Martin Place Securities

We know Australian investment from the ground up


European Lithium

by Barry Dawes

European Lithium

Becoming a serious company. Tanbreez is a world leading REE deposit. CRML breaks 3 month downtrend.

  • CRML share price breaking out technically from 3 month downtrend
  • CRML becoming a leading US-based critical minerals company
  • Acquisition of world leading Tanbreez REE deposit is a master stroke
  • Proposed Lithium Refinery in Saudi Arabia with Obeikan Investment Group - negotiations soon
  • Saudi Arabia’s industrialisation program delivers <US$0.048/kWh electricity
  • BMW US$15m prepaid lithium supply funds received by CRML
  • EUR will be taken along

EUR is also acquiring the high grade Leinster lithium project in Ireland for US$10m paid with 1.23m CRML shares

  • Market cap A$68m on 1,398m shares at A$0.049.
  • MPS assessed market value is A$0.67 today.
  • Appraised value A$1.14.
  • The pieces are coming together for EUR for it to be now taken as a serious company.
  • The listing on NASDAQ of CRML has given EUR a vast balance sheet to pursue developments of its lithium and now REE assets.
  • Despite the naysayers, CRML is well placed to become a key part of important US indices and the acquisition of Tanbreez should provide a significant re rating.

BMW has contributed US$15m to the Wolfsberg Lithium Project and Saudi Arabia is encouraging resources development using its world class new infrastructure and low cost energy inputs for the lithium refinery.

Saudi-based Obeikan Investment Group is proposed JV partner.

Obeikan is one of Saudi Arabia's top 100 companies with more than 3000 employees and offices in 16 countries.

Saudi Arabia has been encouraging industrialisation and resource development under its Saudi Vision 2030 plan to reduce reliance on oil revenues.

A good example of this is the current Saudi drive to invite Australian exploration and development expertise to Saudi Arabia’s Archaean Nubian Belt.

Saudi Arabia is rewarding discoveries by offering 75% debt funding for capex, low energy costs (ultra low gas prices into electricity generation) and 2-3% interest rates for new mining development projects.

Obeikan Investment Group would be well placed to assist in utilising these available incentives.

Note the extent of Saudi Arabian Infrastructure described here.

All those oil revenues have been building a powerful infrastructure base for Saudi Arabia.

  • Roads  73,000km
  • Railways  4,500km
  • Seaports 10 sea ports
  • Airports  28 Airports

Industrial activity is significant in Saudi Arabia.

1  The MODON (Saudi Authority for Industrial Cities and Technology Zone ) administers 35 Industrial cities with over 3,500 factories.

2 The Royal Commission for Jubail and Yanbu (RCJY) has four enterprise zone cities to develop energy related projects.

3 Saudi Arabia also has The Economic Cities Authority overseeing three private sector owned economic zone cities.

The installed infrastructure of power and utilities extends across the Kingdom and offers internationally attractive costs structures.

Note power costs of US$0.048/kWh for normal businesses and for energy intensive businesses, like lithium refining where power costs are >20% of operating costs, the rate is just US$0.032/kWh.

These are far cheaper than European costs of >Euro$0.20/kWh  ( US$21.6/kWh).

Annual Electricity Prices (incl taxes) for Industrial Businesses in Germany.  (Euro cents /kWh)          Source: Statistica

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The Lithium Refinery in Saudi Arabia is very real for CRML.

It is also becoming clearer that long term availability of higher grade spodumene for lithium extraction is far more limited than realised and most other non-brine lithium sources are uneconomic.  


Tanbreez is one of the world’s most important REE deposits and its location in Greenland (part of Denmark) makes it European and more importantly non Chinese.

  • China produces 60% of the world’s primary Rare Earths output
  • China processes 87% of the worlds REE concentrates
  • China produces 91% of the world’s refined REE metals
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All other REE deposits just pale into insignificance against Tanbreez.

  • 28.2mt of TREO.
  • 10x Lynas’s resources.
  • 400m thick, at surface and it is the coastline.
  • Market cap (green) and total TREO resources (blue).
  • TANBREEZ dwarfs them.
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Tanbreez is 27% Heavy REEs which are the most valuable.

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CRML is now being rerated.

Pass through value is very attractive for EUR.

CRML closed at US$11.53 on Friday 14 June and broke a three month downtrend.

Over A$0.60 per EUR share fully diluted.

The yellow shading is likely to be moving to the right.

Almost US$12 and A$0.66 for EUR.

Don’t miss out.

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Leinster Lithium Project

EUR is in the process of acquiring LHR Resources which is the 100% owner of the Leinster Lithium Project.

The project is situated south of Dublin in the Leinster Granite Massif within the same key tectonic zone and along strike to the Blackstairs Lithium (Ganfeng / ILC joint venture) Avalonia Project.

