PDAC 2016: A day with the gold and silver sector

The PDAC International Convention Trade Show & Investors Exchange is the world’s leading Convention for people, companies and organizations in, or connected with, mineral exploration. It’s the occasion to meet over 1,000 exhibitors and 20,000 attendees from over 100 countries. My interest being the gold and silver sector I use it to connect and get the pulse of the gold and silver mining sector. However, the investor exhibit attracts not only gold and silver mining companies but also gold refiners like Italpreziosi, gold and silver retailers like Sprott Money, mining companies like McEwen Mining, the new gold exchange company BitGold and gold and silver mining forum organiser Denver Gold Group.

During the day I had the chance to talk with several players in the gold and silver sector. It’s been a great pleasure to see there the Denver Gold Group who organises two excellent annual conferences for the gold and silver mining industry in the US and Europe. This year’s forums will take place again in April in Zürich and Colorado Springs in September.

IMG_0204Tim Wood and Laurie Barr, Denver Gold Group

After talking with several gold and silver mining companies I got the feeling that the mood was still cautious despite the recent breakout of both gold and silver prices after a long correction. Gold but also silver performed very well since the beginning of 2016 (gold 15%, silver 12%) and that is not just in US dollar terms but in all fiat currencies of advanced as well as developing countries as you can see in the charts bellow.

Gold Spot 2

Gold Performance

Gold XAU

In a recent interview on BNN, Rob McEwen, founder of Goldcorp and now chairman of McEwen Mining, raised some concerns about recent use of streaming. Streaming provides upfront financing to gold mining companies that are looking for capital and in return, receive the right to a percentage of the gold produced from a mine, for the life of the mine. However, as the price of gold increases, streaming could have some of the same negative consequences on profits as hedging, done in the 90s, had during the recent gold bull market. Thanks to a great marketing initiative several visitors, including me, had the opportunity to hold and be photographed with a 12.5 Kg (400 oz) gold bar.

Dan at McEwenDan Popescu and a half a million-dollar gold bar at McEwen Mining stand

Now with such a major global media covered event you have to expect also some disruption. An environmental group did a peaceful protest in the middle of the expedition hall. Environmental damage is also a concern for the industry and major efforts for clean mining are being done. I read recently of a new method of extracting gold without the use of dangerous materials. However recent accidents still weight heavily on the mining industry. Romania and Greece are still postponing the opening of new mines. Actually, I should call them old mines since the Rosia Montana mine in Romania is maybe more than 3000 years old.

IMG_0216Daniela Popescu, P.Eng at the Barrick stand

I also had the pleasure to meet personally Josh Crumb, Co-founder and Chief Strategy Officer of BitGold. I have to admit I was at the start of the company a bit sceptical on the project, mostly because of my misunderstanding of their idea. I have since been impressed by their project especially since I understood better what it is. The idea of combining the ATM payment system and gold is what I like the most in this project. The possibility to use easily and universally gold as money again is what I think is the key to their success. Technology is great but if not easy to use by everybody including non-technology gigs it will not succeed. Simplicity and ease of use is the secret to a successful medium of exchange. As Jim Grant, Grant’s Interest Rate Observer, says it perfectly, “you don’t need a Ph.D. to understand gold”.

IMG_0195Josh Crumb, Co-founder & Chief Strategy Officer, BitGold

My father an engineer and air force pilot always told me when I was building radios, TVs, cars, planes, PCs to keep it simple and user friendly or I will be the only one to use it no matter how great it is. BitGold is definitely a company and an idea to follow closely in the future.

IMG_0201Dan Popescu learning about BitGold and GoldMoney

I also met and got to speak with Benedetta Giuliattini from Italpreziosi, an Italian company in the gold refining and trading sector. Refining is another important sector of the gold and silver sector in which the Swiss and more specifically the Italian speaking canton of Ticino dominates. However, you must know that Italy has a very long history and expertise in working with gold since the Etruscans (today Tuscany, Lazio, and Umbria) more than 2500 years ago.

Etruscan GoldEtruscan pendant with swastika symbols from Bolsena, Italy, 700-650 BC. Louvre Museum

Etruscan gold jewelry flourished due to a very affluent trading system which had evolved during that time. The Etruscans did not invent their decorative techniques. The Mediterranean influences had brought such techniques as granulation. Syro-Phoenician jewellers settled in southern Etruria and taught local apprentices the art of gold granulation and filigree.

Today refiners create different products of the purest gold possible of four nines (9999) and even five nines (99999). The Swiss especially have developed and achieved the best knowhow in using modern technology to purify gold to the highest degree possible. Their craftsmanship is unmatched. Demand for gold coins and bars from the 1 gram to the 1 Kg increased substantially and worldwide recently and that even during the gold price bear market that started in 2013. Some Swiss refiners told me recently they just can’t satisfy demand.

Italpreziosi OroItalpreziosi 1 kilogram bars

I found the mood of both gold and silver investors and suppliers from miners to retailers at PDAC 2016 upbeat but not euphoric. People were relived to see the gold price up but not sure yet if the pain is finally over. This is certainly not the sentiment you see at a top but rather at the bottom of a market and the beginning of an uptrend. Overall it was a great event and well attended both by exponents and the public.