Sponsor: Affinity Metals (TSX-V: AFF) a Canadian mineral exploration company building a strong portfolio of mineral projects in North America. The Corporation’s flagship property is the Drill ready Regal Property near Revelstoke, BC. Recent sampling encountered bonanza grade silver, zinc, and lead with many samples reaching assay over-limits. Further assaying of over-limits has been initiated, results will be reported once received. Click Here for More Info
SPONSOR: Labrador Gold – Two successful gold explorers lead the way in the Labrador gold rush targeting the under-explored gold potential of the province. Exploration has already outlined district scale gold on two projects, including over a 40km strike length of the Florence Lake greenstone belt, one of two greenstone belts covered by the Hopedale Project. Click Here for More Info
Slovakia’s former prime minister called on the country’s parliament to repatriate its gold from the U.K., stating that Britain can’t be trusted with the yellow metal.
“You can hardly trust even the closest allies after the Munich Agreement,†former Slovak prime minister Robert Fico told reporters last week. “I guarantee that if something happens, we won’t see a single gram of this gold. Let’s do it as quickly as possible.â€
In his comment, Fico was referring to a 1938 pact reached by France, the U.K., Italy and Germany, which permitted Adolf Hitler to annex a part of Czechoslovakia.
Fico, who is the leader of the country’s biggest party the socially-conservative Smer. Fico wants to hold a special parliamentary session on the issue, citing uncertainties around Brexit and global economic slowdown.
Slovakia’s gold reserves consist of 31.7 metric tons of gold that are now worth around $1.4 billion, according to Slovakia’s central bank spokesman Peter Majer.
A week after Fico’s gold repatriation comments, the former PM was charged with racism after he agreed with a racist comment made by a far-right former lawmaker, who lost his seat in parliament earlier this year, local police said on Thursday.
“Milan Mazurek said what almost the whole nation thinks and if you execute someone for truth, you make him a national hero,†Fico said in the message published on his official Facebook page in September.
Slovakia’s talk of gold repatriation comes at the same time as Poland chose to bring home 100 tons of its gold from the Bank of England’s storage in London.
“The gold symbolizes the strength of the country,†Poland’s central bank Governor Adam Glapinski told reporters as he announced the move last week.
Poland’s precious metals will now be stored in the central bank’s treasury, National Bank of Poland (NBP) noted.
Ken Konkin Discusses the Goldstorm Deposit at Treaty Creek (including recent outstanding drill results like 0.725 g/t over 838.5m), it’s Potential, and 2020 Development Plans
https://www.commodity-tv.com/play/tudor-gold-the-next-major-discovery-in-the-golden-triangle/
About American Creek
American Creek is a Canadian junior mineral exploration company with a strong portfolio of gold and silver properties in British Columbia.
Three of those properties are located in the prolific “Golden Triangleâ€; the Treaty Creek and Electrum joint venture projects with Tudor Gold/Walter Storm as well as the 100% owned past producing Dunwell Mine.
The Treaty Creek Project is a Joint Venture with Tudor Gold owning 60% and acting as operator. American Creek and Teuton Resources each have 20% interests in the project. American Creek and Teuton are both fully carried until such time as a Production Notice is issued, at which time they are required to contribute their respective 20% share of development costs. Until such time, Tudor is required to fund all exploration and development costs while both American Creek and Teuton have “free ridesâ€.
More information about the Treaty Creek Project can be found here: https://americancreek.com/index.php/projects/treaty-creek/home
A drill program is also ongoing on American Creek’s 100% owned Dunwell Mine property located near Stewart. More information can be found here: https://americancreek.com/index.php/projects/dunwell-mine
The Corporation also holds the Gold Hill, Austruck-Bonanza, Ample Goldmax, Silver Side, and Glitter King properties located in other prospective areas of the province.
For further information please contact Kelvin Burton at: Phone: 403 752-4040 or Email: [email protected]. Information relating to the Corporation is available on its website at www.americancreek.com.
Hub on Agoracom
FULL DISCLOSURE: American Creek is an advertising client of AGORA Internet Relations Corp.
Sponsor: Affinity Metals (TSX-V: AFF) a Canadian mineral exploration company building a strong portfolio of mineral projects in North America. The Corporation’s flagship property is the Drill ready Regal Property near Revelstoke, BC. Recent sampling encountered bonanza grade silver, zinc, and lead with many samples reaching assay over-limits. Further assaying of over-limits has been initiated, results will be reported once received. Click Here for More Info
Gold is all that nationalist leaders in Europe’s east can talk about these days.
Just this week, Poland’s government touted its economic might after completing the repatriation of 100 tons of the metal. Over in Hungary, anti-immigrant Prime Minister Viktor Orban has been ramping up holdings of the safe-haven asset to boost the security of his reserves.
The gold rush mirrors steps by Russia and China to diversify reserves exceeding $3 trillion away from the dollar amid flaring geopolitical tensions with the U.S. Motivations in Europe’s ex-communist wing, however, can vary.
Take the latest example. Former Slovak Premier Robert Fico, who has a shot at returning to power, urges parliament to compel the central bank into bringing home gold stocks stored in the U.K.