The Leinster Lithium Project is subdivided into a North Leinster and a South Leinster Block.

The North Leinster Block consists of 15 prospecting licenses covering an area of 477 km².

The South Leinster Block has 8 licenses covering 284 km².

Each block contains several developing prospect areas where significant lithium bearing spodumene pegmatites have been located in surface sampling and more recently in diamond drilling on PL 1597.

Grades over 3% LiO2 have been encountered.

Gangfeng’s Blackstairs Lithium Avalonia Project within the red circle sits between the two Blocks.

EUR will acquire the asset through the sale of 1.23m CRML shares for US$10m.

Completion of transaction subject to usual due diligence.

The MPS Valuation Matrix

Key assets

  • CRML (83%  reducing to 82%)
  • Tanbreez (7.5%)
  • Lithium Ireland acquisition (paid for with 1.23m CRML shares for US$10m)
  • Cash from exercised options in dilution process.

Market value today A$0.67 and A$1,253m.

Appraised Value A$1.14 at A$2,073m.

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EUR downtrend broken.

Rally to A$0.09

Break of downtrend gives >A$0.40

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Longer Term Technicals

A rise above A$0.065 would put EUR back into the long term formation after the false breakdown.

Break out is > A$0.14.

Bigger target is > A$1.20.

Heed the markets, not the commentators.

Barry Dawes

European Lithium Ltd (EUR.ASX)

by Alison Sammes

Key point

  • Vending Wolfsberg Lithium Project into NASDAQ SPAC
  • EUR to receive US$750m for 82% of new Critical Metals vehicle
  • Pass-through value is A$0.61 /EUR share
  • US$15m prepayment funding from BMW offtake agreement
  • Has 7.5% of Tanbreez world’s largest REE deposit

EUR is developing a portfolio of European lithium and rare earth projects that have
considerable potential to significantly increase the market value of EUR and make it an
early leader in European lithium production.

The key asset is the smaller scale 8.8ktpa LHM Wolfsberg Lithium spodumene mining
project in Austria soon to be vended into CRML for listing on NASDAQ for US$750m in
shares to EUR and lead to it becoming the first EU producer of battery grade lithium.

Connect with Barry Dawes on Linkedin

Gold breaks out – MAJOR market move now coming

by Barry Dawes

Gold, silver and all commodities are now breaking upwards

Key Points

  • Gold moving strongly above US$1800
  • Silver kicks through US$20
  • Nth American gold stocks surging
  • Gold stocks moving up vs strong gold
  • ASX Gold Index hits new all time highs
  • Expect 200% upside (YES!!) in ASX XGD
  • NST breaks through A$15 heading for >A$20
  • A$ strong
  • Shanghai market ready for MAJOR upmove
  • Dawes Points Global Boom – ON TRACK!!!!!

Call me to invest with the best
+61 2 9222 9111

It seems that gold doesn’t want to follow its usual seasonal patterns and is now moving higher in earnest.

Medium term

The long term is very important to envision.

Silver has kicked through US$20 and heading much higher.

Nth American Gold stocks are moving

I see this as a MASSIVE base to propel this index to well over 25,000.

ASX XGD Gold Index

NST superstock to A$20 and beyond

EVN  strong


DEG - so cheap!

BGL  about to soar again

KZR – going parabolic

MGV  - much more to go here

CHN – resting before surge

DGO – great leverage

WRM – watch this very closely – transformed!!

A$ strong and against other currencies

Shanghai – Ready to break much higher

+61 2 9222 9111

Don’t miss out.  Call me for gold sector investment ideas.

+61 2 9222 9111

Kalamazoo Resources Ltd (KZR.ASX) – Commissioned Research Report

by Barry Dawes

Exposure to exciting Victorian and Pilbara gold exploration

Kalamazoo (KZR) is a very interesting company with an impressive track record since listing less than four years ago. It has built an asset base and astutely secured funding that has placed the company in a strong position to confidently carry out its programmes over the next few years.

The company has its focus on two key areas, Victoria and the Pilbara, that are likely to be amongst the most important and exciting exploration centres in Australia for the next five years.

Key Points

  •  Exposure to the Victoria Gold Renaissance
    • 100% owned tenements covering three goldfields and 476km2
  • Exposure to Pilbara gold developments
    • Four projects covering 600km2

Victorian Gold Renaissance Growth Assets

  • Castlemaine gold project – 5.6moz historic production 310km2
  • South Muckleford Gold Project – 2.1moz Historic Goldfield 161km2
  • Tarnagulla Central Gold Project – 0.7moz Historic Goldfield 5km2

Pilbara Gold Potential Recognition Growth Assets

  • Ashburton Gold Project – 1.6moz resource 217km2
  • The Sisters Gold Project – 136km2
  • DOM’s Gold Project – 217km2
  • Marble Bar Gold Project – 48km2

 Call me to discuss:
+61 2 9222 9111

Kalamazoo Resources - Gold Exploration

In Victoria, KZR has accumulated 100% ownership of three historic goldfields in the important 60moz Bendigo Zone that have a combined past production of over 8moz.

