Torex Gold Is Still Cheap To Buy! The price of Torex Gold shares fell to around the $10 US level in 2018. The US inflation rate in 2018 was 2.49%. Using the prediction of a 7% rate of inflation for 2023, we could assume that $100 US. is worth $126 US in 2023. Using inflation solely as a guide to the value of the price of Torex Gold, one might assume that Torex Gold should only be worth $12.60 US today or $17.14 Can. At $15.18, the price of Torex shares, is still cheap!
However, Torex Gold today is not the same company that it was back in 2018. Today, the company has added significantly to the intrinsic value of its resource base. A second mine is rapidly advancing to commercial production no later than Q1 of 2025. Drilling continues as more high grade gold is discovered. These resources are so cheap to mine that Torex is already well known as a low cost producer. It's shares are very highly leveraged to any increases in the price of gold!
The market is anticipating a Federal Reserve that will have some difficulty bringing the present inflationary level, significantly lower, in any short term time horizon, without disrupting the economic system of the country, by causing widespread recession and unemployment. It may take a year or two, before more gentle raise hikes or pauses, have any significant impact upon the inflation level.
So I expect that the rise in the gold price, will be gradual, but steady, over the next year, at least.
Once this inflationary period has begun its decline, then the market will become more certain that the Fed will be done with any further hikes, and it should start a new bull phase with a strong market rally. But this will not commence, until all fears of recession have fully abated!
Dead cat bounces, just don't count!
When a strong world wide rally commences, the US dollar will drop significantly in price, as money pours back into world markets, once again.
Gold and other commodity prices, will be driven up sharply! Their prices usually vary inversely with the price of the US dollar. It is the world's monetary system of exchange.
Energy stocks will start to reverse their recent decline and again offer their greater potential for significant gains.
Also at that time, precious metal stocks will drop again, as gold starts another major decline in price. If Torex Gold hasn't be acquired by then, then like others gold miners, it should have been sold!
The market sells everything in a sector, when it is out of favor. "The baby is thrown out with the bathwater!" A ruthless market, never shows mercy!
The present inflationary period with the consequent rate hikes will be a boon for the precious metal and debt sectors of the financial markets.
This has already been seen with the recent decline in the overall equity market, while the price of bonds have rapidly increased in price.
Bonds may now be a good investment for some investors, but only for those whose investment horizon is more, longer term. Capital appreciation in the bond market may offer significant reward but it won't happen until their rates have begun their decline, once again. This may not happen for some significant time to come.
It depends upon how long it takes the Fed to bring inflation back down to more reasonable levels and when the market anticipates that the prime rate, is about to drop, once again.
However, precious metals also can also offer some, greater potential asset protection, in times of economic uncertainty, when other commodities, do not offer, as much!
Gold and silver, may rise in value, even when the dollar price, remains relatively constant.
Torex Gold is a potential takeover candidate, with its low cost and steady forward gold production!
Any large miner with the cash or available debt facility would have the means to afford such a purchase. But with Torex's market cap, already at $1.3 billion Canadian, any potential purchaser would be well advised to make their takeover bid as soon as possible! It would cost less now!
The market, now very interested in Torex Gold shares, already knows most of these factors. They know that Torex is still very cheaply priced and they had better position themselves, very quickly, by purchasing this company's shares.
Short term traders, as always, delight is making short term moves, as they buy and sell.
That's how they make a living! They may sit around, day trading, all day long. But the smartest of these people, make a lot more money! The CRA makes them pay their taxes as income earnings rather than as capital gains. It is a trade off that they are willing to make, for potentially, larger monetary gains.
Nevertheless,Torex Gold shares keep trading higher, because it is presently, one of the best investments available to make!
The last point to make, is to emphasize, once again, that Torex Gold is highly leveraged to any gains in the gold price!
A low cost producer, is better positioned to make more profit, than other miners, which may be only breaking even, or losing money at today's price of gold.
Other miners have projects in the works that may add future cost efficiencies to their operations by increasing revenue growth, but the lowest cost producer, will always make the most profit, as all companies, continue to grow their mines.
Remember also that Torex Gold was making profit, even when gold prices were lower than today!
As a low cost producer, it doesn't need a much higher gold price for its share price to reach, much more lofty levels.
The market has already decided that its present price is still a bargain.
They are buying, in a frenzied way!
There is mad rush to the entrance. But like in any shopping spree, not everyone can get in, all at once.
Short term traders, sit at the door, slowing their advance!
But they still push ahead!
That's one to make money. Not lose it!
Keep your eyes wide open, don't slumber, when making investment decisions!
When the gold price, jumps to the stars, return to Earth!
All the best! Java