accountability at all levels. They also expect board members and senior management to demonstrate their long-term sustainability goals — beyond short-term profits and immediate returns. What are leaders and decision-makers doing for society as a whole? Companies that go beyond check-boxing common targets by focusing on impactful corporate governance and risk management, are likely to catch the eye of investors in search of opportunities for long-term equity returns and sustainable finance.
Many experts expect investors to continue to hold companies accountable for their ESG goals, especially as the pandemic persists and the possibility of an economic downturn still looms. Companies that develop responsive and actionable policies to tackle ESG challenges and obstacles, as well as ones that institute operational changes — reducing waste or improving risk management — are standing out to investors.
In an annual letter to CEOs, BlackRock’s CEO Larry Fink wrote: “… A company’s ability to manage environmental, social, and governance matters demonstrate the leadership and good governance that is so essential to sustainable growth, which is why we are increasingly integrating these issues into our investment process.”
While this statement speaks to companies across all sectors, the complex nature of the mining industry and magnitude of mining projects requires the involvement of governments and the backing of communities. As regulatory policies differ between jurisdictions, mining companies often turn to help from NGOs that focus on sustainability issues ranging from human rights to environmental stewardship.
The mining sector has achieved significant advances in addressing ESG at the corporate and operational levels over the past 20 years. On the environmental front, miners aim to improve tailings safety, minimize water and energy usage, and reduce GHG emissions through various initiatives such as switching to electric and hydrogen-powered trucks and machinery and expanding renewable energy.
Beyond the life of a project, the increased emphasis on social impact introduces a positive and sustainable change in communities and societies — with more progressive miners implementing plans to help communities survive beyond mine closure.
On the governance front, we see an increase in the number of standalone Sustainability Committees providing adequate and independent Board supervision and engagement with senior management. Furthermore, we have seen a push to increase the diversity of directors and leadership throughout the last decade.
In Canada, mining companies have set a global precedent for responsible mining. The Mining Association of Canada’s Towards Sustainable Mining (TSM) standard is an internationally recognized sustainability program that supports mining companies in managing critical environmental and social risks. Given Canada’s position as a world leader in the production of minerals and metals, addressing health and environmental issues is a national priority. In addition to industry-leading ESG practices, Canada, as a whole, offers a support system that allows mining companies to deliver on their sustainability plans.
While ESG initiatives benefit the environment while keeping in mind the interests of stakeholders at multiple levels, ESG can make global capital more accessible, helping companies grow in their existing markets and branch off into new ones. Keeping sight of the bigger picture, many individual and institutional investors understand that sound ESG policies signal financial health. An increasing number of investors use ESG ratings and evaluations to determine if a company is worth investment.
Tackling ESG issues can make global capital more accessible. According to a 2021 report conducted by Mckinsey, the mining sector accounts for 4–7% of global carbon emissions. Capital markets place a greater emphasis on sustainable mining practices, with the cost of capital highly dependent on ESG. The report also states that the cost of capital can be 20–25% higher for mining companies with poor ESG scores. Companies that publicly share compliance and regulatory policies to minimize environmental impact demonstrate a long-term commitment to sustainability.
We hear that ESG and financial performance have a direct correlation, but how do companies with ESG initiatives translate into higher valuations than those that haven’t addressed ESG? According to MSCI, a global consultancy highly recognized for its ESG rating system, companies’ ESG information transfers to their value and performance, both through their systematic risk profile (lower costs of capital and higher valuations) and their idiosyncratic risk profile (lower costs of capital and lower valuations) (higher profitability and lower exposures to tail risk).
Further, ESG takes a holistic approach that encompasses social engagement practices benefiting local communities and residents through extensive planning and resource sharing. Locally sourcing goods and services, creating employment opportunities for locals supporting community initiatives and creating diversity networks also play critical roles in sustainable ESG policies.
