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Gold SWOT: Central Bank Gold Buying Continued in February

CEO & Chief Investment Officer @ U.S. Global Investors
April 25, 2023

This week, gold futures closed the week at $1992.60, down $23.20 per ounce, or 1.15%. Gold stocks, as measured by the NYSE Arca Gold Miners Index, ended the week higher/lower by 4.42%. The S&P/TSX Venture Index came in off 3.71%. The U.S. Trade-Weighted Dollar gained just 0.15%.


  • The best-performing precious metal for the week was platinum, up 8.16%, while palladium closely trailed with a 7.30% gain. Analysts pointed to the better-than-expected first-quarter GDP gain in China for the strength in platinum group metals (PGMs) with auto sales expected to rise. Gold edged higher after ending last week with a steep loss on stronger-than-expected U.S. inflation data that boosted bets on more monetary tightening. The precious metal traded above $2,000 an ounce Monday, when data showed U.S. near-term inflation expectations unexpectedly surging in early April.
  • Central bank buying continued in February with global gold reserves up by 52 tons, higher for the 11th consecutive month. January and February net purchases totaled 125 tons, the strongest start to a year since 2010. Last week, the People's Bank of China (PBOC) reported a further increase in its gold reserve holdings with March purchases of 18 tons, the fifth consecutive month of increases. China's gold reserves now sit at 2,068 tons. The World Gold Council (WGC) continues to believe that strong central bank gold buying, which set a record in 2022, could continue, particularly owing to the metal's investment appeal.
  • The Korea Times reports that the country’s demand for gold has risen to an all-time high, as a global preference for safer assets has increased due to rising interest rates, concerns over a potential recession and the ongoing war in Ukraine with Russia. Incidentally, the Korean central bank has not added to its gold reserves for the past 10 years. Interestingly, maybe the bank is hedging that their citizens will donate their gold to pay off national debts again, like when the Asian financial crisis hit and their people donate 227 tonnes of gold to the nation to offset debts.


  • The worst-performing precious metal for the week was silver, down 1.36%. Gold futures for June have traded above $2,000 per ounce for the last 14 trading sessions until Friday as unexpectedly strong U.S. business activity climbed to a one-year high, forcing investors to reckon with the prospects of additional rate hikes beyond current expectations. Gold opened below $2,000 on Friday and closed as such.

  • Regis Resources reported March quarter production of 103,700 ounces, a 15% miss versus consensus. RRL indicated production was driven by the slower ramp-up at Garden Well South, unplanned maintenance at Rosemont, poor underground performance at Tropicana and wet weather impacts, which have extended into April. RRL notes the non-weather-related issues have been rectified with rates returning to plan early in the June quarter.
  • Not often do we get news of a gold heist, but two occurred in the past week. In one case, Vancouver-listed Patagonia Gold Corp. had its gold room broken into at its Cap-Oeste Project, in Argentina, in the early hours of April 17; burglars made off with about 500 ounces of gold, or $1 million. In another story, thieves made off with a cargo container stored at Pearson International Airport, outside of Toronto. Initially, it was reported as a $100 million heist, but police said the container contained close to $15 million in gold and other valuables. The container arrived on Monday of this week and disappeared by Thursday. Bloomberg noted gold mined in Canada often transits through Pearson to international markets.


  • If spot commodity prices prevail, there is 54% upside risk to 12-month forward consensus earnings for the gold miners on average, with Harmony the most geared if spot commodity prices prevail. These expectations may already be reflected in the equities and they may struggle to justify further multiple expansion in the current elevated margin environment.
  • Asante Gold Corp. received a bid on Thursday from Fujairah Holding LLC, its largest shareholder, at $2.20 per share. Before the offer, Asante had closed at $1.51 but climbed more than 26% on Friday. Asante rejected the offer on the basis the offer was too conditional on restricting other bidders from participating in the evaluation of the transaction. Asante has two operating mines in Ghana producing a combined 400,000 per year. After the takeover offer, it is valued at only C$723 million, compared to Orla Mining, for example, which is on track to produce 100,000 to 110,000 ounces this year in Mexico and is valued at $1.95 billion.
  • According to a recent World Gold Council (WGC) study, the recent financial sector crisis was a key element behind the 9% increase in gold price through March. This was driven by lower yield rates, a weaker dollar and safe-haven buying. Investors flocked into physically-backed gold ETFs with these funds increasing their holdings by 1.33 million ounces since March 1. The yellow metal reached a 52-week high of $2,047 per ounce late yesterday but has pulled back since. This upward trend continues to have tailwinds from easing U.S. and Bank of Japan monetary policy, based on data points like falling inflation and increasing jobless claims.


  • According to UBS, Barrick's first-quarter earnings per share (EPS) will likely come in below Wall Street estimates. Based on details released in the preliminary production report, the bank calculates EPS of $0.09 per share, versus consensus of $0.18 per share. Compared to Visible Alpha, first-quarter gold production volumes of 952,000 ounces were 4% below the Street's 991,000 ounces on implied cash costs of $990 per ounce versus consensus of $876 per ounce.
  • Barrick’s total cash costs and all-in sustaining costs (AISC) are expected at $1,008 per ounce and $1,358 per ounce, respectively, 22% and 8% higher, respectively, than 2022 fourth quarter and 14% and 13% higher than 2022 first quarter. The company could have inflationary pressure on costs to ease later into the year, as inflation is showing some signs of relief.
  • The large-cap streamers (Franco Nevada and Wheaton Precious Metals) may have a weak first quarter, given the timing of shipments, a ramp-up in assets and better grades expected later in the year. The streamers will address the 15% global minimum tax proposal (GMT) that was included in the Canadian federal budget.


Frank Holmes is the CEO and Chief Investment Officer of U.S. Global Investors. Mr. Holmes purchased a controlling interest in U.S. Global Investors in 1989 and became the firm’s chief investment officer in 1999. Under his guidance, the company’s funds have received numerous awards and honors including more than two dozen Lipper Fund Awards and certificates. In 2006, Mr. Holmes was selected mining fund manager of the year by the Mining Journal. He is also the co-author of “The Goldwatcher: Demystifying Gold Investing.” Mr. Holmes is engaged in a number of international philanthropies. He is a member of the President’s Circle and on the investment committee of the International Crisis Group, which works to resolve conflict around the world. He is also an advisor to the William J. Clinton Foundation on sustainable development in countries with resource-based economies. Mr. Holmes is a native of Toronto and is a graduate of the University of Western Ontario with a bachelor’s degree in economics. He is a former president and chairman of the Toronto Society of the Investment Dealers Association. Mr. Holmes is a much-sought-after keynote speaker at national and international investment conferences. He is also a regular commentator on the financial television networks CNBC, Bloomberg and Fox Business, and has been profiled by Fortune, Barron’s, The Financial Times and other publications.  Visit the U.S. Global Investors website at  You can contact Frank at: [email protected].

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