AEM. Looking for Gold miners? Agnico Eagle Mines is your pick!Agnico Eagle Mines ( NYSE:AEM ) is the gold mining company that I picked as a long-term investment over many other miners such as Equinox and Barrick Gold. I picked it based on which countries have USD Swap Lines , an idea explained by Katusa Research in one of his videos on YouTube. I will explain it briefly here. A USD swap line is an open channel between the US Federal Reserve and certain central banks such that the bank can borrow USD at any time almost instantly up to a certain limit (such as $100 billion dollars). This provides the liquidity necessary for those central banks to settle their balance sheets, loans, settle large money transfers and currency conversions, and do other central-bank-y things that you can read online. In practice, what this means is that it is much cheaper and much more reliable for, say, an American gold mining company to realize earnings from its oversees mining operations if those mines were located in Canada or Mexico (USD Swap line countries) rather than if the mines were located in Turkey for example.
You can find here the list of worldwide central banks that have USD Swap Lines, or I can save you time and list them here:
Before CV-19, the US Federal Reserve had standing USD liquidity swap lines with the central banks of the following countries with a ceiling of $100 billion each:
Canada.
England.
Japan.
European Union.
Switzerland.
And on March 20, 2020, the Federal Reserve extended this arrangement to nine more central banks:
$60 billion for each of:
Singapore.
Australia.
Brazil.
Denmark.
South Korea.
Mexico.
and $30 billion to each of:
New Zealand.
Norway.
Sweden.
As it happens, Agnico Eagle Mines has almost all of its revenue coming from mines located in USD Swap Line countries as opposed to Barrick gold which relies on mines located in Argentina, Chile, Cote d’Ivoire, the Congo, Peru, Saudi Arabia, Tanzania, and other similarly Non-USD-swap-line countries. That alone puts me at more ease of mind as an investor. And I recommend that you weigh in this element in all other kinds of investments.
That's it for fundamental analysis. From the technical analysis side, AEM has been struggling with the ascending trend line. I believe this will be long-time support once we settle above it. I see two paths for price which I determined by two things:
1. The long curve which you can see in the following chart:
2. The Linear time cycle of 272 days, which nicely aligned many momentum shifts. We can use as an approximate indicator next to other clues later when we're approaching the next time zone and are looking for signs of reversal or momentum.
The rest is in the chart. I drew two paths and I expect the lowest point to be the support at $55.60. I am more confident in the higher price path that takes us to $175 by April 2022.
Conclusion : This is a long-term investment for those that chose to invest in gold miners. I believe AEM is a solid pick and is set for growth.