In the Pilbara, KZR’s projects include the recent Ashburton 1.6moz resource acquisition and those in the vicinity of DEG’s exciting Mallina Gold Project.
KZR’s impressive growth has been through strategic asset accumulation and its future is developing them.

The potential of KZR’s tenements and its corporate character have been recognised by Quinton Hennigh, President of Novo Resources and adviser to Kirkland Lake on Fosterville and also KL.TSX Chairman Eric Sprott with respective shareholdings in KZR.

Front page of the Kalamazoo Resources research report from Martin Place Securities

Call me to participate.
Barry Dawes
Executive Chairman
Martin Place Securities
+61 2 9222 9111

19 July 2020

Torque Metals Ltd IPO

by Barry Dawes

Torque Metals Ltd is raising $2,000,000 through a public offer of 20,000,000 Shares at an issue price of $0.10 each.

Torque Metals Key Points

  • Small highly leveraged gold play
  • Two major projects in key WA locations
  • All underexplored by modern methods
  • Paris project near important Boulder-Lefroy Fault
  • Paris/HHH gold project has 32koz Indicated resource on existing Mining Lease
  • Inground value >A$80m  Net value ~A$16m (min)
  • Bullfinch gold project has good exploration prospects
  • Pre money value of Torque is only A$4m
  • A$2m @ A$0.10 IPO closing 3 July   
  • Very good Independent Expert’s Report in Prospectus
  • Listing on SSX in mid July
  • Term Sheet and Prospectus attached

Call me to discuss investment here.  +61 2 9222 9111

For a public offer of 20,000,000 Shares at an issue price of $0.10 each to raise $2,000,000.

Oversubscriptions of up to a further 5,000,000 Shares at an issue price of $0.10 each to raise a further $500,000 may be accepted.
SSX Code: 8TM

Lead Manager

Martin Place Securities
AFSL 291787
Phone: +61 2 9222 9111

SSX Sponsor

Trident Capital
AFSL 292674

Important Information
You must read this important notice before you attempt to access the electronic version of the Prospectus through this website. The information on this page is not part of the Prospectus. If you do not understand it, you should consult your professional adviser without delay.

Lodgement of Prospectus with ASIC
The paper form of the electronic version of the Prospectus (including its attached Entitlement and Acceptance Form) accessible through this website has been lodged with the Australian Securities and Investments Commission.

No offer of securities is made on the basis of the electronic version of the Prospectus accessible through this website. An application for securities can be made by completing the Entitlement and Acceptance Form attached to or accompanied by a paper form of the Prospectus and then lodging the form and the application monies in accordance with the details set out in the Prospectus and the relevant Entitlement and Acceptance Form.

No Advice
Nothing contained on this website or in the Prospectus constitutes investment, legal, business, tax or other advice. In particular, the information on this website and in the Prospectus does not take into account your investment objectives, financial situation or particular needs. In making an investment decision, you must rely on your own examination of the Company and the securities and terms of the offering, including the merits and risks involved. You should consult your professional adviser for legal, business or tax advice.

For legal reasons, the electronic version of the Prospectus accessible through this website is available to persons accessing this website from within Australia and New Zealand, only. If you are accessing this website from anywhere outside Australia and New Zealand please do not download the electronic version of the Prospectus.

The Prospectus does not constitute an offer of securities in any jurisdiction where, or to any person to whom, it would not be lawful to issue the Prospectus or make the offer. It is the responsibility of any applicant outside Australia and New Zealand to ensure compliance with all laws of any country relevant to their applications, and any such applicant should consult their professional advisers as to whether any government or other consents are required, or whether any formalities need to be observed to enable them to apply for and be allotted any securities.

It is not practicable for the Company to comply generally with the securities laws of overseas jurisdictions having regard to the number of overseas shareholders, the number and value of securities these shareholders would be offered and the cost of complying with regulatory requirements in each relevant jurisdiction. Accordingly, the offer pursuant to the Prospectus is only being extended and securities will only be issued to shareholders with a registered address in Australia and New Zealand.

​Clicking on the Prospectus means that you agree to the above terms and conditions and Torque Metals Limited privacy and cookies statement

Torque Metals has two projects - One at Paris/HHH to the South of Kalgoorlie and the second at Bullfinch at Southern Cross to the West of Kalgoorlie.

Paris/HHH is near to production and surplus cash would provide additional funds for further exploration.

Torque Metals Bulfinch map

The Boulder-Lefroy Fault is the dominant structural feature in the Kalgoorlie region and this diagram clearly shows its NNW-SSE orientation

and the numerous subparallel structures either side.