The reason? Sometimes your international partners can betray you, Fico said, citing a 1938 pact by France, Britain, Italy and Germany allowing Adolf Hitler to annex a chunk what was then Czechoslovakia, and — more recently — the Bank of England’s refusal to return Venezuela’s gold stock over political differences.
“You can hardly trust even the closest allies after the Munich Agreement,†Fico told reporters. “I guarantee that if something happens, we won’t see a single gram of this gold. Let’s do it as quickly as possible.â€
His comments came despite the U.K. being one of Slovakia’s closest allies after the Soviet empire crumbled, helping ease the path to European Union and NATO. Fico said Brexit and the risk of a global economic crisis put Slovak gold stored in Britain in a dangerous situation.
The gold Poland brought back also came from the U.K., though there was no questioning of Britain’s reliability by central bank Governor Adam Glapinski.
Instead, he said he wanted to demonstrate the strength of his nation’s $586 billion economy — the largest in the EU’s east. Poland has doubled its gold holdings in the past two years and now has the region’s biggest stockpile.
Hungary, though, has been an active buyer too. Gold reserves surged 10-fold last year, setting the clamor for the metal in the countries around it in motion.
Serbia’s strongman leader Aleksandar Vucic took note, ordering the central bank to boost reserves and prompting the purchase of nine tons in October. Vucic said last week that more should be bought because “we see in which direction the crisis in the world is moving.â€
The biggest nation to emerge from the breakup of Yugoslavia still keeps some of its gold abroad, the central bank said by email. The region is buying more of the metal because of global uncertainty over trade and politics, Brexit and low interest rates, it said.
Romania had also sought to relocate some of its gold reserves from the U.K., but those plans were put on hold when the government behind them was ousted in October.
For the no-nonsense leaders that have come to dominate eastern Europe, the main benefit may be the message to voters that hefty holdings of the precious metal conveys.
“Gold is a symbol,†said Vuk Vukovic, a political economist in Zagreb. “When states purchase it, people everywhere see it as a sign of economic sovereignty.â€
By Andrea Dudik and Radoslav Tomek
SPONSOR: Labrador Gold – Two successful gold explorers lead the way in the Labrador gold rush targeting the under-explored gold potential of the province. Exploration has already outlined district scale gold on two projects, including over a 40km strike length of the Florence Lake greenstone belt, one of two greenstone belts covered by the Hopedale Project. Click Here for More Info
It’s that time of year again, tax selling in North America which leads into a seasonally strong period there after for mining stocks. Today i’ll focus on strong potential set ups that are in a stage one base, looking to move higher. Stage analysis example for those new to that approach.
Historical data supports a strong move higher in Gold / Silver Miners in late Q4 into Q1.
Both $GDX mainly Gold miners and $SILJ both since 2016 bottoms, has lead into strong periods for the months ahead.
Looking at the big picture first in GDX. Built a base since the 2013 break down, which was retest in 2016 and mid 2018.
Current situation GDX in a large bull flag, building energy in a possible attempt to retest 31usd GDX, and if it can break, not much above resistance to 40usd GDX.
$SIL Silver Miners ETF Monthly showing similar though lagging price action. Miners have lead Silver (see below). If 32-33usd is taken out, a move into the 50usd+ level could come quick.
Gold broke out this year of a long term base, whilst Silver has failed to take out 18.75ish on a weekly close thus far in 2019. Gold moves has been strong, and after the peak at 1560usd, Gold miners has continued to act well, indicating the consolidation in Gold and a possibly upwards move is incoming. Watching to see if Gold will follow the miners and break a flag to retest 1560usd.
Silver 18.75 weekly close and we will be looking at 20+ Silver. 2020 targets would show 24-26usd very possible thereafter. The way stocks like $AG $PAAS have acted, could be a leading indicator.
In no particular order, charts that are leading the sector, and have strong bases and look set to push higher. I may miss a few, but these set ups look solid. The longer the base, the higher in space as they say.
$CNL #TSX Has broken out on shorter time frames. Up near 180% in 2019. Looking at the big picture in a large multi year base.
$TGZ #TSX Looking like a nice power, ready to break higher.
$AUY #TSX after a near 100% rise in 2019, has been basing despite Gold pull backs. 3.80$ break out and could be ready to retest $6 2016 high.
$PRU #ASX #TSX Had an excellent 2019, rising from mid 30c to high of 95c AUD. 250k oz pa looking to double production to 500k+ in Africa. Retesting 2013 levels, a break above 95c and nothing but air to 1.50$.
$KNT #TSX retesting all time highs, has been the best performing producer, a killer move. Targets from brokers i have seen are up to 4.75$.
$SILV #TSX continues its uptrend and upward trajectory
$WDO #TSX Like Silver Crest, powers higher into new highs..
$SSRM #NYSE Solid numbers and growth. Base nearly complete and price action starts turning higher.
$EGO #TSX up 200% in 2019, building a nice flag here
$CDE #TSX Inverse H&S break out after earnings, pulling in for a possible retest, completion of the move is 8.8$usd or 50% + circa.
$AG #NYSE Another power base from First Majestic Silver .. If Silver runs to 24-26usd, perhaps this will outperform. The fact that Silver peaked at 19.5usd and back to 16.50ish, AG held it’s own. Bullish price action.
