NFG & Gold Price: Both Defensive Value & Massive Potential UA few points to note:
[ I wrote this last night amidst Gold and NFG down]
1) The price of gold has held up very well over many months. Long term bonds have gotten slaughtered. People who invested in bonds at much lower rates, thinking they were making a conservative investment were extremely mistaken, by investing in bonds at very low rates. ...the 'safe haven' investment category of bonds failed miserably.....Meanwhile, gold has held up remarkably well in the face of the fastest rising interest rates since Volker was head of the FED in the 80s. And, yet, gold pays no interest rate yield..... maybe gold goes down further, but it's recent stability would seem to indicate that it will probably maintain its stability in pricing..it has been noted that gold has been much more stable than bonds. Gold is being recognized as a, if not, the, 'safe haven' investment.
2) The price of gold doesn't really effect NFG much, in reality, due to the high grade
Nature of NFGs ore. NFG's analog is the Fosterville mine, which has had among the lowest AISC (all in production costs) in the world. Even if gold were priced at $1000 USD per ounce, Fosterville would still be making substantial profits. ....this will likely be the case with NFG. So, even IF gold were to drop a couple hundred US$, it doesn't threaten NFG future operations. NFG will be highly profitable with gold at $1500 USD, $2000, $2500 etc........ ....
3) GIven the SEA CHANGES in the world situation we are witnessing, and which are likely to persist for years to come, gold will likely remain a 'safe haven' for a store of value. It is already at all time highs in many currencies......gold has no yield, but gold stocks do, once they are producing gold....currently, everything is highly valued. It's called 'the everything bubble'.....Residential real estate, commercial real estate, stocks, bonds have come down a lot, but if inflation persists?.....it seems like one teeny investment category, gold stocks ( and silver stocks and other miners of various minerals might also be included) are at bargain basement prices, possibly the lowest valuations in history. .......
4) NFG seems to have been greatly 'deRisked' in the last two years, by discovering so much high grade gold just on a small fraction of the massive Queesway project, and just to shallow depths. NFG appears to be taking early steps to begin mining given the investment they have made in Maritime Resources and their MOU with them (MAE)..Due to MAE having fully constructed processing facilities, starting production of gold may not take very long at all, possibly a year or so. Newfoundland WANTS mining to proliferate....there seems little doubt NFG will be mining gold and processing it in the not so distant future....and the upside as to how much gold may well be discovered and mined at Queensway many years into the futureis quite exciting to consider. Both Erich Sprott and Quenten Henigh, a renowned gold focused geologist, believe that there will be gold being mined from Queensway a number of decades into the future......bottom line, where else do you feel comfortable investing with value in mind? The gold stock sector is the key investment sector I think of, and NFG appears to be at the top of the heap for having revealed a major resource, and thus has solid value and downside protection vis a vis its likely resource size, along with the stability of gold itself. Thus, you have both the conservatism of value in the ground for defensive investing, and possibly massive upside, as NFG continues its building of its resource and production of same as the next logical step..............
Might NFG fall more? .....yes, of course. Especially with our Lil Shorty nemisis....but, if you sell NFG here, do you get to buy it lower?.....will you be successful in doing so? ......What if gold turns around here or just holds steady?...What if NFG announces major news in the weeks ahead?