Gold Bull Awakens – USD Stumbles – Cheap Gold Stocks Ready To Go
I started to get confident that we hit the bottom in gold back in the middle of December, in late December we got a rally that gave a good signal that things were about to get better. I watch this part of the year closely because it can give a strong signal about what assets will have bullish January Barometer readings. When the first week of January was bullish for gold it was another signal we were going to see a strong year for gold. I put my Outlook 2016 report out after the first week of trading was over and predicted gold would have a strong year, US stock markets would struggle and the US dollar was ready to roll over.
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In the Outlook 2016 report, I also made the case that high-quality gold stocks would significantly outperform gold. In that report I talked about some top gold picks, today I was reviewing them and wanted do an update report The gold stocks on my list of picks are still just starting to participate, I believe these companies will benefit from a buy the dips and sell the rallies strategy throughout 2016.
Premier Gold Mines (PG.T)
Premier Gold has been a company that has been one of my go-to gold stocks, whenever I think gold is ready to perform well. I first started following them years ago when they were spun out from the original Wolfden Resources. I started coverage because I really liked their projects in Red Lake, Ontario. Things have moved along nicely over the years as Goldcorp was building a tunnel from one of their mines to another and the ground in between is a partnership with Premier and Goldcorp. What makes it really exciting is, now the partners can drill from stations in the tunnel and are getting impressive results. They will be able to drill at lower costs, for deep targets and do it year round.
They also have a 50/50 partnership on the Trans Canada project which is just off the Trans Canada Highway near Geraldton, Ontario, to say that it has a good location to build a gold mine is an understatement. They also have a great story with their production and exploration plays in Nevada. Premier has a strong portfolio of projects that includes a great pipeline from exploration to production. All focused on well-known mining camps in the mining friendly jurisdictions of Ontario and Nevada.
This is a well-run gold-focused company and they will have strong news flow in 2016, that is why I’ve invited them to be a website sponsor in my newly launched website sponsorship program. I would be delighted if they accepted because I believe they have an outstanding future and will make their long-term shareholders happy.
I encourage you to take a close look at their portfolio, they are a middle tier gold-focused producer in the making. There are far too few companies of this size, that gives them a competitive advantage as they can look at projects that are too small for majors, yet could be company makers for a middle tier gold producer.
Pretium Resources (PVG.T)
Anybody that follows my commentary knows that I’m a big fan of high-grade gold projects. Yes, they can have issues like continuity, but they can also lead you to rocks made of gold. I first started coverage of Pretium after it got hammered down when one engineering firm left the project and one stayed. My first reaction was, there is lots of extreme high-grade gold here, it is run my Robert Quartermain who is a serious mine builder who does things right and a competent engineer firm was sticking with the project. They had two working together and they butted heads. But I had confidence in the drill results and the people, so I went out on the limb and made them one of my top picks when it got to a few bucks. It has come back a long way from that and also partnered up with a Chinese company and are heading toward building a gold mine.
I had confidence in the drill results and the people, so I went out on the limb and made them one of my top picks when it got to a few bucks. It has come back a long way from that and also partnered up with a Chinese company and are heading toward building a gold mine.
This is a company maker project that has the potential to kick off a lot of profit, even at current prices for gold. In a bullish move on gold, which I see coming as they get closer to mining, it will only add more free cash flow.
I haven’t had the chance to approach Pretium about becoming a website sponsor, but I would be real excited to have them on board. This is a key litmus test in my thinking these days, whether or not I would like to have them as a sponsor. If they would be good to have a sponsor, I think they would also be good ones to own. Pretium passes the test.
My outlook for Pretium is they have the potential of turning into another Goldcorp in the years after they started mining gold in Red Lake. It was very high-grade low-cost production which is what Pretium has and they also have the people that know how to build high-grade mines and operate them.
Dalradian Resources (DNA.T)
Here is another high-grade gold project, but unlike Premier and Pretium who have it in Red Lake, Nevada, and British Columbia, Dalradian’s project is in Northern Ireland. I don’t usually look for high-grade gold projects in Ireland, but once I saw their first drill holes, I thought they were onto something special. They have received big cheques from Ross Beaty and others in bought-deal financings at higher valuations. Smart money is in at significantly higher prices than the current price. Looks like they agree it is special.
