Gold is Good Again, Time for An Update
Things have been busy since early this year for the Allan Barry Reports; covering a bunch of high-quality companies, had a great series of industry experts on the shows discussing plenty of good stocks in depth, launched a new website sponsorship program and made some prescient calls on gold and other trends that have helped grow the reach of the reports. It has been awhile since the last update report, I’m going to discuss some of the main trends I’m following, updates on our sponsors, stocks I’ve taken flyers on, and my picks from past reports.
Before discussing the trends and stocks, I wanted to update readers on how things are going for the Allan Barry Reports. In mid-January, I launched a new website sponsorship program, I’ve had three companies join the program so far, and I have a few more in the works. I’m going to put a cap on the number of members at around a handful and keep a couple spots open for special situations.
Now that a stronger market is here for gold, commodities, high-quality resource stocks and Canada in general, I can see new blood coming into the mining space. One of my pet peeves with a lot of juniors, and larger companies for that matter is with crummy investor relations. When you add in the enormous amount of money that is spent on investor relations for public companies and it doesn’t add up. I’m always on the hunt for new stocks to cover in the reports, I often call companies on days when they have put an important news release out. It shocks me how often I won’t be able to get somebody on the phone, and equally as bad is the follow through on voice messages.
Often, when I do get someone on the phone, if it is an investor relations person, they won’t have the key information that I need to cover the company, instead, I get the big stock pitch about how this news and all their other promotional efforts are going to drive the stock higher. I can get a little testy when after telling them I don’t care about the stock pitch, and that I’m only interested in the project and what the truth machine says, some will continue to give me the stock pitch.
I usually try to get the key person on the phone because they have more of the important information on the top of their minds, although they can often be iffy about the art of storytelling. It isn’t easy to be a good storyteller, and when you’re a geologist, lawyer or business person which are the people running juniors, you are usually more suited for something other than explaining the companies story to investors big and small.
I have a solution that I will be launching in the next few weeks with more details on the program on launch. At this time, I’m ready to say that I will be putting together a project that delivers the kind of service that I look for from public companies. As is often the case, great products come when they fill a need, I see a need and will deliver a product that will be a great tool for investors and companies to network. The service will be designed as a leading edge investor relations service, if you want stock jockeys, this isn’t the right service for you. On the other hand, if you want to be associated with the best practices and a high level of customer service to potential and current shareholders this program will fit perfectly.
For many years, I’ve really had my nose to the grindstone building the Allan Barry Reports into a go-to destination for investors serious about investing in the resource stock space. Before starting the reports in 2005, I worked as a consultant to publicly traded companies since 1993. I have extensive experience in exploration, strategic planning, digital marketing, news release writing and several other skills crucial for public companies that need to get their stories out to a larger audience. I’m ready to start taking on clients again, and look forward to announcing this work in the near future, for select clients, I will consider board positions.
We are seeing significant changes in the playing field concerning mining and First Nations throughout Canada, but there are substantial learning curves for everybody. As a mining entrepreneur with a long career, who is also First Nations, I have seen a lot and have worked successfully with public resource companies to engage local indigenous groups and help them to receive permits to advance their projects. My basic philosophy is straightforward, based on three key principals; respect, inclusion and meaningful consultation. Really it is the follow-through that counts the most and takes serious commitment, not just lip-service. It is a topic I’m passionate about because I know how important the industry needs mines and First Nations need job opportunities, and I’m currently eagerly looking for consulting work offering community relationship building services.
As you can tell, the gold and resource market is shifting, I have a lot of valuable skills and I’m focused on building the business end of Allan Barry Reports now that the reports are in great shape.
One of the key markets I follow is gold because in a commodity bull market gold is always a leader. Long term my bullish argument for gold is based on trends in supply and demand. There have been systemic issues arise over the past few decades that have tightened the supply chain on gold. In the short term, the USD has a big impact on the trend in gold and I’m seeing trends that suggest the USD is going to continue getting pummeled and add fuel to the bullish story for gold.