$PAAS #NYSE up 100% YTD, another strong Silver runner, making 52 week highs and showing excellent relative strength. Cheap on a EPS basis.
$BTO #TSX B2Gold building a power base here too..
$WPM #NYSE Another strong Silver stock larger C+H in play.
As producers have been the main beneficiary of this rally, i do like mid cap development plays with solid management teams. The valuation gap is one of the largest on record.
$GDX / $GDXJ ratio which has been in an uptrend for nearly a decade, favouring large producers, looks to be testing break trend line. A break down and we could see money moving to the development and exploration plays that thus far have lagged.
Stocks to add to your watchlist, and ones i like. Charts don’t look pretty on some, but any rotation, and they will rally hard.
$Rio.v Rio2 5moz Chilean development play run by Legendary Alex Black. Potential double bottom.
$MZZ.ax Matador on the ASX is my favourite developer. Down the road from $MOZ in Canada, trading at near 1/10th of the valuation, will be producing before MOZ and a profile of 100kpa. Broker targets of 70c, still in a stage one base.
$PRB Probe run by ex Barrick, with ahigh grade 2moz in Canada.
$AXU #Silver High grade Silver developer
$MAG Silver Tier one Silver Miner, fully funded to development
$NHK Nighthawk Solid LT exploration play, good buying in low 30s
$MKO Mako up 110% YTD, fully funded to production as well as finding and expanding resource with very high grade hits.
$ADT Needs no introduction up 700% since IPO in 2018. One of my larger holdings, continues it’s solid uptrend, much more left in the tank.
As you can see, the sector is strong and the set ups moving forward look favorable in this period especially using historical data. Judging on the price action, we continue to move higher into 2020. Have a good Christmas..
SPONSOR: Advance Gold AAX.v – Advance Gold controls 100% interest in the Tabasquena Silver Mine in Zacatecas, Mexico. A cluster of 30 Epithermal veins have been discovered, with recent emphasis on exploring a large anomaly to drill. Advance also owns 13.5% of the Kakamega JV attached to Barrick Takeover Offer for Acacia Mining. Click Here For More Info
S&P Global Market Intelligence’s annual Gold Discoveries report found that gold exploration budgets peaked in 2012, but remain at historically high levels.
Explorers have allocated US$54.3 billion to gold exploration over the past decade, 60% higher than the $32.2 billion spent over the preceding 18 years.
Despite the effort, just 215.5 million ounces has been discovered in 41 discoveries over the past decade, compared with 1.72 billion ounces in 222 discoveries in the preceding 18-year period.
Over half of that amount is contained in just 10 discoveries, with Zhaojin Mining Industry Co’s 16.4Moz Haiyu deposit in China the largest.
Other deposits in the top 10 including Barrick Gold’s Goldrush, White Rivers Exploration/Harmony Gold’s JV, SolGold’s Cascabel and Cardinal Gold’s Namdini.
S&P says that even after adjusting for more recently identified deposits that might eventually surpass its threshold for a major discovery, and for major discoveries with potential to expand, it forecasts that the gold in major discoveries might only increase to about 363Moz over the next decade.
S&P Metals & Mining senior research analyst Kevin Murphy said previous research into gold lead times showed that it took about 20 years for an asset to advance from early exploration to production.
“This timeline implies that the reduced discovery rates of the last decade will limit the pool of projects that could come online in 15 to 20 years,” he said.
“Unless discovery rates begin an upswing in the near future, there could be a lack of quality assets available for development in the longer term.
“The declining discovery rate shows the importance of continuing exploration and funding companies responsible for exploration to maintain a healthy future pipeline of assets available for development.”
Majors Barrick and Newcrest Mining reported declines in reserves this year.
Barrick’s reserves dropped to 64.4Moz from 86Moz, mainly due to divestments and reclassification, while Newcrest’s dropped by 3Moz to 62Moz.
Newmont Mining’s remained unchanged at 68.5Moz, though the average grade fell by 5%.
Newmont has increased its 2018 exploration budget to US$350-400 million from $200 million last year, Barrick is boosting its spend to $185-225 million from $149 million, and Newcrest is spending $70-90 million in FY18, up from $58 million.
SOURCE: https://www.mining-journal.com/research/news/1337480/gold-discovery-rates-continue-to-slide
Kamloops, British Columbia–(Newsfile Corp. – November 27, 2019) – Advance Gold Corp. (TSXV: AAX) (“Advance Gold” or “the Company”) is pleased to announce drilling has started to test the large chargeability anomaly identified in recent 3D Induced Polarization (IP) geophysical surveys on its Tabasquena project in Zacatecas, Mexico. Two phases of IP surveys identified a 1000 metres by 500 metres continuous chargeability anomaly. The anomaly remains open to the north and to the south and at depth.