All the largest gold mines in this region are on or very near this Boulder-Lefroy fault which is acting as the mineralised fluids plumbing system. Paris/HHH is within 50km of some very large gold deposits and the area has not had much modern exploration.   

The Paris/HHH Gold Project deposit had 18koz recovered in 2017 in a small mining operation and currently has a JORC `Indicated’ resource of 32,000 ounces

on existing granted pre Native Title mining leases that should allow gold production within the next 18 months.  The previous scoping study is still basically current.

Assuming a conservative 50% recovery and $1000/oz margin at A$2500/oz just this resource this would bring  A$16m cash surplus to the project.

As with all mines, the increased A$ gold price will increase the total gold in a revised pit design so the resource number should be higher

Paris has good high grade zones and some old workings and good potential down plunge.

The HHH deposit has potential down dip and in the footwall.

Additional potential is noted in a sub parallel structure at Paris North where 5.2m @ 14.2g/t has been intersected.

The 68km2 contiguous granted mining lease tenements have additional potential along strike at in the sub parallel zones for Strauss and Marmaracs.

But much of this is underexplored.

Paris has also has a 10km northward extension in a 80% earn in JV with Jindalee Resources Ltd. 

Some high grade intersections have been encountered including Maynard’s Dam with 3m @28g/t.

Markets have bottomed out. ASX Gold Sector moving higher

by Barry Dawes
  • Gold ready to move up again.
  • Expect a much higher A$ in the coming years.
  • Some excellent LT charts here.

No changes to outlook or strategy.

Heed the markets not the commentators.

Its Bull Market continuation for years to come.

US equity market back into next uptrend channel.

Downtrend broken for the DOW 30 Industrials.

Lots of data here.  All bullish.

  • Gold looks brilliant.
  • Silver getting ready to move.
  • A$ strong and rising.
  • Global Boom intact.
  • LME metals still tight and little inventory build.
  • Oil has bottomed.   Market tighter than current commentary expects.



BUY oil stocks


BUY Lithium stocks  LKE PLS GXY

Gold is moving to challenge previous 2011 highs of US$1800-1923 and has a near term target of US$1800 where some consolidation `should’ take place.

But note that more consolidation around here could allow gold to exceed previous high at US$1923.

Shorter term suggests the current consolidation is nearly over and we should move higher.

Don’t you just love long term charts!  From Jason Atkinson in Dallas  @schism

Institutional investors have added to portfolios abut are still low compared to previous gold bull market leg.

The main driver is likely to be the short covering from Western gold market participants although it would be expected that Asian demand is likely to be soft for a while yet.

Physical gold is scarce and premiums are being paid for coins and bars.

Some US numbers on coin sales.   (Can’t confirm source though)

US$ holding strong.  The numbers might seem horrific but just think of the numbers everywhere else.  Who would buy the Euro(57% of this index)?

Nth American Gold Stocks

And those liking the long term,  the XAU should rise about 50x over the next decade.  From Jason Atkinson in Dallas  @schism

And here.  Gold stocks vs  S&P500.    From Jason Atkinson in Dallas  @schism

A$ has had a major reversal.

A$ will follow gold and goldstocks

A$ gold to consolidate with rising currency.

The Australian gold industry is doing very well at present with record production and record exploration at a time of record gold prices.

Gold sector shares should rise much higher and action should just get better as market breadth expands and more investors participate.

Aren’t you glad you bought NST for dividends a few years ago and not NAB or the other banks!


When I think of Silver I think of Palladium.  When I think of Palladium I think of Silver.  For Silver Bulls   - From Jason Atkinson in Dallas  @schism

The low for oil is in.  The recovery will be rapid.  Graphics from @Gradhhy

Oil: Global Crude Storage Builds In April Are Nowhere Near Analyst Estimates

LME metals inventories showing no appreciable build-up (other than nickel).

Moment of truth for iron ore

Shanghai is holding up very well.

Lithium is looking good.

It is time to be proactive in this market and recognize that all these fiat expenditures will be very good for gold.

Call me to participate  +61 2 9222 9111

Low in place for resources stocks and inflation emerging #96

by Barry Dawes

This has certainly been uncharted territory for us all so we can only react to what major markets are doing and saying.  The very long term price histories remain positive and suggest the past few months have seen declines to major long term support.

We now need to ponder what this all means in the longer term.

And price history suggests you can forget the doomsday scenarios.

Extremes in sentiment show many signs of very important lows and provide the basis for continuation of the DawesPoints Global Boom.

The rally in global equities has begun and it could be driven more by the assumption that the worst for Covid-19 may be over rather than just the US bailout.  The markets are anticipating a peaking in new Covid-19 reportings and/or that a cure/cures has/have been found.

Let’s look at what the markets are saying and have been showing these signs for the past month as reported in my desk notes.