I put out the Outlook 2016 report in early January, in it I made bold predictions about impending weakness in the US stock market and the USD, plus that gold was primed to get rolling to be one of the best performing asset classes this year. Now that we are well into the year, I wouldn’t change my predictions.
The USD index has shown weakness this year, especially since early February, since then it has traded like a heavily promoted stock after bad news is out. It is never a good thing when the currency of a country is trading like a penny stock, especially when it is the world reserve currency.
It is clear to the currency traders that the Fed won’t be raising interest rates significantly any time soon. I often say there are 19 trillion reasons (the amount of the US national debt) they can’t raise rates. Adding even one percent starts to go right to the debt. They really can’t raise rates no matter how much they market their story about wanting to normalize rates. The bottom line is that the country can’t afford to normalize rates, plus the way the market had a fit when they made a tiny move from a base of basically zero was pretty clear to the Fed they better be careful.
The Fed has painted itself into a corner, not only can they not raise rates to support the USD, they also can’t lower rates to support the stock market because there is no way the Fed will lower and signal that negative rates are a possibility.
It is actually a perfect situation for me, all they can do is talk, and lately every time Janet Yellen speaks publicly the USD gets smacked down more. The currency traders know she is bluffing about normalizing rates and it won’t be long before the US stock market joins the bearish party. With stocks on average priced for perfection but with an earnings recession underway and a weaponless Fed, it is extremely risky to own US stocks at the moment. The fear trade of parking money in the USD and US stock market is showing plenty of cracks.
While the USD is under pressure, CAD, gold, and other commodities are performing extremely well, and certain high-quality gold stocks and other resource stocks are starting to find a serious audience. A new audience is finding its way to high-quality Canadian resource stocks, and also finding the most talented people in the world for exploring, developing and miners.
I’m seeing a nice trend develop that we are seeing a focus on the serious plays, and there aren’t a lot in the various categories, whether looking at mining, development or explorations plays. I can see a large crowd coming and they will be bidding up the prices of quality plays as it is a basic situation of thin supply and strong demand.
Stocks are no different than commodities, in the long haul it is all about supply and demand. If shareholders have confidence and hold on tightly to what they have when they know it is cheap, then the supply is tight. If a new wave of buyers comes in, they have to start paying up to get in the game.
The trends I’m following give me confidence that my call to avoid US stocks and USD, while loading up on quality resource plays in Canada is coming through nicely. Hold on folks, we are just coming off the canvas and have a 15 round championship fight ahead of us.
In the past when I used to do more public speaking engagements, one of my favourite things was the question and answer periods. I know the organizers didn’t always like it because I would take over the room and start taking questions from all over the place. I loved it, kind of reminded me a little of back when I used to play a lot of sports.
The thing I liked the most, was giving my quick points of the key attributes that catch my attention about the company then talk about recent news and my opinion of what I see and what I see upcoming. I thought that is a great format for updating the companies I’m covering.
I’ll start with my sponsors, then stocks I’ve taken a flyer on and my top gold picks.
I’m lucky to have some great sponsors, they all started first as stocks I took a flyer on or picked in reports before they joined as sponsors. They make my work possible, I invite readers to visit their websites and do your homework on them, they are strong candidates for growth.
Premier Gold Mines (PG.T)
Premier Gold is a unique mining company loaded with a strong portfolio of projects ranging from exploration to production. They have an enviable portfolio of projects for a small gold mining company, plus they are loaded with cash and have their needs looked after for funding to move their various projects forward. Their projects are all in well-known mining camps in Ontario and Nevada. They have an impressive pipeline of projects, that puts them in a strong position for growth for many years into the future. In addition, they are very busy with the drill rig and with development so they have a wonderful flow of news. I’m proud to have them as a sponsor, I was pleased to have Ewan Downie on a show back in mid-December 2015 and also pick Premier Gold as one of my top gold picks in my Outlook 2016 report. They really are hitting on all cylinders and with their news flow they should be able to keep investors attention for years into the future.
