No one knows what gold is going to do tomorrow, next week or over the next few months, cautions junior mining sector expert Brien Lundin, editor of Gold Newsletter — and a participant in MoneyShow's upcoming live streaming event, Money, Metals & Mining Expo, on September 1-3.
All we can do is come up with our highly considered probabilities, also known to us skeptics as our best guesses. And my best guess is that gold will once again trade in a range over a few months, consolidating this latest surge higher.
Supporting my argument that we’ll correct via time and not via a deeper price correction is that every probe lower in the gold price has been met by strong, bargain-hunting buying. It seems to me that this buying, because it’s been so consistent and strong enough to reverse the downtrends, is coming from larger pools of capital.
In other words, my theory is that the big money investors have finally bought into the themes that we gold bugs have been pounding the table about for years. Whether it’s a shift in big-money allocations or simply a groundswell of retail buyers, or both, somebody's buying these dips.
More good news is that the mining stocks are once again on board. Miners have been lagging gold and silver on the recent red-hot rally. My operating theory has been that the metals were moving too quickly for investors and analysts to accept that a new, higher price plateau was actually being achieved.
In other words, until the metals were able to prove that these new levels were sustainable, the mining equities market wasn’t going to begin factoring them into valuations.
That’s a process, and the longer gold and silver remain in this higher range, that process will continue. Thus, you can see why — as I believe we’re likely to maintain these levels — I view the miners as an opportunity right now.
Meanwhile, we focus on the junior end of the equity spectrum, and it’s here that I have a couple of additional comments. First is the amazing recent debut of Sun Peak Metals (Vancouver: PEAK).
When I first introduced it to you in July, it was more of a forewarning that this well-supported, widely watched, private exploration company with high-grade copper and gold projects in Ethiopia was going to come public.
I still love the company’s prospects and, obviously, am glad I’m a shareholder after having invested in the private vehicle some years ago. But we’ll have to hold off and hope for a better entry point before making Sun Peak an official recommendation. The next drill results won’t come until the fall and a lot can happen between now and then, so we’ll watch and wait for now.
Minera Alamos (Vancouver: MAI.V) (OTC: MAIFF) has added the Cerro de Oro gold project in northern Zacatecas State, Mexico. Comprised of the Zacatecas I and II concessions, the acquisition adds to the company’s holdings in the area, bringing its total land package there to 6,500 hectares.
This area of Zacatecas is known for gold- and silver-rich intrusive deposits and plays host to several large-scale mines. This key addition fills the earlier-stage part of Minera’s pipeline, as it moves the heap-leach operation at Santana toward production and shepherds its PEA-level La Fortuna project through the permitting process.
Thanks to the C$1.39 million it has raised recently through the sale of non-core assets, Minera has ample funds to make the initial cash payment for Cerro de Oro and to pay for the first 12 months of work it has budgeted for the project.
We’re sitting on a six-bag gain with MAI from our entry price back in late January 2019. And yet there remains so much upside left — near-term production stories are going to continue to be fantastic levers in this robust gold bull market. Minera Alamos is still very much a buy.