Key Points

  • Dow Jones Industrial Index at important MAJOR long term uptrend support
  • Four year cycle low is probably in place
  • Sentiment indicators show high pessimism levels
  • Long term indicators suggest low is in place
  • US$ still strong – Euro made new 3year low
  • Bond markets well over extended
  • Commodities driven lower by oil price rout
  • Shanghai market still holding well
  • Iron ore steady
  • Long term ASX Metals and Mining index back to downtrend line
  • Oil price bottoming
  • Gold rising  - physical gold scarce – much higher prices coming
  • A$ gold price still very strong and exceeded A$2800 intraday
  • ASX Gold stocks ready to rally to new highs
  • Best big buys BHP RIO FMG MIN WPL OSH
  • Best emerging golds DEG BGL CYL RED KZR CDV NTM CHN MGV  

Call me to participate:
+61 2 9222 9111

I still am of the view that this weakness will be over very quickly and the fiscal and monetary easing across the world will cause strongly inflationary pressures.

I am seeing numerous efforts to bring some vaccines and drugs to combat the virus and am particularly impressed with the results from the anti-malarial Hydroxy Chloroquine.  Markets might be recognizing this.

These figures are very interesting for the understanding of this Covid-19 virus and who it hits.

A 2 April 2020 report from Reuters on Louisiana showed an astounding 97% of COVID 19 hospital admissions had pre-existing conditions:-

  • Diabetes 40%
  • Obesity 25%
  • Chronic Kidney 23%
  • Cardiac Problems 21%

(these are not meant to add to 100)

And this:-

I have not been able to independently confirm this data but it seems whatever data we are seeing it is more a matter of comparing apples with bananas, cheese and zucchini.

Age, gender, race, comorbidities, mortality/admission ratios and so much needs to be tabulated and analysed.

Control might prove to be far simpler than currently perceived.

This crisis is enforcing curtailment of civil liberties and changing expectations from citizens so we might see some most unexpected outcomes when this is all over.  Will it bring better people into politics and will the media be reformed after so much partisan commentary from commentators who are instant experts on everything?

Good people need to, and are, standing up.  

The opportunity for restructuring the global economy and supply chains is now massive.  This should result in more manufacturing in the US and hopefully in Australia and may be a sea change here in attitudes and actions.  New incentives for start ups, fewer regulations, revival of onshore oil and gas exploration, consideration of new onshore refining capacity and changes in labour laws.

The crisis has created problems in Europe and the pressures will surely lead to the eventual break up of the EU.  That union has no leadership and its many members will be wondering why they are there at all.  Euro to zero?

Also the problems in Iran could lead to a better outcome for its citizens and a regime change would curtail much of the insurgency in the Middle East.

And the impact on China may also lead to more liberalisation once the crisis there has truly passed.

The collapse in the oil price will cause restructuring in US shale production and in Russia.  Saudi Arabia will be having budget issues as will all the high taxing oil producing countries.

Expect to see the permanent loss of at least 1mmbbl/day production from marginal fields in the US and Russia in 2020.  Oil prices (West Texas Intermediate -WTI) in Midland Texas have been in the US$6-7/bbl range as demand drops storage is taken up.  Expect a 25% decline in US oil production rate from ~13mmbbl/day to <10.  

This crisis has also shown up problems in so much infrastructure so renewal capex should accelerate across the board with physical assets and also in IT and bureaucracies.  Interesting times.

The economic impact of the shutdowns will be great on employment levels but many sectors will be completely unaffected in the short term.

The equity markets will discount the future and give a better idea of the outlook so it will again be a time to `Heed the Markets, not the Commentators’.

This is indeed a critical moment in the markets but could be the MAJOR low here as the bottom picked up the 1982 uptrend.    Maybe some churning is required but the worst is probably over.

This graphic shows the extreme low channel and a jump back into the next channel.

The shorter term looks even better for a market bottom to be in place.  Bounced off a lower channel and back into a mid-range channel.

It is worth looking at some of the sentiment graphics available.

Martin Pring with Stockcharts showed the NYSE Bullish % Index hit a level almost as low as 2008.

The US Put/Call ratio was at extremes with all Puts and no Calls.

Martin Pring’s momentum indicators provided a major BUY signal with many stocks making extreme lows then rebounding to show leadership in the S&P500 Index.

Ciovacco Capital has this interesting chart for the S&P 500 250 week moving average with probably fastest-ever test.

Source: Ciovacco Capital

The short term has seen a close above the 200 week moving average but with confirmation needed with this week’s close.

Source: Ciovacco Capital

Stocks are outperforming bonds and have just pulled back to the break out line.  Very positive.

And this from Graddhy – Commodities TA and Cycles (@graddhybpc) suggesting the 4 year cycle low is coming in right now. This is impressive.   Major sell off, massive volume right on time with this 4 year cycle.

f you have a Twitter account I suggest you follow him at @graddhybpc

Comparisons with 1929. 