Allan Barry Laboucan, President and CEO of Advance Gold Corp. commented: “We are very excited to drill this large chargeability anomaly as these kinds of targets are not easily found, especially in regions well known for big mines. What makes it particularly stand out is that the high chargeability is consistent from east to west on each survey line, and from line to line over the entire grid. One always has to be aware of possible false positives, such as the possibility of disseminated magnetite causing the chargeability anomaly. However, in this case there has been no magnetite found in the area and an historical magnetic geophysical survey by the Geological Survey of Mexico showed no magnetic anomaly. There are a few potential explanations for the anomaly of this size from mines in Zacatecas. At the Real de Angeles mine and the mine at Fresnillo there were large stockwork vein systems. Previous drilling at Tabasquena has found a near surface network of epithermal veins with widespread gold and silver mineralization, although the IP survey did not pick up that network of drilled veins. Another possibility is a porphyry intrusion that are known to be below epithermal vein systems. Finally, volcanogenic massive sulphide deposits (VMS) are known to occur in clusters, so far, there is only one found in the area, Teck’s San Nicolas VMS deposit. The San Nicolas discovery was found with the first drill hole into a large IP chargeability anomaly. For a small company like Advance Gold to have such a significant anomaly, in a prolific region for mines is exceptional, now we are drilling to better understand what we have at the Tabasquena project.”
The
first drill hole to test the chargeability anomaly will be
approximately in the middle of the anomaly. It will be drilled at a 65
degree angle, from west to east. The first image below shows the collar
location and direction of the hole. In the north part of the image, you
can see the Tabasquena shaft area, where historical mining was done in
the oxide zone of the Tabasquena vein, and just off the image to the
south is the Tesorito shaft also used historically to mine the
Tabasquena vein in the oxides.
Drill Hole 1
To view an enhanced version of Drill Hole 1, please visit:
https://orders.newsfilecorp.com/files/5492/50185_7f3793d874883847_001full.jpg
The image below is a plan view, with past drill holes outside the purple area which is the projected chargeability anomaly to surface. Those drill holes intersected a series of veins, with widespread gold and silver mineralization. None of the holes reached the chargeability anomaly.
Plan view showing previous drill holes
To view an enhanced version of the plan view, please visit:
https://orders.newsfilecorp.com/files/5492/50185_7f3793d874883847_002full.jpg
The final image below, is a cross section of the new drill hole, which has been designed to cover approximately 100 metres from west to east, plus go down to 500 metres and hit the middle of the chargeability anomaly. The anomaly remains open at depth beyond the planned 500 metres and a decision will be made during drilling to extend it.
Cross section of new drill hole
To view an enhanced version of the cross section, please visit:
https://orders.newsfilecorp.com/files/5492/50185_7f3793d874883847_003full.jpg
Julio Pinto Linares is a QP, Doctor in Geological Sciences with specialty in Economic Geology and Qualified Professional No. 01365 by MMSA., and QP for Advance Gold and is the qualified person as defined by National Instrument 43-101 and he has read and approved the accuracy of technical information contained in this news release.
About Advance Gold Corp. (TSXV: AAX)
Advance Gold is a TSX-V listed junior exploration company focused on acquiring and exploring mineral properties containing precious metals. The Company acquired a 100% interest in the Tabasquena Silver Mine in Zacatecas, Mexico in 2017, and the Venaditas project, also in Zacatecas state, in April, 2018.
The Tabasquena project is located near the Milagros silver mine near the city of Ojocaliente, Mexico. Benefits at Tabasquena include road access to the claims, power to the claims, a 100-metre underground shaft and underground workings, plus it is a fully permitted mine.
Venaditas is well located adjacent to Teck’s San Nicolas mine, a VMS deposit, and it is approximately 11km to the east of the Tabasquena project, along a paved road.
In addition, Advance Gold holds a 13.23% interest on strategic claims in the Liranda Corridor in Kenya, East Africa. The remaining 86.77% of the Kakamega project is held by Barrick Gold Corporation.
For further information, please contact:
Allan Barry Laboucan,
President and CEO
Phone: (604) 505-4753
Email: [email protected]Reply
SPONSOR: Advance Gold AAX.v – Advance Gold controls 100% interest in the Tabasquena Silver Mine in Zacatecas, Mexico. A cluster of 30 Epithermal veins have been discovered, with recent emphasis on exploring a large anomaly to drill. Advance also owns 13.5% of the Kakamega JV attached to Barrick Takeover Offer for Acacia Mining. Click Here For More Info
Gold mining stocks have soared approximately 30% so far in 2019, based on the performance of the NYSE Arca Gold Miners Index (GDM) as of November 15.1 Over the last 12 months, the sector is up nearly 50%. Some investors may assume that gold stocks have run their course. On the contrary, we think that the gold mining equities still have a great deal of upside to offer.
In brief, we think we’re in the early stages of a prolonged bull market for gold. While the relationship between the prices for gold bullion and gold stocks isn’t a linear one, rising demand for the yellow metal commodity has historically driven stock performance. Moreover, despite the recent rally, gold mining stocks have yet to recover from the beating they suffered starting in 2011. Still, recent outperformance — coupled with improving fundamentals — creates momentum, a key factor in many quantitative strategies.
Gold has been a store of value since the beginning of civilization, and yet the nuances of investing in gold — be it the metal or miners — is still a source of confusion. As we see it, that also means opportunity.
Here are five reasons to consider investing in gold equities now.
REASON #1. Rising Gold Prices Drive Demand
Figure 1. Gold Bull Market is Just Getting Started
Source: Bloomberg as of 11/15/19. Gold was $1,514 on 11/1/19, and $1,468 as of 11/15/19.
