Gold is breaking above the 200 DMA which is very positive for the junior mining sector(NYSEARCA:GDXJ) as huge capitals of inflow occur usually from generalist investors on this technical move.
The last time gold (NYSEARCA:GLD)broke above the 200 DMA to the upside was in early 2016 and led to a powerful five month upward leg higher.
(Originally Published 4-6-17)
The time for my readers to benefit from precious metals and junior miners could be right around the corner for those who waited for years for the sector to base and reverse off those lows. The US dollar could be on the verge of a devaluation under Trump as he knows the Chinese have been manipulating their currency lower to take away our manufacturing and mining.
That is why Trump is meeting with the Chinese Premier right now in what may be the new cold war which could send the US dollar(NYSEARCA:UUP) lower and precious metals and commodities soaring. Gold and silver are basing and prepping for a breakout above 200 DMA. The S&P500 (NYSEARCA:SPY) and Dow(NYSEARCA:DIA) is way overbought with record amount of margin debt. This leads to painful corrections which may not be good for overbought stocks but great for cheap gold miners and explorers.
You see during a bull market in stocks its hard for precious metals to gain momentum. During previous market routs investors flocked to gold and silver sending precious metal valuations through the roof. I expect that could happen possibly within the next 3-5 years if not sooner. As the bubble in real estate ends throughout the world on easy credit I expect another rally in precious metals and real assets that will make the 2011 rally look small in comparison.
The miners are set up for a major reversal as they are sitting on huge cash positions. Look at the recent Goldcorp deal with Exeter to partner with Barrick or their recent moves into the Yukon with Kaminak. These producers have been reducing debt, cutting fat and beginning to once again generate free cash flow which could bring back a lot of investors seeking capital preservation during a volatile risky geopolitical time. Even some big miners are increasing dividends.
They need growth and the mining sector needs new high grade discoveries. I expect as the gold price continues its uptrend which began in early 2016 after a 5 year bear market that a lot of marginal mines could get back in the money. Be careful with producers who are having difficulty with cost overruns or permitting.
Its been a very exciting time for this gold explorer in Burkina Faso which may be onto an exciting new high grade gold discovery. The success in Burkina Faso and the institutional interest has been great over the past few years with the success of producers True Gold, RoxGold and Endeavor Mining.
This little junior has RoxGold’s exploration manager working full time on what could be his next big discovery in the country. There was a quartz vein outcropping that looked exciting which they sampled. The results were quite exciting as eight of the eleven samples were high grade including one sample which came back close to 3k grams per tonne. This caused a major run through early February. Now the stock has based for eight weeks on the verge of what may be its next leg higher if they continue to see exploration success with drilling.
The company raised around $2 million CAD earlier this year to drill this property which has never been explored before with modern methods. Eight out of the nine holes intersected gold with one intercept of 27 g/t over 5 meters which was very shallow only 58 meters below surface. This company is moving fast with the exploration and I hope to hear exciting news as assays are pending and drilling is ongoing. This is the first exploration program on the property and they are hitting high grade.
The company thinks they may have about a 1 km strike. Burkina Faso is a gold producing country with only about 20 years of modern exploration. There has been some great success their including True Gold which was acquired by Endeavor Mining for close to $250 Million CAD. This little explorer is in the same belt and trades at less than 1/10th of that takeout valuation.
This companies greatest strength is the countrymen in Burkina who have that track record of success with Roxgold and was able to secure top exploration assets in the center of the gold belt. According to the company they could add one or two top notch exploration assets creating a nice portfolio of top notch high grade gold exploration projects in a jurisdiction which has witnessed huge growth of several new producers and increasing M&A. News could come any day. Make sure to listen to my interview with the COO of this Junior Gold Explorer in Burkina Faso by clicking here…
In addition, I recently discussed a new optimization plan with this near term gold producer in the southwest US. They recently put out news about proposing a power line be built to the property which could save the mine $16 million over five years. The power line is much better than the generators that were planned as it will reduce emissions considerably and save money. This is exciting for all the fundamentals of the project which is already extremely impressive.
The job creation could create an economic boon to the region especially if the company finds more mineralization below the vein at depth. They are actively drilling and had some exciting results weeks ago showing some exciting upside potential. The mine could definitely help out the region which has been hit hard with high unemployment and could improve some of the nearby infrastructure and roads.
Remember this company owns one of the lowest cost gold mines going into production with all in sustaining costs way below $700 per ounce. I am shocked that more mid-tiers or majors have not at least taken an equity stake in this project of just under 20% or 10%. Construction is underway and over 45 million has been put into this project to date.
This company is on the doorstep of production however pay attention to the step out drilling they are doing which could significantly expand mine life and resources. I would say the next couple of months could be quite exciting for this emerging gold producer as they advance the Mine closer to production in 2017. After highlighting the company earlier this year the stock shot up in price allowing existing warrant holders to exercise their positions strengthening the treasury and improving the balance sheet.
Listen to my full interview with this emerging gold producer’s CEO by clicking here…
Disclosure: I own shares and warrants in both these linked companies and
they are both website sponsors so I have been paid an advertising fee and
have a conflict of interest as I could benefit from price appreciation.
This should not be taken as investment advice but only as an advertisement.
I am not a financial advisor. This contains forward looking statements
which may not come to fruition as small cap mining stocks are risky. I may
buy/sell without notice to subscribers.
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