The 1929 fall was very dramatic and the recovery quite spectacular.

This graphic is not logarithmic so is not so useful.  (Apologies that it is cut off, unlabelled and unsourced.)

However, this is Martin Pring’s view of 1926-1941 highlighting major selloffs.

The world worked on the Gold Standard then so prices had a true yardstick (even if it did change in 1934 from US$20.67 to US$34.00).

Today, with no Gold Standard, all prices are measured against a floating currency which means nothing can be measured against a fixed yardstick.

It is also worth noting that in the 1920-30s about 40% of Western World workforce was employed in primary industries:-  agriculture, mining, fishing, forestry, energy etc.

Today it is 3-4% so low commodity prices benefit most of the other 96%.

But today, services are far more than 40% and here it is where most job losses appear to be.

Importantly, many of these services have low barriers to entry as far as working capital so we should see a strong pick up once the turn comes through.

Barriers to employment in many services might just be a desk, phone or a vehicle.

I have shown this long term graphic of the Dow Industrial Average from 1923 to present from Schism @jatkinson33 previously.

A break of the uptrend curve from the low in 1932 would be very negative indeed but it would seem that government fiscal and monetary policies are and will be very accommodative such that a decline would be unlikely.

Also, bull markets, and this has been a major bull market, generally end with a bang.   This hasn’t!

Note that the Dow 30 was not even at the midpoint curve when it had its pull back to the bottom uptrend curve.

We have a long way to go yet to the upside!

Source: Schism @jatkinson33

The US$ seems to be retaining its strength in this index.

The Euro looks awful to me.

Bonds are well overbought, at EXTREMES and have hit the top of the channel….

… the long term is for a change in the direction of interest rates.  This must be the low in interest rates.

Commodities are bottoming out after a massive energy related sell off into a four year cycle low. 

Source:  @graddhybpc

The longer term in this 60 year price history of the CRB Index shows today is certainly at an extreme level but it is at a stage of close to the end of a 12 year decline from 2008.

Source: Schism @jatkinson33

This index is back at 1973 levels in nominal terms but it is heavily weighted to oil and petroleum sector products. 

It seems to be coming into a major low.

Clearly precious metals and copper are well above 1973 levels and certainly iron ore so do not fit into this group.

ASX Metals and Mining

This is one of the best and most positive charts I can find.  Pull back to 2008 downtrend and some long term support.

This graphic tells me a lot and is very positive.  Ignore the current `fundamentals’ and consider that a retest of the 2008 downtrend line has taken place at a level that is horizontally important.  The bounce should be robust from here.

BHP is well placed to continue its longer term outperformance of the S&P500.

Shanghai - Long term still heading up

It is surprising that Shanghai is holding up well and in 2019 finally broke out from its 2015 downtrend.

This market may be manipulated but it is still at the level of a decade ago despite rising GDP figures.

Shanghai – Short term still solid

And what might this mean?  Shanghai vs S&P 500.

Iron ore is holding OK.

Gold – looking very strong  - Much higher prices coming -probably quite soon

Watch the recent interview with Barry on CNBC here.

Gold – still in uptrend here and making new rally highs.

And here

This model puts gold into the US$10,000/oz class in the next few years and almost US$9,000 now.

Source: Lighthouse

Another view on gold from Northstar @Northst18363337 suggests we are only just starting this bull market.  Northstar is an excellent analyst on Twitter.

Source: Northstar @Northst18363337

Gold stocks in North America have done some constructive (if highly unusual) technical action and this is very positive.

The sell-offs were related to highly leveraged ETF and hedge funds getting margin calls. The worst of this should now be over and will allow gold stocks to move higher again.

Market leaders Barrick and Newmont are very constructive.

The bigger picture is provided by this Dawes Point Elliott Wave interpretation where it would appear we have just completed a wave 2 in a WAVE 3. 

Gold stocks are poised to strongly outperform the general market.

A$ gold is still strong and made a new high above A$2800 and is now about A$2730.

The ASX Gold Index has provided a good test and a bounce.