The Impact Assessment Agency of Canada is a government agency that reports to the Minister of the Environment and Climate Change and provides high-quality impact evaluations that consider the environmental, economic, social, and health impact of planned initiatives. The agency facilitates decisions on projects that support Canada’s sustainable development and helps companies shift to greener operations. Increased support from governing bodies shows accountability, which some analysts correlate to lower risk. A 2020 CFA Institute report stated that ESG analysis should be a fundamental part of investment analysis and requires a disciplined and tangible approach to integrate fully into the investment process. The report also showed the impact of ESG on company share prices across all sectors in 2022 saw tremendous growth over five years (2017–2022).
Employee productivity can increase if they believe in a company’s ESG goals. By installing a vision and greater responsibility, higher employee satisfaction can directly correlate with shareholder returns. A Marsh & McLennan study also found that attractive job destinations for post-secondary graduates typically have lower carbon footprints, more diversity and a conscious effort to respect employees. “By 2029, the Millennial and Gen Z generations will make up 72 percent of the world’s workforce, compared to 52 percent in 2019. These generations place greater importance on environmental and social concerns than their predecessors do — and will expect more from employers on these issues.” the study reads.
Allocating capital towards sustainable opportunities can help companies streamline their profits, creating long-term value for investors. According to a study from McKinsey, “A strong ESG proposition correlates with higher equity returns”, from both a tilt and momentum perspective. Better performance in ESG also corresponds with a reduction in downside risk, as evidenced, among other ways, by lower loan and credit default swap spreads and higher credit ratings
Metals and mining investors are showing a greater interest in identifying well-positioned mining companies with sustainably-run operations with the goal of achieving a low-carbon profile, and adequately compensating for ESG externalities. The industry’s ability to credibly and independently demonstrate its commitment to ESG principles, recognize its shortcomings, and effectively use sustainable finance tools will communicate long-term value creation and socioeconomic benefits beyond value preservation.
ESG is not merely a trend and we can expect its role in investing to grow significantly in the near future. Mining companies with transparent ESG practices certified by industry-recognized regulatory and compliance agencies, have a strong media presence, and an accomplished senior management team with a solid track record at fostering relationships within the industry and community demonstrate the opportunity for growth and long-term value for shareholders.
To learn more about O3 Mining’s sustainable initiatives and ESG investing, contact our Investor Relations Team today
Sources:
https://o3mining.com/sustainability/
https://o3mining.com/articles/junior-mining-stocks-potential-for-massive-rewards/
https://www.sciencedirect.com/science/article/pii/S0024630121000741
https://hbr.org/2020/09/social-impact-efforts-that-create-real-value
https://www.nasdaq.com/articles/strong-esg-practices-can-benefit-companies-and-investors-2019-03-13
The Journal of Portfolio Management July 2019, 45 (5) 69-83; DOI: https://doi.org/10.3905/jpm.2019.45.5.069
https://www.mining-journal.com/partners/partner-content/1407846/sustainable-mining-tailings-guidance-made-to-align-with-global-standard
https://www.canada.ca/en/impact-assessment-agency.html
https://www.cfainstitute.org/-/media/documents/article/position-paper/cfa-esg-integration-canada-web-3pp.ashx
https://www.mckinsey.com/~/media/McKinsey/Business%20Functions/Strategy%20and%20Corporate%20Finance/Our%20Insights/Five%20ways%20that%20ESG%20creates%20value/Five-ways-that-ESG-creates-value.ashx
https://www.msci.com/documents/10199/03d6faef-2394-44e9-a119-4ca130909226
https://www.marshmclennan.com/insights/publications/2020/may/esg-as-a-workforce-strategy.html
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Gold as a Portfolio Diversifier — Nearly all seasoned investors will agree that gold is an essential asset in a well-balanced portfolio, complementing stocks, bonds, and other alternative investments. Gold acts as a multi-faceted hedge and significantly outperforms many different asset classes when other markets are falling yet sustains stability when markets are rising. Gold has consistently surpassed equities in total value appreciation over the last fifty years.
