Gold is trading around US$1600/ounce. In my interviews that were done between 2017-2019, I was asked about the prospects of gold. I stated that I believed between 2020-2021 we’d see gold above $2000 + ounce. We are getting closer. This bodes extremely well for junior mining stocks. The junior mining sector is probably the best way to play the possibility of an ascension in gold prices as it provides leverage. Sometimes these companies will rise parabolically like they did in 2001-2002 and 2011. But I feel the timing is just not right yet for a huge upsurge in the junior mining markets. There are still a plethora of junior mining companies. Some of them started as such, morphed into crypto and cannabis companies and have transformed back. I am hoping to see strategic M&A’s in the industry that would bode well for shareholders. As well, I’d like to see more money/investments flowing into the sector via: private placements being filled quickly.
Gold can be seen as a monetary asset. According to Rob McEwen of McEwen Mining, “Gold’s always a monetary asset, [the] ultimate currency, real money,” McEwen said. In the gold mining business, “you’re really mining money.” As some countries have moved to negative yields on government-issued debt, McEwen said, some investors have been drawn to gold and other alternatives to stocks and bonds.” https://www.marketwatch.com/story/meet-the-mining-chief-who-wants-to-get-his-company-into-the-sp-500-2016-09-28
Gold stocks are essentially equities. When the stock market faulters, usually precious metal stocks also follow. That is why when we witnessed high gold prices (2011) a lot of precious metal companies did not follow. It would be utopian to see a high $US, surging markets and a high gold price coupled with a lot of buzz and M&A’s in the mining sector but all those things may not happen all at once. Then what is one to do if you want to invest in the junior mining sector? Look for good opportunities with an exceptional risk-reward ratio. Couple that with stellar properties and a strong, ethical management team and you could have a recipe for success. It seems it is like finding a needle in a haystack but there are good companies out there. The colloquial statements holds true, especially in the junior mining market: “timing is everything” and “location, location, location.”
Happy Investing!
Dr. Kal Kotecha
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