Wednesday, March 15, 2017

Gold Exploration Spending Is Plunging

Gold miner spending on exploration is plunging. Down 4 years in a row. Read it here. An excerpt

“The 2016 exploration budgets by 1,580 companies totaled only U.S. $6.89 billion, a year-on-year drop of 21% and barely one-third of the level budgeted in 2012,” stated S&P Global Market Intelligence’s Corporate Exploration Strategies (CES) report.

I'll tell you why. Because the big fish find it much easier to have small companies do the exploration for them. They can then buy those companies on the cheap when they find something. 

But two questions ...

  • Gold explorers are trading at stupid discounts right now. What happens when that discount goes away?
  • As more gold explorers get bought, there are less good ones to choose from. Will those companies start trading at a premium?

In other news, the Fed dishes up "Goldilocks" announcement for the gold market. Some stories from Kitco:

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