Diversified buy-and-hold passive investing is a simple way to create wealth for many people. Strategic Asset Allocation entails a passive, diversified portfolio to which you continually add money and rebalance accordingly. A diversified portfolio that uses strategic asset allocation contains a range of index funds or ETFs that rebalance it from time to time. If one asset class rises while another falls, you sell some of the higher-performing assets and buy the drop in the underperforming asset to keep the same proportion over time to maintain balance. A strategic asset allocation approach is similar to a buy-and-hold strategy, emphasizing diversification to mitigate risk and maximize profits.
Investing becomes routine with portfolios that use strategic asset allocation methods. However, over time investors may become more conservative and risk-averse. Seasoned investors often advise novice ones to begin with a high stock allocation and progressively reduce their stock allocation while increasing their bond allocation over time.
Tactical Asset Allocation is a step up from traditional asset allocation, and it involves actively modifying your weightings in different asset classes depending on momentum or predicted forward returns. Unlike strategic asset allocation, tactical asset allocation takes a more hands-on approach to asset allocation — right now, investors who use tactical asset allocation practices are setting their sights on gold. Given the current political and economic climate, more investors are modifying asset allocations to increase gold and gold mining stocks because of attractive risk/reward ratios existing in the market. The benefit is that investors decrease risk while increasing rewards in the short term, allowing them to turn profits more quickly. It is a somewhat active strategy as managers return the portfolio to its initial asset allocation after achieving their short-term profit goals executed over the long term. Tactical asset allocation is essential for building and balancing an investment portfolio and optimizing portfolio performance.
In short, you can consider tactical asset allocation to be similar to captaining a ship. Suppose a storm suddenly popped up on your radar 300km from your current location — you might have to make some quick decisions that you wouldn’t ordinarily make to prepare for them to ensure you reach your destination safely. In other words, while you might not allocate more than 10% of your portfolio to gold, knowing about political tensions or threats of inflation on the horizon might make you consider otherwise.
To achieve diversification and risk-adjusted returns, investors have welcomed alternatives to traditional stock and bond investing. This move has had an impact on gold allocations. Gold is becoming more widely recognized as a mainstream investment, as worldwide investment demand has surged by an average of 14% per year since 2001, while the gold price has nearly doubled.
The following are the main drivers of this expansion:
Stocks, bonds, and broad-based portfolios all benefit from the addition of gold. Gold has historically increased portfolio risk-adjusted returns, delivered positive returns, and provided liquidity to pay liabilities in times of market stress as a store of wealth and a hedge against systemic risk, currency depreciation, and inflation.
a source of income
Gold has always been thought to be a good investment during times of uncertainty. It has historically produced long-term positive returns in both good and poor times. In the nearly half-century following the end of the gold standard in 1971, gold’s value has climbed by an average of 10% annually.
This dichotomy reflects gold’s numerous sources of demand and sets it apart from other investment assets. Because gold has global recognition and is not a liability, it is used to protect and enhance wealth over time and is also used as a medium for exchange. Gold is also in high demand as a luxury item, with customers worldwide appreciating its worth. It’s also a crucial component in electronics. These various sources of demand give gold a unique resiliency — the ability to deliver substantial returns in both good and bad times.
To learn more about using gold stocks in tactical or strategic asset allocation, contact our investor relations team today!
Sources:
https://www.gold.org/goldhub/data/gold-prices
https://www.forbes.com/sites/adamstrauss/2022/01/25/ten-predictions-for-2022/?sh=335763d472df
https://www.reuters.com/markets/europe/gold-holds-around-2-month-peaks-firmer-us-yields-weigh-2022-01-20/
https://www.investopedia.com/ask/answers/09/gold-standard.asp
https://www.investopedia.com/terms/t/tacticalassetallocation.asp
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Investing in gold is a common way investors safeguard their portfolio, as it is the ideal safe-haven asset during times of economic uncertainty and turmoil. And while we witnessed the economy reeling from the impact of the COVID-19 pandemic over the past two years, this sentiment has never rung truer. As investors look for safe investments with low risk, precious metals like gold are proving their worth as a mainstay in investment portfolios. Over the course of a two-year of highs and lows, the gold market saw double-digit growth, which outpaced gains in other markets. Following decreased mining operations to comply with new safety rules and regulations due to COVID-19 in 2020, increased scarcity of gold pushed its demand even further. Often considered the best hedge against inflation, gold holds its value when risks are high in other markets.