All this looks very encouraging to me. Best big buys BHP RIO FMG MIN WPL OSHBest Golds NCM NST EVN WGX RRL SAR WGXBest emerging golds DEG BGL CYL RED KZR CDV NTM CHN MGV  

Call me to participate.
Barry Dawes BSc F AusIMM(CP) MSAFAA
Executive Chairman
Martin Place Securities
+61 2 9222 9111

Commissioned Research Report Lake Resources Ltd (LKE.ASX)

by Alison Sammes

Key Points

  • Lake Resources has five lithium projects in Argentina:-
    • Brines - Kachi, Cauchari, Olaroz and Paso in Jujuy Province
    • Pegmatites- 150km strike exploration in Catamarca Province
  • Flagship Kachi Inferred Ore Reserves of 4.4Mt LCE @216mg/L LCE*
  • PFS for 25ktpa LCE Kachi due in March Qtr 2020
  • Unique low operating cost Business Plan
  • Pilot plant for innovative Lilac direct extraction technology underway
  • Technology gives >80% lithium recovery and slashes processing time
  • Lilac Solutions now backed by Gates/Bezos Sustainability Fund
  • Cauchari adjoins Ganfeng JV - has achieved 506m @ 505mg/L lithium
  • Lithium market bottoming & turning up–needs >600% supply increase
  • Strong growth in batteries for EVs demand and energy storage uses
  • Project funding likely in 2020 for Kachi and first output in 2023
  • Significant rerating of the company due over 2020

* lithium carbonate equivalent

Call me to discuss:
+61 2 9222 9111

High Purity Lithium Production in Argentina

LKE has a lithium development strategy with projects in the prime Argentinian brine producing regions and utilising innovative technologies to minimise operating costs and to maximise earnings and sustainability benefits.

LKE’s 4.4mt LCE Kachi resource will utilise Lilac Solutions ion exchange technology in its project with a PFS due shortly for 2023 production startup.

Lithium sector undergoing improved conditions as supply and demand match.

The rise and rise of the lithium-ion battery is changing the world.

The versatility of this technology for application from smartphones, domestic appliances, power storage to Electric Vehicles (hereon EVs) implies universal acceptance and dependence. The advent of the high tech chemical refiner and processor for battery plants is changing the lithium industry.

It becomes critical to understand that whilst lithium prices are soft it does appear that they are bottoming and as the near term market balance is being sorted out. Underlying battery demand is inexorably rising between 15-18% per year together with EV and energy storage demand and will eventually impact the lithium price.

LKE has globally significant resources and has Lilac Solutions’ innovative approach to lithium recovery from brines.

Ion exchange technology cuts out the time and capital intensive evaporative process from the flow sheet.

Commissioned Research Report Torian Resources Ltd (TNR.ASX)

by Alison Sammes

Key Points From Research on Torian Resources Ltd

  • Small explorer resuming activities along Zuleika Shear near Kalgoorlie
  • A$6m of JV funding in place for the next four years
  • Mt Stirling resource near RED.ASX Ursus Fault discoveries along from King of the Hills
  • Small scale mining project in consideration for 2020
  • Kalgoorlie region has numerous new targets beneath alluvium cover
  • Very small market cap but high potential
  • Download Full Research Report here

Call me to discuss:
+61 2 9222 9111

Developing Quality Gold Exploration Portfolio in WA

Torian has quality exploration tenements in two prolific gold production regions in Western Australia and is ready to resume activity after a period of tenement rationalisation and management changes.

Kalgoorlie Region tenements have six projects including the Zuleika Shear, Credo Well, Mt Monger and Gibraltar. This Kalgoorlie region has a widespread blanket of transported cover and little outcrop and is undergoing a major re-evaluation and re-interpretation from basic principles as new gold hosting environments in the Black Flag Group (including sediments) are recognised. Over 127 targets have been identified by TNR on its tenements using geological and geophysical tools.

Leonora Region tenements have three projects Mt Stirling, Mt Stirling Well and Diorite. Mt Stirling is adjacent to RED.ASX’s very encouraging King of the Hills development and likely to provide near term cashflow from small scale mining.

Torian has accelerated the activity over its portfolio by farm-outs and is seeking to achieve gold production and build cash by end 2020.

Gold Moves Higher

by Barry Dawes

Key Points

  • Gold heading to US$1600 and higher
  • Silver ready to move
  • ASX ETFs available
    • for Gold (Gold.asx)
    • Silver ETPMAG.axw
    • GDX.axw
  • World Gold Council data for 2019
    • Gold ETFs bought net 325 tonnes to record 2885t
    • Central banks were net buyers for 10th consecutive year with 650t to 34,500t
    • ETFs and Central Bank purchases offset decline in Asian demand
    • Gold mine production fell slightly (-1% to 3463)  – first decline in ten years
    • Scrap supply increased with higher gold price
  • US jewellery demand grew 2% to 10 year high of 131t.
  • A$ gold hits new record high A$2370/oz
  • JP Morgan probe into gold price rigging could result in gold moving higher
  • Gold stock technicals also very constructive
  • US$ and global equities heading higher
  • Decade of Prosperity ahead -  MUST WATCH video link
  • Gold is becoming Metal of Prosperity
  • My latest Proactive video

Call me to participate:
+61 2 9222 9111

Gold is a many splendoured thing and means different things to different people.

Concerns over debt, the Coronavirus or an overvalued stock market could be reasons for higher gold prices but I still consider gold now to be the Metal of Prosperity.

