Miner calls out financial risk of mythical Greek proportions

Cerberus, the monstrous three headed dog which guarded the classical Greek underworld, was active today in the form of geopolitical instability, sovereign debt and inflation. Evolution Mining CEO Jake Klein called out the trilogy at this week’s AGM. Cerberus, the monstrous three headed dog which guarded the Classical Greek underworld He was not comfortable with current conditions which have seen the precious metal’s Australian spot price increase by 14 percent this calendar year he told shareholders. Main Image: Mount Rawdon Open Pit 75km south west of Bundaberg Geopolitical tensions with the potential to cause ructions reminiscent of last century were herding investors towards safe assets, he said. He cited the on-going war in Ukraine and the ‘major new conflict in the middle east’, as having ‘very significant social, political and economic consequences around the world.’ “I think it’s fair to say this is one of the most seminal geopolitical moments in our lifetime,” he said. “A century ago, the global order was being redefined following World War One and similarly today, geopolitical changes have the potential to have ongoing, material repercussions for many years to come.” Related: Evolution bosses quizzed on Glencore opportunities Debt levels of historic proportions added fuel to financial risk, Mr Klein said. Jake Klein - CEO Evolution Mining “… and here our focus should be firmly on the United States. Just before World War Two, US debt was around US$40 billion. Today, it is a staggering US$33 trillion. That’s 800 times higher and increasing at US$100 million an hour. “To put this into context, it effectively equates to a debt of over US$200,000 for every taxpayer in the country. “Looking all the way back to 1970, the US dollar spot gold price has shown a remarkable correlation to the trajectory of US debt, a trend which now seems very predictable and intractable. “At the same time, China has emerged as one of the world’s largest investors in US treasuries issued to fund consistent government deficits, while also becoming the world’s largest creditor to low and middle income countries.” Mr Klein named inflation as the third threat and said traditional solutions were having reduced impact. “We have seen consecutive interest rate rises from the world’s central banks as they seek to return inflation to target levels – in Australia there has already been thirteen increases to date. “While the ‘higher-for-longer’ interest rate approach has led to a modest reduction in the rate of inflation in most developed countries, many are still above their targeted range and inflation remains an ongoing challenge. “In this unsettled macro environment, the Australian dollar spot gold price has increased approximately 14 percent since the beginning of the year to an all-time high of over $3,000 an ounce. “The major contributor to this has been central bank buying, which was 14 percent higher in the first ten months of 2023 compared to the same period last year, as well as a falling Australian dollar. “As a Company, we are not comfortable with the risk trajectory that is contributing to a higher gold price but acknowledge investor preference for safe-haven assets in times of uncertainty in global markets. “Sadly, I don’t see any scenario where this normalises in the foreseeable future.” Evolution Mining is an active mid-tier Queensland miner with assets including the Ernest Henry and Mount Rawdon operations.

Miner calls out financial risk of mythical Greek proportions

Industry Queensland

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