While there will always be long-term gains on physical gold such as collectible coins, gold bars and jewellery, there are several other ways to invest in gold products. The appeal of the physical commodity is that it is tangible and is not related to different market stocks, bonds, or real estate. However, things to consider can include the offsite storage cost for gold bullion and the possibility of security risks.
Unlike actual gold, you can buy gold ETFs on a stock exchange just like stocks. ETFs can offer a more convenient option for investors to gain exposure to gold without incurring the costs and hassle associated with markups, storage fees, and security risks associated with physical gold. Investors need to consider that ETFs come with an expense ratio — in other words, they will lose a percentage of the value of their investment as a recurrent annual fee to cover management and administrative expenditures. The value of ETFs moves with gold’s valuation on the market. Like any other investment, be sure to perform your due diligence before investing in gold ETFs.
Investing in gold mining stocks can effectively diversify your portfolio, offering security against inflation market turbulence and political and economic upheaval. Because gold is a scarce commodity that offers a long-term store of value, investing in companies that produce the precious metal will also generate long-term returns. Further, gold miners can use the cash flow generated by their operations to enhance production, pay dividends, and repurchase shares. These investments and shareholder returns position gold mining businesses to generate potentially higher overall returns than gold’s price appreciation and perform better than ETFs.
The price of gold has jumped exponentially over the past two years — and while gold seemed like it lost steam in 2021, gold steadily closed above US 1800 in January of 2022 — a 51.31% increase over five years and an astounding 536.14% increase since 2000.
Investors turn to gold when fiat currency is weak, namely, the US dollar, inevitably increasing its price. The price of gold nearly tripled between 1998 and 2008 during the financial crisis, reaching the $1,000/oz milestone. When supply chain shortages skyrocket the cost of goods, gold prices will continue upward amid high inflation rates. Gold retains its value during periods of financial uncertainty and political turmoil — add to that a pandemic that impacted global markets. As demand increases, so will the opportunities for equity return in gold mining stocks.
The price of gold rose steadily in the late 2000s and outperformed the S&P 500, and that trend could happen again with global markets in flux. Analysts expect the price of gold to increase significantly in 2022, potentially reaching $3,000 by the end of the year. According to Yahoo, we saw similar activity in 2005, suggesting a wave of investment could occur close to year-end.
Gold boasts some of the highest liquidity in the commodity markets and historically holds value over time. By maintaining a diverse range of assets in your portfolio, including gold stocks, you can effectively secure your investments should the unexpected arise. Emerging markets and tech are producing a new pool of investors, fuelling gold demand. Market experts predict demand to considerably outpace supply, making gold stocks a secure haven for investors interested in alternative assets.
Sources:
https://o3mining.com/articles/why-gold-is-the-best-investment-for-millennials-in-2021/
https://ca.finance.yahoo.com/news/gold-price-prediction-2022-115924758.html
https://www.marketwatch.com/story/gold-prices-turn-higher-aim-to-snap-multiday-skid-11642598669
https://www.forbes.com/sites/theyec/2021/01/13/how-precious-metals-have-performed-during-coronavirus-a-year-in-review/?sh=14f556eeb171
https://www.kitco.com/gold-price-today-usa/
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The History of Mining — Archaeological evidence suggests that mining first occurred in prehistoric periods. The first mined material was flint, which humans broke into sharp-edged bits to use as scrapers, knives, and arrowheads due to its conchoidal breaking pattern. Early mine shafts uncovered in France and Britain containing flint dated back to the Neolithic Period, or New Stone Age, and were up to 100 metres deep. However, the world’s oldest known underground mine, located at Bomvu Ridge in Swaziland’s Ngwenya mountains, is believed to be over 40,000 years old. People extracted ochre, a natural clay earth pigment used as body colouration during funeral and ceremonial rituals.