West Red Lake Gold Mines (CSE: RLG)
Anybody that has followed my reports over the years is aware of how much I love looking for high-grade gold, one of the best camps in the world for high-grade gold is in Red Lake, Ontario. Success in Red Lake is what changed Goldcorp from a junior exploration company in the late 1990s to one of the largest gold-focused companies in the world. West Red Lake Gold has a classic Red Lake target at their Hinge Zone on the project that is a 60/40 partnership with Goldcorp in favour of West Red Lake Gold. Goldcorp has recently gone through changes at the board level, and the new team is seriously focused on exploration. They understand how badly the industry needs new discoveries, it shouldn’t be too long before West Red Lake Gold gets into the project after spring breakup and get cranking with the drill again, focused on testing that Hinge Zone. The target is exceptional with historical mines on either side of the Hinge Zone, there are also two key structures, both have seen past drilling that hit gold in almost every hole, several with high-grade to bonanza grades of gold. The past drilling on these two structures has never drilled into a target as well prepared to host a lot of high-grade gold like the Hinge Zone. I’m excited to have them as a sponsor and about their upcoming drilling to test their Hinge Zone target. They have a high probability of hitting based on the geology and past drilling, and to become a junior with an emerging high-grade gold discovery.
Wolfden Resources (WLF.V)
I started covering Wolfden back in late October 2015, shortly after they announced their first batch of drilling from a new discovery on a project that hadn’t seen any work for decades. The claims lapsed and Wolfden staked them, they have 100% with no royalties to worry about. What caught my attention was the high-grade nickel-copper they were hitting, in particular, I noticed they had tagged a new zone of mineralization that carried high-grade called the New Lower Zone. Since then, they have done a couple more drill programs and are exceeding my hopes with each batch of drill results on both the Main Zone and New Lower Zone. A model is developing that is showing the potential for traps where significant zones of high-grade can accumulate. It seems to be pinching and swelling along strike and at depth. But most importantly, they are catching lots of high-grade nickel-copper-cobalt in the drill holes and the geophysics are working well for targeting new drilling. Wolfden’s Rice Lake project is around 10km from Snow Lake, Manitoba which is a well-known part of Manitoba for nickel-copper mines. Big ones. They were the first company to join my website sponsorship program and I’m proud to have a small exploration company with such an exceptional high-grade nickel-copper-cobalt project on the team.
My Stock Picks
I’ve already mentioned my website sponsor Premier Gold Mines above; they are also one of the group of top gold picks that I made in my Outlook 2016 report prior to them becoming a sponsor. I picked four other gold stocks in that report and will update on them in this section.
My most recent pick was IDM Mining (IDM.V), just a few days ago, instead of an update I will point readers to the recent post.
Sirios Resources (SOI.V)
This pick has been on a tear ever since I started coverage less than three weeks ago. What caught my attention and the market’s excitement was the news from hole #52 at their Chee Choo project in Quebec. On Apr. 7, when I took a flyer on the stock I got it at $0.22, and since then it has traded as high as $0.50 as we await the remaining assay results. At this point, it looks like the market is anticipating as good, or better in the upcoming results than from hole #52. It is important to remember a couple key points, they haven’t done any drilling around hole #52, that is for upcoming drilling. They also never selected portions of the remaining core for expedited assaying. The market is too optimistic at this point and it looks like a good time to be taking some profits to build up some cash in case it corrects after the remaining assays are reported. Even if the results move the stock much higher, it still makes sense to take some profits because the risk of a correction is fairly high. The main thing I’m excited about is more drilling around hole #52 and additional drilling based on what has been learned from the recent drilling. That won’t happen until the summer program which isn’t that far away, so I’m looking strategically at some weakness to buy cheaper between when the next assays come out and the next drilling starts.
Dalradian Resources (DNA.T)
Dalradian was one of my top gold picks that I included in my Outlook 2016 report that has been ripping since the report went out. I picked it because they have a high-grade gold project, but what makes it somewhat unique is the project is in Northern Ireland. Another key reason that I chose them is they had a flood of money come in last year from some wealthy mining investors including Ross Beatty. They had paid around one dollar, but were hammered lower during the last stages of the multiple year gold bear market that ended in December 2015. It made a lot of sense to me that based on the quality of the project that had attracted some sharp people to invest, to pick it for my audience when they could buy it for a lot cheaper than “smart money” paid. This has all the hallmarks of a high-grade low cost producing mine, I’m not the only one that can see this and as more investors are looking for quality gold stocks they are performing exceptionally well and will grab investor’s attention.
