JPMorgan: Equities Cut, Invest More in Gold

jpmorgan says cut equities and buy more gold

The US debt ceiling scare, rising recession risks and Federal Reserve hawks are just a handful of reasons why JPMorgan Chase is advising investors to cut exposure to stocks and hold more gold and cash.

With the macro environment taking on more and more risk, JPMorgan strategists are trimming exposure to US equities and increasing its cash holdings by 2%. The multinational bank is also shifting away from energy and moving full steam ahead towards gold.

JPMorgan’s chief global markets strategist Marko Kolanovic said that the risk-reward for equities is poor due to a number of factors including elevated recession risk, stretched valuations, high interest rates and tightening liquidity and pointed to gold's safe-haven properties as a hedge against these risks.

Of course, JPMorgan isn’t the only bank that’s bullish on gold. According to a new survey from the World Gold Council, up to 24% of central banks were looking to raise gold holdings this year.

In 2022, net gold purchases by central banks totaled 1,135 tonnes, sending gold buying levels to the highest level in 55 years. Since the beginning of 2023, the big banks are following the same trend, accumulating gold at the fastest pace on record.

Rising gold prices bodes well for the producers of the yellow metal, like Luca Mining (TSXV:LUCA) (OTCQX:LUCMF), a Canadian mining company bringing its second mine into commercial production this year.

A Junior Resource Company With a Unique Opportunity for Rapid Growth

Luca Mining holds two high-quality Mexican gold, silver and base metal mining projects with a combined 2.2 million gold equivalent ounce Measured & Indicated (M&I) resource.

The Campo Morado mine, a polymetallic underground operation with a Measured & Indicated (M&I) resource of 16.6 million tons grading 4.01% zinc, 0.80% copper, 0.93% lead, 123 g/t silver and 1.70 g/t gold, and the Tahuehueto Gold project, which is on track to deliver initial production by June 30, 2023.

On June 15, the company announced that pilot-scale testing of Jameson Cell technology at Campo Morado shows promise of improving base and precious metals recoveries and concentrate grades. A major advantage of Jameson Cell technology is the cells are smaller than conventional flotation cells and have no moving parts, meaning they can be easily maintained online without any shutdowns.

Luca Mining has also been making significant progress at its Tahuehueto gold mine. Last month, the company announced a detailed two step plan in achieving 1,000 tonnes per day (tpd) commercial production at Tahuehueto, with the first stage of 500 tpd projected to be completed by the end of June.

Along with construction, Tahuehueto is undergoing pre-production, allowing the team to continue fine-tuning systems and plant performance ahead of full-scale production. So far, the average lead recovery to concentrate has been 79.8%, with a composition of 29% lead, 50.5 g/t gold, and 584 g/t silver on average. To date, the average zinc recovery in May is 59.7%, with 47% zinc, 12.6 g/t gold, and 144 g/t silver. According to the 2022 PFS, total gold and silver recoveries are roughly 86% (average for April 2023).

The company expects the final stage of 1,000 tpd production at the Tahuehueto Gold project to be finished by the end of 2023.

Luca Mining also bolstered its board of directors with the addition of Dr. Neil O’Brien, a consulting economic geologist and former mining executive with three decades of experience including Board of Director roles in public and private mineral exploration companies, and Phil Brumit Sr., a mining executive with over 40 years of experience in property evaluation, engineering, project management, construction, start-up and operations.

Dr O’Brien previously served as SVP exploration and new business development for Lundin Mining, while Brumit served as former executive VP projects & operations at Josemaria Resources, president and managing director at Minera Candelaria, a subsidiary of Lundin Mining, president of Freeport-McMoRan's African division and senior advisor, North American manager of operations for Newmont and general manager of operations for PT Newmont Nusa Tenggara's Batu Hijau mine in Indonesia. Image Source: Freepik.