Gold was one of the first metals mined from sand and gravel streambeds, where it appeared naturally as a pure metal due to its chemical stability. Early civilizations prized gold for several reasons — it is visually appealing, does not corrode, is multi-faced, and is useful in many different applications. Ancient cultures saw the value in gold, and lavishly decorated tombs and temples, paying homage to gods and significant figures. In Bulgaria, archaeologists uncovered the oldest piece of gold jewellery, dating back roughly 6600 years.
The Ancient Egyptians were one of the first civilizations to produce gold on a large scale, with evidence of its use dating it to 3100 BCE, during the predynastic period. The exact origins of gold mining in predynastic Egypt are obscure, and people most likely collected the metal from alluvial deposits throughout that era. Possibly the most famous of gold finds in Egypt (and in history) was Tutankhamun’s tomb, which was uncovered by English Archaeologist Howard Carter, with financial backing from Lord Carnarvon in 1922. In the 14th century B.C., this young king governed Egypt, and when he died, he was placed in a tomb containing thousands of artifacts to follow him into the afterlife. Many of the artifacts were solid gold, including King Tut’s inner coffin, weighing approximately 110.4 kilos (242.9 lbs.). Egyptians also mined copper on the Sinai Peninsula as early as 3000 BCE, although some bronze (copper alloyed with tin) dates back to 3700 BCE. Iron dates back to 2800 BC and Egyptian records of iron ore smelting date back to 1300 BCE. Historians state that lead found in ancient Troy ruins dates as early as 2500 BCE.
Ancient Gold Deposits
Gold appears to have been obtained by ancient civilizations from numerous resources in the Middle East. The region near the Red Sea and the Nubian Desert provided most of the gold utilized by the Egyptian Pharaohs who depended on the Nile River to transport the precious metal. When these mines became unable to meet demand, reserves in other locations, most likely in southern Africa, were exploited.
Mesopotamian and Palestinian artisans most likely acquired their supplies from Egypt and Arabia. Recent examinations of the Mahd Adh Dhahab (literally “Cradle of Gold”) mine in the modern Kingdom of Saudi Arabia suggest that this location was rich in gold, silver, and copper during King Solomon’s time (961-922 B.C.).
In the Western Hemisphere, gold objects were a means of communicating with a supernatural realm and the majority of the gold in Mesoamerican culture was found in riverbeds or in surface-level soil, without digging or using deep excavation methods. Rather than being passive accumulations of wealth, gold items acted as active agents in a constant conflict with great forces. By the second millennium B.C., people were using gold in the mountainous region of the Andes. From there, the use of gold progressively migrated north, reaching Central America in the first centuries A.D. and Mexico by the end of the first millennium A.D. Metalworking was adopted later in Mexico than other arts. Still, they mastered the art and the beauty and originality of the Mixtec, and Aztec goldsmithing traditions remain unparalleled.
Gold shared a strong identifying tie with the sun — referring to gold as “excrement of the sun.” In Colombia, ritualists would leave gold or copper-gold alloy artifacts outside in the sun to recharge their generative abilities. Experts believe the gold in Mexico’s and Peru’s Aztec and Inca treasuries originated in Colombia, although there is a possibility that they sourced gold in surrounding regions. The Aztec and Inca incorporated gold in their creation of intricate headdresses and collars — frequently with several component elements such as bells and dangles that reflected light from afar. They used gold ornaments primarily to build identities, demonstrating position, privilege, isolation, and differentiation.
Sadly, the Spanish Conquistadores pillaged these civilizations’ throughout the expeditions of the New World, melting and casting numerous gold and silver objects into coins and bars, destroying precious relics and Indigenous legacies.
