Central Banks Might Be Preparing for a Gold-Based Monetary Regime

Central banks could be preparing for a new monetary regime where gold plays an essential role, according to Goehring and Rozencwajg.

Right now, the US dollar is at risk of losing its reserve currency status which could create the most impactful shock to the stock market in the past forty years, Leigh Goehring explained.

In recent months, emerging economies like China, India, Turkey, Egypt, Qatar, and Singapore have been increasing their gold reserves, creating a massive drive and demand. After making record-breaking purchases in 2022 for 1,136 tonnes of gold, central banks added another 228 tonnes to global gold holdings during the first quarter of this year.

This robust gold buying has been sustaining gold and keeping it above the $1,900 per ounce level in the face of a hawkish Federal Reserve.

But it isn’t just the last two years that the central banks have been driving gold demand, they have been the driving force for the last decade which could be related to the projected monetary regime shift. 

For years, there has been speculation that the US dollar is losing its standing as a reserve currency, but growing evidence that countries are abandoning the dollar suggests that time may be coming sooner rather than later.

Saudi Arabia is discussing paying for its oil in renminbi, all sanctioned Russian oil sales being paid in renminbi, Brazil wanting to settle its agricultural trade with China in renminbi, and France’s TotalEnergies willing to sell LNG to China and accept renminbi.

Of course, these initiatives aren’t considered monetary regime change because China has a closed capital account and countries trading in renminbi cannot exchange it, which is where gold comes in.

This could explain why so many central banks are buying gold. China has taken a serious approach to building its gold reserves. Since November, China has purchased 144 tonnes of gold, bringing the central bank’s total stocks to around 2,092 tonnes.

Goehring & Rozencwajg expect gold to break through $2,100 before the end of the year, which will benefit gold producers like Luca Mining (TSXV:LUCA) (OTCQX:LUCMF), a Canadian based publicly traded mining company operating in Mexico.

The Rising Star of Mexican Mining

Luca Mining has two high-quality Mexican gold, silver, and base metal mining assets with a total resource of 2.2 million gold equivalent ounces (M&I). The Tahuehueto Gold Mine, which is on track to deliver initial production by June 30, 2023, and the Campo Morado mine, which has a compliant 16.6 million tonne Measured & Indicated (M&I) resource grading 4.01% zinc, 0.80% copper, 0.93% lead, 123 g/t silver, and 1.70 g/t gold.

On June 28, Luca Mining announced that its Tahuehueto Gold project has achieved production capacity of 500 tonnes per day (tpd) on time and on budget, making the mine profitable at current metal prices. This major milestone allows the company to move toward 1,000 tpd production capacity at Tahuehueto which is expected to be completed by the end of 2023.

The final stage of 1,000 tpd production offers a net present value (NPV) of US$131.8 million, an IRR or 65% and an average all-in-sustaining cost (AISC) of US$855 per ounce gold equivalent over the 10 year mine life.

Recent production grades have averaged 2.47 grams per tonne (g/t) gold (Au), 31.2 g/t silver (Ag), 1.23% lead (Pb), and 2.92% zinc (Zn). The lead concentrate achieved an average content of 51.2 g/t Au and 648.5 g/t Ag and the zinc concentrate achieved an average content of 45.2 % Zn, all of which was within 5% of the plan. 

Luca Mining also announced the closing of an oversubscribed private placement for total proceeds of C$24.9 million.

Earlier this month, the company also shared an update on metallurgical test work to improve precious metal recoveries at its Campo Morado Mine in Guerrero, Mexico.

Pilot-scale testing of Jameson Cell technology at Campo Morado at micro-fine grind levels demonstrates the ability to significantly improve recoveries and concentrate grades in both the copper and lead streams, as well as moderate improvements in the zinc stream and potential cost savings.

Click here for more information about Luca Mining (TSXV:LUCA) (OTCQX:LUCMF).

Featured Image @ FreePik

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6) This document contains forward-looking information and forward-looking statements, within the meaning of applicable Canadian securities legislation, (collectively, “forward-looking statements”), which reflect management’s expectations regarding Luca Mining Corp.’s future growth, future business plans and opportunities, expected activities, and other statements about future events, results or performance. Wherever possible, words such as “predicts”, “projects”, “targets”, “plans”, “expects”, “does not expect”, “budget”, “scheduled”, “estimates”, “forecasts”, “anticipate” or “does not anticipate”, “believe”, “intend” and similar expressions or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative or grammatical variation thereof or other variations thereof, or comparable terminology have been used to identify forward-looking statements. These forward-looking statements include, among other things, statements relating to: (a) revenue generating potential with respect to Luca Mining Corp.’s industry; (b) market opportunity; (c) Luca Mining Corp.’s business plans and strategies; (d) services that Luca Mining Corp. intends to offer; (e) Luca Mining Corp.’s milestone projections and targets; (f) Luca Mining Corp.’s expectations regarding receipt of approval for regulatory applications; (g) Luca Mining Corp.’s intentions to expand into other jurisdictions including the timeline expectations relating to those expansion plans; and (h) Luca Mining Corp.’s expectations with regarding its ability to deliver shareholder value. Forward-looking statements are not a guarantee of future performance and are based upon a number of estimates and assumptions of management in light of management’s experience and perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances, as of the date of this document including, without limitation, assumptions about: (a) the ability to raise any necessary additional capital on reasonable terms to execute Luca Mining Corp.’s business plan; (b) that general business and economic conditions will not change in a material adverse manner; (c) Luca Mining Corp.’s ability to procure equipment and operating supplies in sufficient quantities and on a timely basis; (d) the accuracy of budgeted costs and expenditures; (e) Luca Mining Corp.’s ability to attract and retain skilled personnel; (f) political and regulatory stability; (g) the receipt of governmental, regulatory and third-party approvals, licenses and permits on favorable terms; (h) changes in applicable legislation; (i) stability in financial and capital markets; and (j) expectations regarding the level of disruption to as a result of CV-19. Such forward-looking information involves a variety of known and unknown risks, uncertainties and other factors which may cause the actual plans, intentions, activities, results, performance or achievements of Luca Mining Corp. to be materially different from any future plans, intentions, activities, results, performance or achievements expressed or implied by such forward-looking statements. Such risks include, without limitation: (a) Luca Mining Corp.’s operations could be adversely affected by possible future government legislation, policies and controls or by changes in applicable laws and regulations; (b) public health crises such as CV-19 may adversely impact Luca Mining Corp.’s business; (c) the volatility of global capital markets; (d) political instability and changes to the regulations governing Luca Mining Corp.’s business operations (e) Luca Mining Corp. may be unable to implement its growth strategy; and (f) increased competition.

Except as required by law, Luca Mining Corp. undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future event or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. Neither does Luca Mining Corp. nor any of its representatives make any representation or warranty, express or implied, as to the accuracy, sufficiency or completeness of the information in this document. Neither Luca Mining Corp. nor any of its representatives shall have any liability whatsoever, under contract, tort, trust or otherwise, to you or any person resulting from the use of the information in this document by you or any of your representatives or for omissions from the information in this document.

7) Any graphs, tables or other information demonstrating the historical performance or current or historical attributes of Luca Mining Corp. or any other entity contained in this document are intended only to illustrate historical performance or current or historical attributes of Luca Mining Corp. or such entities and are not necessarily indicative of future performance of Luca Mining Corp. or such entities.

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