I had a pretty interesting conversation today with Peter George an American broker about currency, interest rates, oil, and precious metals. He pointed me to the OIL/Gold ratio shown below:

Note that the ratio is 23 today.

My take:
If you look at the oil Rig Count, that shows the amount of rigs that are currently active in the USA and then think through that the rig count decline is mostly due to rigs being pulled off tight oil – shale oil fields because of the decline in prices making these fields less economic then this may point towards an emerging increase in oil prices in both US$ and Gold as (over) supply comes off.

Baker Hughes reported another significant decline in the rig count for the week ending on February 6. The oil services firm reported that 87 rigs were pulled out of operations last week, which followed a record-breaking 94 rig decline the week before. The number of active rigs is now at its lowest level since 2011, and is down 29 percent since October.

RC drilling of the Duckhead Main Lode at the base of the open pit has intersected significant gold mineralisation extending beneath the current open pit limits. Gold results include;
FVM514 28 m @ 266.8 g/t including 1 m @ 6,844.6 g/t
FVM515 53 m @ 47.4 g/t including 1 m @ 1,218.5 g/t
FVM511 16 m @ 57.7 g/t including 7 m @ 126.9 g/t
FVM510 23 m @ 36.9 g/t including 4 m @ 197.6 g/t
FVM508 14 m @ 25.9 g/t including 1 m @ 294.5 g/t

A potential cutback at Duckhead is being evaluated to extract 35-45,000 ounces of gold and is likely to be completed in the 2015 dry season between July and December. Importantly, the current guidance of ~180,000 ounce production in 2015 does not include a potential cutback on the Duckhead Main Lode.

• Systematic auger drilling over the Duckhead Mine Corridor has discovered a significant new near surface gold anomaly at Goosebumps located 500 m east of Duckhead, where auger gold results of up to 1.4 g/t bottom of hole and up to 13.5 g/t is present in a subsequently re-assayed iron ore diamond hole.

“It has been decided by the Government of India to withdraw the 20:80 scheme and restrictions placed on import of gold. Accordingly, all instructions issued about the scheme from time to time starting with A.P. (DIR Series) Circular No.25 dated August 14, 2013 stand withdrawn with immediate effect,” the bank said.

“India’s so-called 80:20 gold import rule was introduced in 2013. The restriction required traders to export 20 percent of all gold imported into India in an attempt to slow gold imports. That change sparked a rise in gold-smuggling activities, forcing gold consumers to resort to various extreme measures.”

Silver is such a little market that not much capital returning can make a huge price difference. As of the end of last month, the S&P 500 stocks were collectively worth $18,518.7b. That is 3139x larger than meager SLV!

If only one-tenth of one percent of stock market capital started chasing the next silver upleg, that $18.5b would drive silver stratospheric. But it’s not only stock traders who are going to be buying silver via SLV shares, futures speculators will join them. And like SLV’s holdings, specs’ total long-side silver futures exposure has already been enjoying a strong contrary uptrend in 2014! This is despite parallel record shorting.

Read full article: http://seekingalpha.com/article/2596745-bullish-silver-stealth-buying-by-professional-investors-continues

https://www.silverinstitute.org/site/2014/10/22/total-silver-investment-may-increase-by-one-billion-ounces-over-the-next-decade/

When investors examine the gold withdrawal numbers coming out of China they see that the Chinese are certainly not abandoning gold as the price falls, but are instead, increasing their gold buying. That is a positive sign for gold investors as it shows that there is a real physical demand floor under the gold price at current levels – that is despite weak demand from Western investors.

The second point for investors to ponder is that gold production growth is expected to decline as Chinese miners have a more difficult time producing as much of the easy fruit has already been picked. That is a trend we’ve been seeing all over the world and it shows that future demand for gold will have to be met from existing above-ground stocks – a positive development for investors that have long-term horizons.

Read the full article

Silver had a physical supply deficit of 103 million ounces last year.

Physical supply deficits in silver cannot persist in the long-term.

Silver is an investment that will require patience.

Read article

ZNC Presentation

Highlights

Kavaklitepe Gold Project, Turkey (ZNC earning 70%)

• Recent (2013) grass roots gold discovery in Tethyan Belt – (“elephant” terrain)

• Large, virtually drill-ready, high order gold soil / IP anomaly >1km strike  Trenching and drilling (permitting in progress)

Develin Creek Copper-Zinc-Silver-Gold, QLD (ZNC initial 51%, option for 100%)

• 3 known VHMS massive sulphide deposits with JORC resources, 50km of strike of host volcanics

• 2011 drilling outside resource; 13.2 metres @ 3.3% copper, 4.0% zinc, 30g/t silver and 0.4g/t gold

Drilling to extend known deposits, geophysics, geochemistry to detect new targets

Mt Minnie Gold Project, WA (ZNC 100%)

• 75km strike of major regional fault. Alteration, geochemistry, rock samples 64.2 and 21.5 g/t Au

Initial field assessment to follow-up and extend known prospects

Earaheedy Manganese (and Pb,Zn) Project, WA (ZNC 100%)

• New manganese province discovered by ZNC, potential DSO drill intersections (+40%Mn)

• Target area doubled with new acquisitions (RIO tenements, Blue Cliffs).

Mapping, sampling, drilling new ground, beneficiation tests, assess geophysical techniques

Mt Alexander Iron Ore, WA (ZNC 100%)

• JORC magnetite Resource 535 Mt @ 30.0% Fe close to West Pilbara coast, 50% of target untested.

Seeking development partner/ buyer for project

Other
Divesting Indonesian coal project – Conditional offer received, US$500K +royalty US$1/t

Evaluating new project opportunities (acquire at bottom of the cycle)

More about Zenith Minerals Ltd