In an earlier blog post, we discussed famous gold rushes that helped shape the mining industry, including the Fraser River Goldrush (1858–the mid-1860s), the Klondike Gold Rush (1861–67), and the Klondike Gold Rush (1896–1899). However, Indigenous peoples mined metals such as gold, copper, silver, and cobalt to make tools, weapons, art, and other artifacts well before the arrival of Europeans and also discovered gold in the Pacific Northwest. Their efforts to defend their claims resulted in the Fraser Canyon War of 1858, which led to establishing reserves in British Columbia.
Placer mining is the process of excavating, transporting, concentrating, and recovering heavy minerals from alluvial or placer deposits using water. Placer mining exploits gold’s high density, enabling it to sink faster than the lighter siliceous minerals in the water. Sands and gravel containing gold that settles out from quickly moving streams and rivers at spots where the current slows down are examples of deposits extracted using this approach. While the fundamental principles of placer mining have remained constant over time, technologies have advanced significantly.
Panning was a technique used by miners during the big gold strikes of the nineteenth century. It involved filling a pan with a few handfuls of gold-bearing soil or gravel and a significant amount of water. The miner would swirl the pan, washing the gravel, eventually separating it, leaving the gold and heavier minerals behind.
Miners later used a “rocker,” which allowed them to sift larger amounts of ore than panning. Instead of a twirling motion, miners shovelled gravel onto a perforated iron plate poured water over it, forcing smaller particles to fall through the holes and onto an apron that spread them evenly throughout the riffles. The apron dispersed the material perpendicular to the bottom and sides of the cradle across riffled pieces of wood or iron. Gold was trapped on the riffles as the material passed through the cradle and was later extracted.
When the miners exhausted the streambeds of gold, they took to hard rock mining using pickaxes, and later Some mining shafts went as deep as shafts forty feet deep with horizontal tunnels extending from them in search of subterranean veins of gold-bearing quartz.
As the need for larger-scale operations emerged, miners employed drilling and blast mining methods, breaking up ‘benches’ of rock close to the earth’s surface to transport the smaller pieces containing ore to further separate it from the waste rock. Modern-day open-pit mines cover a large area and use massive mining equipment. Open-pit mining is one of the most common methods practiced today.
When an ore deposit is located far below the surface, which requires the need to move a substantial amount of rock/waste, miners have to turn to other techniques. Underground mining is more costly than open-pit mining and employs specialized equipment depending on orebody geometry (the size, shape, and direction), the grade of mineralization, the strength of the rock components, and the depths involved.
Rapid technological advancements, including automation, digitization, and A.I., are having a profound effect on the mining industry. Autonomous vehicles, automated drilling and tunnel boring equipment, drones, and smart sensors are just a few of the innovations transforming the way we mine gold. The need for more sustainable methods of mining that have less of an impact on the environment is a key driver in mining innovation, ensuring both surrounding communities and mining companies benefit from projects.
Autonomous mining practices enable businesses to remove employees from hazardous work environments. Modern mining technology is becoming more accessible, providing businesses with more alternatives to decrease and control their operating costs in the face of uncertain commodities markets. Further, the use of low-impact mining and technological advances demonstrate increased economic feasibility, which shows the promise of sustainable mining production and long-term value for shareholders.
Sources:
https://whc.unesco.org/en/tentativelists/5421/
https://www.reuters.com/article/us-bulgaria-archaeology-gold-idUSKCN10L0YQ
https://www.metmuseum.org/toah/hd/egold/hd_egold.htm
https://www.historymuseum.ca/cmc/exhibitions/civil/egypt/egtut03e.html
https://o3mining.com/articles/the-gold-rush-that-shaped-canadas-mining-industry/
https://www.igfmining.org/
In Dictionary of Energy (Second Edition), 2015
https://www.metmuseum.org/exhibitions/listings/2018/golden-kingdoms
https://www.britannica.com/technology/panning
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