High-grade gold and plenty of cash makes for a good combination in a stronger market for gold. I’ve had a chance to talk to some friends in the mining business that have experience in Ireland and it looks similar to other countries, it depends on where the project is located. They are in a good area that definitely needs jobs, and I haven’t heard of any opposition.
I haven’t had a chance to invite them to become a website sponsor, they pass the test of whether or not I would invite them and think they are a core holding for investors looking for gold stocks.
During 2015, they had a strong news flow, with lots of them concerning key people joining the team and as investors, and plenty of drilling results. I would expect a similar scenario for in 2016, in a stronger market for gold, a company with sharp people jumping at the chance to get involved and can deliver high-grade gold results, will get a lot of attention.
Sabina Gold & Silver Corp. (SBB.T)
I started coverage of Sabina back in November when I had Bruce Mcleod on a show. At that point, we talked mostly about the work they are doing to assess the economics of their 100% owned Back River gold project in Nunavut. Not long after the show, they put out additional news and included results of surface sampling. I went to their Christmas party and looked at the maps and where they had found the high-grade surface samples. The story became crystal clear in my mind, they have a structure where every spot they drill on it that also has surface sampling results to back up the target, they hit when they have drilled it.
What makes things even more impressive, is that the spot where they found the samples is around 500 metres from the proposed plant. Drilling has the potential of not only delivering excellent drill results, it could also have a significant impact on their economics as well to find high-grade so close to the plant.
Last week, I was at the Metals Investor Forum in Vancouver and had a chance to speak with Bruce Mcleod. He mentioned that the best times to drill up there is when it is cold and things are hard. We also had a chance to discuss their efforts to consult and include the Inuit in their project. I like what I heard, Bruce is a driven guy and I think he has a solid understanding of the issues and a strong game plan.
I have invited Sabina to become a website sponsor in my new program, unfortunately, they had to pass due to budgets. I’m hopeful to have them on as a sponsor in the future because I think they have a project with exceptional economics, with the chance to create many opportunities for the Inuit and strong returns for their shareholders.
The near-term news that I’m looking for is when they start drilling, it looks like they have great potential to deliver high-grade gold results that will help them reach a higher valuation. Especially considering that by the time they start making these news announcements, we will be well on our way in a new bullish trend for gold.
Yamana Gold (YRI.T)
Yamana is a company that I started following in the 1990s when they were a small junior trading at around 30 pennies. I watched them grow into a large gold producer since then with a strong portfolio of projects. They are a bit of a bellwether for me, when gold miners are getting hammered, Yamana can get punished more than most of their peers in the gold mining space. The last time they got hit hard enough that they get down to a valuation that I want to cover them, was after the global economic collapse in 2008. All stocks were hammered back then, but the gold stocks were the first to start recovering and they bounced back pretty aggressively until 2011.
Now, in addition to seeing the bearish trend for gold ending in the middle of December 2015 and the start of a bullish trend, I’m also seeing Yamana down at a valuation that I want to bring it to my audience as a pick. They are a better company now than they were in late 2008, they have loaded up with new mines and have a great pipeline of gold production.
I haven’t had a chance to invite Yamana to be a sponsor, if I go to the PDAC this year I will reach out. It would be great to have them on board because I see them as a core holding for gold stock investors.
I always get a smile when I see a big correction ending, I need the Yamana confirmation, and we have got it. I’m gaining confidence we will have a 20-25% up year for gold in 2016 and in that scenario, I have a lot of confidence Yamana will outperform.
I started out the Allan Barry Reports as an email newsletter, I used to write a lot more reports like this, I’m thinking of doing it more again. Maybe use the shows for interviews with company executives and these reports when I have several stocks to talk about.
I also added the part in each companies commentary of where they stand as a potential website sponsor. Lately, I’ve been talking to plenty of companies about the changes I’m making at the Allan Barry Reports.
One of those is that I will be covering fewer companies, but covering them with expanded coverage. This is costly and time-consuming, in the past, I ate those costs, but that is not a sustainable business model for an independent reporter.
I have plenty of confidence that I can get the word out better with the digital marketing tools I use than many companies can with large promotional budgets. If readers know of some companies that meet my standards to invite them, I would love to hear about them. I can be reached at firstname.lastname@example.org or call 604-505-4753.
As always, my reports are for information purposes only, before making any investment decision it is important to do your homework and speak with your financial advisors.
All the best,
Allan Barry Laboucan