Gold is nearing a breakout!!!
The commodity that gives many fits to analysts because it has so many different factors affecting it; factors whose weight and importance are constantly changing… I am pretty sure is about to break out! If you are an investor and you just keep saying buy gold, over this decade and last you have been and you are going to keep being right… but that doesn’t mean gold moves in a straight line. Certainly not on the methodical pace it has done for the 3 years since 2009, but after a falter through the entire fall season where that trend was broken, POG caught support at $1500 and bottomed at the beginning winter and is preparing to resume a significant uptrend over the next 18 months.
Why am I so confident gold is about to soar? Inflation, currency debasement and the need for standard unit of measure among currencies. These 3 factors will continue to drive investors, traders and speculators into this sector. Gold is none other than an inflation trade. Since 2009, gold has tracked the INDU and S & P almost perfectly and will continue to as long as the factors above remain the underlying driving reasons for this trade. Gold is no long a fear trade, if there is real fear in the market, investors and traders will dump gold along with any other asset. Cash is and always will be king and the current psychology of dumping gold in times of fear for cash signals to me that the majority of sentiment in the investing community drives investors to treat gold as a commodity and not cold hard cash.
Will gold ever return as a currency? I have my doubts as there is not enough gold to ever introduce it as a common instrument of trade. Nor is there enough silver. Nor could you ever mine enough on a yearly basis to keep up with required monetary supply rates.
Re-introducing the gold standard would make capital even scarcer than it currently is, severely hampering growth among economies of those that try to introduce it. Then you have the Federal Reserve. They run the system and there is not a chance in hell Ben, any of his predecessors, or his successors will ever allow such a thing to happen. If USA monetary issues turn the dollar into the peso, then you may have an attempt to use the gold standard to put Uncle Sam in handcuffs, but that is still far-fetched at best. Gold is a barometer of monetary debasement in this world and with global stimulus expected in China, the USA and in Europe. These factors sets the stage for gold to make its next push up.
I expect POG to trade over $2,000 by the end of the year and believe there is a good 6 – 8 week run in the precious metal to challenge 2011 highs. If you want a prelim time table, expect a top in March/April in POG, consolidation for a 6 – 8 weeks and then a solid run for the second half of 2012 as we approach “the end of the world as the Mayans know it.”
Tis the Season for $0.10 to $0.20 cent gold juniors
The theme in this year is finding quality junior companies exploring low risk high value projects with outstanding partners.
Nevada Sunrise NEV-V $0.22 ~$14M market cap
Pilot Gold PLG-T $1.76 ~$100M market cap
Big Discovery at Kinsley Mountain!!!
Pilot Gold thinks Kinsley Mountain is another Long Canyon which was bought by Newmont early last year. PLG is a very strong operator including the mgmt team from Fronteer developing what may be a moderate grading Carlin Style multi-million ounce gold deposit in Nevada. PLG was an IPO last spring with the Fronteer’s mgmt team moving onto the next project they think has the best shot at being a Fronteer repeat and they believe Kinsley mountain is a lock in Nevada.
Kinsley Mountain was mined in the 1990’s in 7 small pits but was shut down due to low gold prices and financial difficulty by Alta. What is important to not is that there is a high grade oxide zone making Kinsley Mountain a very cheap high payback mining operation mining an inexpensive high grade oxide cap.
5.91 g/t over 18.4 meters6.75 g/t over 7.5 meters6.23 g/t over 8.7 meters Deposit modelling: Creation of a three-dimensional model of geology and mineralization to aid in the selection of new drill targets, and further compilation of extensive historic databases.
Drilling: 12,000 metres of drilling is planned. The first priority will be infill and step-out drilling on mineralized zones identified in historic drill programs. In addition to near-mine drilling and resource definition, a comprehensive effort to identify new targets will be undertaken, encompassing both the original 141 claims as well as the 128 claims staked by Pilot Gold to the north, a largely unexplored area.
Resource estimation: Pilot Gold anticipates completing a project first resource by year-end.
Development activities: Preliminary metallurgical work, hydrological, environmental and baseline studies; and, submission of a Plan of Operation to the U.S. federal government to allow for property-wide drilling.
It’s hard to think Nevada Sunrise will move much higher after exploding to the upside over the last month. NEV-V could peak out at $0.30 or so over the short term, but if PLG defines a Long Canyon like deposit at Kinsley Mountain then this company will be worth a $100M to $200M with a 35% interest in the project and Pilot Gold funding exploration for the foreseeable future. Both Pilot Gold and Nevada Sunrise are very strong buys on any weakness. PLG might be the better lower risk trade and entry point while NEV consolidates in the $0.20’s after shooting up on initial results. Expect NEV to top out this week while traders roll profits into PLG who is the operator of the project and will command a premium. If exploration goes well, I would expect Pilot Gold to buy out NEV-V at much higher prices.