Gold recently broke past $1,500 an ounce for the first time since 2013 (Figure 1), as global political and macroeconomic trends are driving demand for the yellow metal. Along with other strategists, we think gold bullion could surpass its all-time high of $1,900 within the next couple of years. Key factors driving long-term demand for gold as a store of value and defensive asset, especially among central banks and institutions, include low-to-negative interest rates, rising debt levels, trade tensions and intensifying geopolitical risk.
Price movements for physical gold and gold-mining stocks aren’t perfectly in sync, but the relationship between them is strong and persistent, across economic cycles.
Historically, rising (and falling) gold prices have a three-times multiplier effect on gold stocks: If the value of gold bullion increases by 10%, mining stocks tend to increase by 30%, and vice versa. The reason: Miners have significant fixed operating costs and high operating leverage, meaning big swings in physical gold prices have a larger impact on miners’ profitability.
This relationship cuts both ways, as we saw after physical gold prices peaked in late 2011. As the value of gold subsequently declined (Figure 2), the value of gold stocks plummeted even more. Between 2011 and 2018, the sector posted negative returns in six out of eight calendar years. Even with recent gains, gold mining stocks have yet to recover relative to historical valuations. Since the sector peak in April 2011, gold mining equities are still off by more than 60%.
Figure 2. Gold Mining Equities are Very Undervalued
Source: Bloomberg as of 11/12/19.
Figure 3. Gold Demand Has Rebounded: Purchases by Central Banks
Central banks have been net buyers of gold over the past 10 years. Gold plays an important part in central banks’ reserves management, and they are significant holders of gold. According to the World Gold Council: “Today, central banks own almost 34,000 tonnes (t) of gold, making it the third-largest reserve asset in the world. The increase in central bank demand for gold reflects current geopolitical, political and economic conditions, as well as structural changes in the global economy. Gold is both a liquid, counter-cyclical asset and a long-term store of value. As such, it can help central banks meet their core objectives of safety, liquidity and return.â€
Source: Metals Focus, Refinitiv GFMS, World Gold Council. As of June 30, 2019.
REASON #2. Gold Stocks are Severely Undervalued
Given the amplified volatility of gold stocks relative to gold, investors need to go in with their eyes wide open. Nevertheless, multi-year declines may now set the stage for significant upside.
While miners as a group still trade below their net asset values, the discounts of smaller, “junior†miners are especially extreme, as much of the recent rally has been driven by the largest, “senior†gold miners. In fact, the valuation gap between North American junior and senior gold miners is the widest it’s ever been.
Figure 4. The Valuation Gap Between Senior and Juniors is at Historic Extremes
Source: BMO Capital Markets, FactSet. North American senior vs. junior gold miners. As of 7/19/19.
Reason #3. Supplies are Limited
Most investors grasp the importance of investing in companies whose business models are protected by “competitive moats.†Gold miners have this in spades, as it can take 15 years from discovery of a new gold mine to successful ore production. The barriers to entry are enormous for newcomers in this sector, given the need for expensive and specialized equipment, environmental regulations and political considerations.
Meanwhile, the supply of gold is finite and there have been increasingly fewer gold discoveries in recent years. This dynamic — combined with depressed valuations of junior gold miners — is driving consolidation in the industry. It is far cheaper for senior miners to buy new gold production than to “build†capacity themselves. In fact, based on an analysis of recent transactions, there is a 35% discount for buying ounces in the market via acquisitions versus discovering new ounces (according to Scotiabank).
Figure 5. Major Gold Discoveries have Declined Significantly
Source: © Copyright by SNL Metals & Mining 2016. All rights reserved.
REASON #4. Momentum May Turn Positive
Investors love momentum — following positive trends in prices, earnings and other factors — and the rise of quantitative strategies has made this market phenomenon even more pervasive. For the last eight years, momentum has largely worked against the gold mining sector, but now there are signs the wind is shifting, and that momentum could soon work in its favor.
Analysts covering the sector have understandably been conservative in their estimates and may soon be playing catch up, given higher gold prices and a leveling off of mining costs. Any improvements in earnings outlooks could potentially accelerate positive momentum for the sector. As my colleague Paul Wong wrote earlier this month in The Sweet Spot for Gold Equities: â€At this stage in the gold cycle, we are in the sweet spot for gold mining company earnings. A starting low gold price base will result in earnings changes with a high percentage increase when measured quarter-over-quarter or year-over-year.â€
In Figure 6, we highlight the progression of 2020E EPS (estimates of earnings-per-share) revisions for the top-10 gold mining companies in SGDM2 versus the average 2020E EPS for the top-20 companies in the S&P 500 Index.3 Since January 2019, the average 2020E EPS for the top-10 gold mining companies had increased from $0.65 to $0.98 by the end of October, representing a 50% jump, compared to a decline of 9% for the S&P 500. After the Q3 reporting season, we would expect that 2020E EPS for gold miners will be revised even higher.
Figure 6. Sweet Spot for Gold Mining Company Earnings
Source: Bloomberg as of 10/31/19.
