What does 2020 have in store for the junior mining sector? I wish I had a crystal ball but I believe that finally the junior mining investors will be rewarded broadly from 2020-2022. 2019 was a good year for gold and gold stocks in general but unlike the majors, not all junior miners made upward moves. I remember 2011 - the junior mining boom was similar in many ways but a lot shorter than that of the tech boom of the late 1990’s where a lot of the stocks in the sector increased, some exponentially. These are the booms that change lives. I am not predicting that the 2011 boom will be relived again in the junior mining sector but I believe the next few years should be better broadly for junior mining stocks then the years past.
If/when gold rises to over $2000 US per ounce, the stocks should rally more than the increase in the price of the metal. A lot of this may be due to the media attention gold will get once it surpasses the psychological level.
According to FinancialPost: As 2019 ends, it’s a totally different story: Gold broke through the US$1,500 per ounce barrier in August for the first time in six years before settling just below that threshold, sparking a run on gold mining equities that was bolstered by a string of transformational mergers. That included deals involving Barrick and Detour, which sat in the $24 and $25 range, respectively, in late December. But even as gold’s hot run tempered slightly to end the year, its most enthusiastic investors say its prospects have seldom been so positive. They argue that the same factors that helped gold perform so well in 2019 — including trade tensions, potential interest rate cuts, a volatile stock and bond market and geopolitical uncertainties such as Brexit — remain in place to a certain degree and are setting the stage for a massive rally in 2020. https://business.financialpost.com/commodities/mining/2019-was-a-dream-come-true-for-gold-bugs-2020-could-be-even-better
Gold of course is used as a hedge and for safe-haven, witnessed by the recent US airstrike on Iran.The recent US-Iran crisis saw gold trading at about $1600US/ounce but that was short lived. More future tensions may lead to higher gold prices.
Many pundits including news letter writers constantly have been saying gold is going to hit new highs – this has been going on for many years. Probability has it that they will be correct at least one time. My predictions were set a while ago and I still stick with it – 2020, 2021and 2022 could be banner years for junior mining stocks. Precious metal stocks are generally a huge leverage to any ascension in the price of the yellow metal. Investors have been waiting with baited breath for a broad increase in the junior mining sector and it is about time they were rewarded.
Happy Investing!
Dr. Kal Kotecha
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