Asian demand is from rising prosperity and sales to Asia from the West represents a short position for many banks. The probe into JPMorgan gold price rigging may force cover of these short positions, especially in silver.

ETF and Central Bank purchases of gold in the Dec Half of 2019 offset declines in Asian demand but rising prosperity in the US pushed gold jewellery demand to the ten-year highs.

The US is experiencing a momentous acceleration in its Trump Blue Collar Boom. Just watch employment, housing and autos (the coming EV boom).

Economic Confidence Index is at the highest level in almost 20 years.

Gullup's Economic Confidence Index, 1992-2020

This long term demographic/technical graphic shows the US market is in the early days of a major bull market.  Demographic changes are driving it.

Capital flows are showing bonds have peaked and are flowing into equities.  And Property and commodities and gold.

Watch this video!!

Gold has continued to move higher in all currencies and achieved Friday monthly close on 31 January at US$1588.

The technical setup is for gold to now move higher in the near future.

US$1600 is an important level so a break above this should see gold rise almost US$200 to around US$1775 in a reasonably short time frame.

Moves to US$1800 are likely in 2020 and the previous high of US$1923 might be met or exceeded this year.

The longer-term picture is for a much higher gold price than this.

Gold in A$ is moving higher and the technical are suggesting a coming move into the next channel.

Gold can be traded using the ASX-listed ETF GOLD.ASX.

Silver is also setting up for continuation higher after its strong move in Sept last year.

As with gold, the long term pattern is suggesting a move that will take silver above its 1980 and 2011 high of US$50/oz.

Silver can be traded using the ASX-listed ETF ETPMAG.AXW

World Gold Council Data

The recently published 2019 data from the World Gold Council provided some interesting market trends.

Gold-backed ETF holdings reached an all-time high in Dec Qtr 2019 at 2885 tonnes, up 325 tonnes. 

Europe now has almost as much in gold ETFs as the US.

Gold in Euros seems to be ready for a strong move as well.

The Euro still looks very weak to me and so the US$ will remain strong.

The US$ Index seems to be now ready to move higher.

Central banks were net buyers for 10th consecutive year with 650t to 34,500t and this gain, similar to

that in 2018, was the most in 50 years.

World Gold Mine production was 1% lower at 3463 tonnes and the first mine output decline in ten years. 

Interestingly, this data shows the rate of change of gold production has a declining trend.

China has been declining from a record 453 tonnes (453,00kgs here) to 420 t but these figures may be optimistic.  Peru gold output fell 9% in 2019.

Gold production in China has been from numerous small mines so the longer-term production is not assured despite official forecasts.

Other major gold producers Australia, USA and Russia were marginally higher.

Production costs as measured by AISC figures are rising again but this is more likely to be a function of declining cutoff grades rather than input factor costs.

On this graphic, ~6% of global gold production is still loss-making basis AISC data.

Recycling rose 11% to reflect the higher prices bringing out scrap.

The data showed gold in Indian Rupees drew out some selling.

Gold stocks

Gold stocks in North America continue to consolidate and after breaking through some technical resistance should move sharply higher again.

The unhedged HUI index is constructive.

The Philadelphia Gold Index has major long term resistance at 110 so a breakthrough this soon into 2020 will provide an acceleration to 150-170.

The GDX ETF seems to be tracking the XAU but may be stronger.

This GDX is tradable on ASX under code GDX.AXW.

Also, a North American Goldstock portfolio BetaShares ETF MNRS.AXW (non ASX companies) is available on ASX.

Individual stocks like Newmont

And leading royalty company Franco Nevada, are doing well.

Overall, Nth American Gold stocks are now breaking upwards against the  S&P 500.

And looking very positive against gold itself.

Here in Australia the ASX S&P Gold Index looks very constructive. New highs above 2011 were seen in 2019 but the Index (~39% NCM) has pulled back to good support where the 2 December Dawes Points BUY NOW was issued.  Once XGD breaks out to new highs a strongly accelerative action is likely to take place.

NST is well on its way to A$20 and beyond.

And NCM is far too cheap.  Haveiron will be a real winner for NCM by converting Telfer from a marginal operation to a long life very profitable mine.  Recent rains should also remove any concern for water for Cadia.

ASX gold stocks are very cheap now.

All these constructive technicals for gold and silver ( and platinum ) are telling me the artificial down pressures on gold are being removed and a significant revaluation is coming.

But this and so much else is also telling me that US equities and hence global equities are looking very strong for at least a decade.

The massive over-commitment to bonds to ~US$110tn will provide capital flows to equities and commodities for the next decade.  

Call me to participate.

Barry Dawes BSc F AusIMM(CP) MSAFAA

Executive Chairman
Martin Place Securities

+61 2 9222 9111

10 February 2020

Dawes Points #95

I own, or have in controlled entities, all the stocks.