REASON #5. Gold Stocks Play a Different Role than Bullion
As with any investment, it’s important to think about the role of gold stocks in the context of a broader portfolio. One common misconception is that gold stocks and physical gold are two sides of the same coin. While their fates are certainly correlated, as asset classes they could not be more different.
Physical gold, whether it’s in the form of coin, bar or a trust (for example, Sprott Physical Gold Trust, NYSE Arca: PHYS), should be viewed as a stable store of value. It’s counter-cyclical and has proven over millennia to be an effective hedge against market turbulence and volatility.
As such, we recommend that investors allocate between 5% to 10% of their assets to physical gold and precious metals.
Gold stocks, conversely, should be viewed in the context of an investor’s overall equity portfolio; the size of the allocation will depend on many factors, including risk tolerance. Strategists advocate owning gold stocks continuously, in part because they have low correlations to the broader market. However, most investors view gold stocks as tactical investments. When valuations are severely depressed, as they are now, gold stocks may have the potential to outperform.
At Sprott, we believe that it may be time to consider investing in gold stocks, in addition to physical gold.
BY Ed Coyne
SOURCE: https://www.sprott.com/insights/five-reasons-why-gold-stocks-make-sense/
Sponsor: Affinity Metals is a Canadian mineral exploration company building a strong portfolio of mineral projects in North America. The Corporation’s flagship property is the Drill ready Regal Property near Revelstoke, BC. Recent sampling encountered bonanza grade silver, zinc, and lead with many samples reaching assay over-limits. Further assaying of over-limits has been initiated, results will be reported once received. (TSX-V: AFF) Click Here for More Info
Gold mining stocks have soared approximately 30% so far in 2019, based on the performance of the NYSE Arca Gold Miners Index (GDM) as of November 15.1 Over the last 12 months, the sector is up nearly 50%. Some investors may assume that gold stocks have run their course. On the contrary, we think that the gold mining equities still have a great deal of upside to offer.
In brief, we think we’re in the early stages of a prolonged bull market for gold. While the relationship between the prices for gold bullion and gold stocks isn’t a linear one, rising demand for the yellow metal commodity has historically driven stock performance. Moreover, despite the recent rally, gold mining stocks have yet to recover from the beating they suffered starting in 2011. Still, recent outperformance — coupled with improving fundamentals — creates momentum, a key factor in many quantitative strategies.
Gold has been a store of value since the beginning of civilization, and yet the nuances of investing in gold — be it the metal or miners — is still a source of confusion. As we see it, that also means opportunity.
Here are five reasons to consider investing in gold equities now.
Figure 1. Gold Bull Market is Just Getting Started
Source: Bloomberg as of 11/15/19. Gold was $1,514 on 11/1/19, and $1,468 as of 11/15/19.
Gold recently broke past $1,500 an ounce for the first time since 2013 (Figure 1), as global political and macroeconomic trends are driving demand for the yellow metal. Along with other strategists, we think gold bullion could surpass its all-time high of $1,900 within the next couple of years. Key factors driving long-term demand for gold as a store of value and defensive asset, especially among central banks and institutions, include low-to-negative interest rates, rising debt levels, trade tensions and intensifying geopolitical risk.
Price movements for physical gold and gold-mining stocks aren’t perfectly in sync, but the relationship between them is strong and persistent, across economic cycles.
Historically, rising (and falling) gold prices have a three-times multiplier effect on gold stocks: If the value of gold bullion increases by 10%, mining stocks tend to increase by 30%, and vice versa. The reason: Miners have significant fixed operating costs and high operating leverage, meaning big swings in physical gold prices have a larger impact on miners’ profitability.
This relationship cuts both ways, as we saw after physical gold prices peaked in late 2011. As the value of gold subsequently declined (Figure 2), the value of gold stocks plummeted even more. Between 2011 and 2018, the sector posted negative returns in six out of eight calendar years. Even with recent gains, gold mining stocks have yet to recover relative to historical valuations. Since the sector peak in April 2011, gold mining equities are still off by more than 60%.
Figure 2. Gold Mining Equities are Very Undervalued
Source: Bloomberg as of 11/12/19.
Figure 3. Gold Demand Has Rebounded: Purchases by Central Banks
Central banks have been net buyers of gold over the past 10 years. Gold plays an important part in central banks’ reserves management, and they are significant holders of gold. According to the World Gold Council: “Today, central banks own almost 34,000 tonnes (t) of gold, making it the third-largest reserve asset in the world. The increase in central bank demand for gold reflects current geopolitical, political and economic conditions, as well as structural changes in the global economy. Gold is both a liquid, counter-cyclical asset and a long-term store of value. As such, it can help central banks meet their core objectives of safety, liquidity and return.”
Source: Metals Focus, Refinitiv GFMS, World Gold Council. As of June 30, 2019.
Given the amplified volatility of gold stocks relative to gold, investors need to go in with their eyes wide open. Nevertheless, multi-year declines may now set the stage for significant upside.
While miners as a group still trade below their net asset values, the discounts of smaller, “junior†miners are especially extreme, as much of the recent rally has been driven by the largest, “senior†gold miners. In fact, the valuation gap between North American junior and senior gold miners is the widest it’s ever been.