Metals Creek MEK-V $0.125 ~ $12M market cap
Metals Creek Resources is exploring for gold in Timmins among giants. Metals Creek is exploring a 50/50 jv with Goldcorp in Timmins Porcupine West that is just east and along strike with Lakeshore Gold, Richmont Mines and Explor Resources. At a $50m market cap, Explor is currently the close neighbor and smallest market cap company that has results comparable to that of Metals Creek Ogden property. To the east of the Ogden Property you have the Hollinger Mine, the McIntyre Mine and Goldcorp’s Dome Mine.
The Thomas Ogden Property has been receiving encouraging results to date that include the latest hole hitting near surface high grade intervals of 8.83 g/t au over 5.5 meters and 7.57 g/t au over 7.0 meters. These high grade intersections were drilled 25 meters below high grade intercept released in January of 4.37 g/t au over 23.4 meters. Both of these intercepts were shallow and start within 100 meters of surface and were within 76 meter to 94 meter broader zones of mineralization grading 1.94 and 1.92 g/t au.
Metals Creek briefly traded above $0.30 last year so at $0.125 is undervalued considering the recent material discoveries on the Ogden Property in Timmins West and is treading at historic lows it hasn’t seen since early 2009. Expect MEK-V to pop back up into the $0. 20 range with an exciting discovery. With near broad near surface intersections on this property that include high grade portion as well. MEK-V is well on their way to defining a large gold zone on their 50/50 Ogden JV with Goldcorp.
Soldi Ventures SOV-V $0.15 ~$5M market cap
Soldi Ventures SOV-V has the double double going for them. Not only have they made a good discovery at the Golden Bullet Project in Newfoundland, but the recently acquired a graphite project in Quebec. Golden Bullet is high grade with thin widths but the grades are high enough to potentially justify mining with intervals routinely grading above an ounce per tonne of gold. With gold coming back on this high grade property that was explored by Noranda in the late 80’s will produce some very nice headlines. Historical results include…
57.46 g/t au over 4.3 meters38.53 g/t au over 6.45 meters106.2 g/t au over 2.3 meters8.98 g/t au over 14.33 metersYou can anticipate that Soldi will produce results similar to the above which will certainly drive the share price higher and create big volume days.
Lochaber Graphite Acquisition Adds to the Soldi Hype
Soldi has also acquired the Lochaber Graphite Property which is a massive flake graphite property in Quebec 30 km east of Ottawa. The zone is rather small with 1 meter to 3 meter widths exposed in trenches in previous work along 50 - 150 meter strike, but has been traced for over 500 meters in exposed graphite bearing rock. The grades were also visually estimated so there is no way to reliably gauge this project until initial exploration results come back.
There are certainly better graphite projects to be had with Solace Resources initial work on the Montpellier exposing a 7 meter zones with 4 samples ranging from 0.84% Cgr to 14.4% Cgr. Solace Resources is a much better early lead than Lochaber, but there are many investors who won’t care and with both gold coming back in flavor and graphite being the hottest commodity on the planet right now for excitement… SOV-V is a great trade to $0.30. Solace is also just getting going and will hit $1 very quickly with such a low float and in the process of acquiring another 3 graphite projects. Throw in their claims beside Avalon and this is one of the best early exploration companies on the market. I am looking to trade Soldi while I have no problem buying and holding Solace Resources which is going to be a very hot story going forward following the Standard Graphite model for graphite exploration.
Got your Lotto ticket BKT-V???
Expect this company to trade well above $0.20 in expectation of making a big discovery in Tanzania. Laurence Stephenson is either going to be a hero or zero announcing such broad intersections in in a very large gold zone. It is worth the gamble, as I am betting on the fact that he will have a hard time finding work again making such public statements about results and mineralized intercepts and then coming up with nothing. I like to gamble, I won’t be the bank until I see results, but maybe Brookemont Capital is on to something big in Tanzania. A great way to trade this is trade it up to news and get out the days leading up to the news release and then buy the news if it is good and material. You might miss some pennies in between, but I have been hit hard in expecting good results and the company not delivering. Never bet the bank on discovery without assays. Again if what BKT says is true these guys might be on to something big. |