Figure 4. The Valuation Gap Between Senior and Juniors is at Historic Extremes
Source: BMO Capital Markets, FactSet. North American senior vs. junior gold miners. As of 7/19/19.
Most investors grasp the importance of investing in companies whose business models are protected by “competitive moats.†Gold miners have this in spades, as it can take 15 years from discovery of a new gold mine to successful ore production. The barriers to entry are enormous for newcomers in this sector, given the need for expensive and specialized equipment, environmental regulations and political considerations.
Meanwhile, the supply of gold is finite and there have been increasingly fewer gold discoveries in recent years. This dynamic — combined with depressed valuations of junior gold miners — is driving consolidation in the industry. It is far cheaper for senior miners to buy new gold production than to “build†capacity themselves. In fact, based on an analysis of recent transactions, there is a 35% discount for buying ounces in the market via acquisitions versus discovering new ounces (according to Scotiabank).
Figure 5. Major Gold Discoveries have Declined Significantly
Source: © Copyright by SNL Metals & Mining 2016. All rights reserved.
Investors love momentum — following positive trends in prices, earnings and other factors — and the rise of quantitative strategies has made this market phenomenon even more pervasive. For the last eight years, momentum has largely worked against the gold mining sector, but now there are signs the wind is shifting, and that momentum could soon work in its favor.
Analysts covering the sector have understandably been conservative in their estimates and may soon be playing catch up, given higher gold prices and a leveling off of mining costs. Any improvements in earnings outlooks could potentially accelerate positive momentum for the sector. As my colleague Paul Wong wrote earlier this month in The Sweet Spot for Gold Equities: â€At this stage in the gold cycle, we are in the sweet spot for gold mining company earnings. A starting low gold price base will result in earnings changes with a high percentage increase when measured quarter-over-quarter or year-over-year.â€
In Figure 6, we highlight the progression of 2020E EPS (estimates of earnings-per-share) revisions for the top-10 gold mining companies in SGDM2 versus the average 2020E EPS for the top-20 companies in the S&P 500 Index.3 Since January 2019, the average 2020E EPS for the top-10 gold mining companies had increased from $0.65 to $0.98 by the end of October, representing a 50% jump, compared to a decline of 9% for the S&P 500. After the Q3 reporting season, we would expect that 2020E EPS for gold miners will be revised even higher.
Figure 6. Sweet Spot for Gold Mining Company Earnings
Source: Bloomberg as of 10/31/19.
As with any investment, it’s important to think about the role of gold stocks in the context of a broader portfolio. One common misconception is that gold stocks and physical gold are two sides of the same coin. While their fates are certainly correlated, as asset classes they could not be more different.
Physical gold, whether it’s in the form of coin, bar or a trust (for example, Sprott Physical Gold Trust, NYSE Arca: PHYS), should be viewed as a stable store of value. It’s counter-cyclical and has proven over millennia to be an effective hedge against market turbulence and volatility.
As such, we recommend that investors allocate between 5% to 10% of their assets to physical gold and precious metals.
Gold stocks, conversely, should be viewed in the context of an investor’s overall equity portfolio; the size of the allocation will depend on many factors, including risk tolerance. Strategists advocate owning gold stocks continuously, in part because they have low correlations to the broader market. However, most investors view gold stocks as tactical investments. When valuations are severely depressed, as they are now, gold stocks may have the potential to outperform.
At Sprott, we believe that it may be time to consider investing in gold stocks, in addition to physical gold.
BY Ed Coyne
SOURCE: https://sprott.com/insights/five-reasons-why-gold-stocks-make-sense/
Labrador Gold Corp. (TSX-V: LAB) (“Labrador Gold†or the “Companyâ€) is pleased to announce results of rock sampling at its Hopedale project in Labrador.
The Company controls a 57-kilometre strike length of stratigraphy prospective for gold in the Florence Lake Greenstone Belt (FLGB). To date, the Company has defined eight high potential areas for gold within the belt. The 2019 exploration program was designed to generate drill targets within these areas using detailed geological mapping, rock sampling and prospecting and ground magnetics/VLF-EM (very low frequency electromagnetics).
Sampling of the prospective areas resulted in 201 rock samples with gold values ranging from below the detection limit of 5 parts per billion (ppb) to 8.26 grams per tonne (g/t) in selected grab samples. The highest gold values were from three samples taken at the site of a new mineralized showing discovered shortly after the start of field work (see News Release dated July 26, 2019). The showing is located approximately 500 metres north, and along strike of, the Thurber Dog gold occurrence where previous Labrador Gold rock sampling returned values up to 7.87 g/t Au. Mineralization is comprised of disseminated to semi-massive pyrite and arsenopyrite hosted by felsic metavolcanic rocks with pervasive iron oxide alteration. The three samples from the occurrence assayed 1.67 g/t Au, 2.83 g/t Au and 8.26 g/t Au.
Anomalous gold values were also found in samples from elsewhere in the targeted areas and range from 0.11 g/t Au to 0.6 g/t Au (See table below). To date the company has collected 12,510 soil samples, 414 lake sediment samples and 834 rock samples along the length of the greenstone belt.
“Our systematic approach to exploration of the Florence Lake belt continues to turn up anomalous gold values in areas of high potential.†said Roger Moss, President and Chief Executive Officer of Labrador Gold. “The Thurber Dog area stands out as the most consistently mineralized gold trend in the belt and we are still finding gold mineralization that fills in gaps along the three kilometre stretch of anomalous gold in both rock and soil. The discovery of the new gold showing this season is the latest addition to what is turning into a prolific trend.â€
Highlights of 2019 rock sample assays.
| Sample ID | Easting | Northing | Sample Type* | Rock type | Mineralization | Au (ppb) | Area |
| 1702676 | 654781 | 6110696 | Grab | Quartz vein | Py, Apy | 8,263 | New Showing |
| 1710148 | 654778 | 6110691 | Grab | Felsic volcanic | Py, Apy | 1.672 | New Showing |
| 1710149 | 654781 | 6110696 | Grab | Felsic volcanic | Py, Apy | 2.831 | New Showing |
| 1710140 | 654745 | 6111249 | Grab | Chlorite schist | – | 602 | Thurber Trend |
| 1695444 | 654628 | 6112280 | Grab | Ultramafic volcanic | Py | 114 | Thurber North |
| 1995433 | 654628 | 6112280 | Grab | Quartz vein | Py | 224 | Thurber North |
| 1705230 | 654996 | 6113663 | Grab | Mafic volcanic | Apy | 532 | Thurber Boundary |
| 1691224 | 647639 | 6100795 | Grab | Ultramafic volcanic | Apy, Py | 107 | Jasmine North |
| 1702687 | 648021 | 6098550 | Grab | Iron formation | Py | 388 | Jasmine South |
| 1705738 | 647074 | 6095318 | Grab | Quartz vein | – | 134 | Misery North |
| 1702678 | 644914 | 6091661 | Grab | Quartz vein | Py | 488 | Misery |
| 1785270 | 643338 | 6085835 | Grab | Mafic volcanic | Py | 336 | Schist Lakes |
*Note that grab samples are select samples and are not necessarily representative of gold mineralization found on the property. Abbreviations: Py pyrite; Apy Arsenopyrite.
All samples were shipped to the Bureau Veritas laboratory in Vancouver, BC, where they were crushed and split and a 500g sub sample pulverized to 200 mesh. Samples of 30g were analyzed for gold by fire assay with an atomic absorption finish and another 15g sample for 36 elements by ultratrace ICP-MS (inductively coupled plasma-mass spectrometry) following an aqua regia digestion. Over limit samples (greater than 10g/t Au) are re-assayed using fire assay with a gravimetric finish. In addition to the QA-QC conducted by the laboratory, the Company routinely submits blanks, field duplicates and certified reference standards with batches of samples to monitor the quality of the analyses.
Roger Moss, PhD., P.Geo., is the qualified person responsible for all technical information in this release.
About Labrador Gold:
Labrador Gold is a Canadian based mineral exploration company focused on the acquisition and exploration of prospective gold projects in the Americas. In 2017 Labrador Gold signed a Letter of Intent under which the Company has the option to acquire 100% of the 896 square kilometre (km2) Ashuanipi property in northwest Labrador and the Hopedale (458 km2) property in eastern Labrador.
The Hopedale property covers much of the Hunt River and Florence Lake greenstone belts that stretch over 80 km. The belts are typical of greenstone belts around the world but have been underexplored by comparison. Initial work by Labrador Gold during 2017 show gold anomalies in soils and lake sediments over a 3 kilometre section of the northern portion of the Florence Lake greenstone belt in the vicinity of the known Thurber Dog gold showing where grab samples assayed up to 7.8g/t gold. In addition, anomalous gold in soil and lake sediment samples occur over approximately 40 kilometres along the southern section of the greenstone belt (see news release dated January 25th 2018 for more details). Labrador Gold now controls approximately 57km strike length of the Florence Lake Greenstone Belt.
The Ashuanipi gold project is located just 35 km from the historical iron ore mining community of Schefferville, which is linked by rail to the port of Sept Iles, Quebec in the south. The claim blocks cover large lake sediment gold anomalies that, with the exception of local prospecting, have not seen a systematic modern day exploration program. Results of the 2017 reconnaissance exploration program following up the lake sediment anomalies show gold anomalies in soils and lake sediments over a 15 kilometre long by 2 to 6 kilometre wide north-south trend and over a 14 kilometre long by 2 to 4 kilometre wide east-west trend. The anomalies appear to be broadly associated with magnetic highs and do not show any correlation with specific rock types on a regional scale (see news release dated January 18th 2018). This suggests a possible structural control on the localization of the gold anomalies. Historical work 30 km north on the Quebec side led to gold intersections of up to 2.23 grams per tonne (g/t) Au over 19.55 metres (not true width) (Source: IOS Services Geoscientifiques, 2012, Exploration and geological reconnaissance work in the Goodwood River Area, Sheffor Project, Summer Field Season 2011). Gold in both areas appears to be associated with similar rock types.
The Company has 57,039,022 common shares issued and outstanding and trades on the TSX Venture Exchange under the symbol LAB.
For more information please contact:
Roger Moss, President and CEO Tel: 416-704-8291
Or visit our website at: www.labradorgold.com
Twitter: @LabGoldCorp