Pretium Resources (PVG.T)
Pretium is another of the excellent performers from my top gold stock picks in the Outlook 2016 report. They have an exceptional high-grade gold project in northwestern British Columbia, in a region known as the Golden Triangle. The project is funded and rapidly moving toward becoming a near term gold producer from a low-cost operation. This is a straightforward story, as gold moves higher and they move closer to production the stock will get a higher valuation and when it starts producing it will be clear this company will grow to be a large, profitable gold miner. There is often a knock on high-grade projects by high-profile commentators covering this stock about continuity issues with high-grade. Which you can say about most high-grade deposits. It is worth remembering that the people running this company are very experienced at building and operating high-grade mines. I like their chances to become a much larger gold mining company and this project could propel them into that middle-tier size which was bought out in the last gold bull market leaving a void. There are projects out there that are too small for the majors but could turn a middle-tier into a major. I see them moving into this void in the coming years.
Sabina Gold & Silver Corp. (SBB.T)
I started coverage of Sabina back in mid-November 2015, when I had Bruce McLeod on for an interview. During the interview, in addition to discussing the economic evaluations they had completed, I also wanted to talk about some exploration work they had reported. They had announced high-grade surface sample results on a geological structure that everywhere else they had found anomalies like this and drilled them is where they found their resources. They are drilling those targets now and I like their chances of hitting and also how that can help their economics as one of their targets is around 500 metres from the proposed plant. This could be great for investors that like exploration results and the advanced worked as well. Recently the company was picked up by a group that tends to bring a lot of hot money into a stock. When they wrote Sabina up, the stock went parabolic, although this feels nice while it happens, hot money doesn’t care about drill results. And it never lasts long. The stock looks very stretched right now, it is almost as if great results are priced into the stock. It is a good time for those sitting on big profits to book some of those profits. It will help shareholders bring down their average price and also take risk out of their position.
Yamana Gold (YRI.T)
Yamana is a company that I’ve followed since the 1990s when they were a tiny exploration company that I watched grow into a major player in the gold mining business. I’ve only ever featured them a couple times as a pick in my reports. After the big market meltdown during the global economic collapse in 2008, within a few months into 2009, I was seeing trends in gold and felt it was ready to turn around. When I see these kinds of trends I look for confirmation in the gold stocks on my radar screen. Everything was telling me that gold was dramatically oversold and ready to come back. Yamana was one of the stock charts I looked at it, and they were a big producer by then, yet they were trading like a penny dreadful. I picked them and they were a great pick. Recently, when I was looking for confirmation that gold was ready to get stronger based on the technical and fundamental indicators I follow, I went back to my old Yamana Barometer. There it was ready for me to pick again because they were hammered and ready to roll. They have a strong group of assets and are ready to keep getting repriced higher as gold keeps moving ahead on the new gold bull run.
My Painful Reminders
Dunnedin Ventures (DVI.V)
This is a company that I was brought into to help turn a shell into a diamond company. The key reasons I was brought in were for my experience in diamond exploration and with First Nations community building. My position was as a Special Advisor to the company, and during my tenure with the company I butted heads with Chris Taylor and the board of directors. They had little experience in diamonds, and I felt they were making some serious mistakes. As anybody that knows me will attest, I don’t pull punches especially when I feel like things aren’t being done the right way. Over the years, I’ve had tons of consulting clients and never had a situation like this.
I’ve had to keep a close eye on the company because a lot of people own the stock because of the diamond credibility I brought to the story and due to how we presented ourselves to the local Inuit community. Last summer, while up in Nunavut doing community consultations and prospecting I was in charge of the company initiatives on community outreach and relationship building with local Inuit groups. We had excellent meetings, received permits to do a lot of work and had no community opposition. In less than a year since I left, the company had no community outreach while out promoting all the work they were planning to do, and yet submitted permits to do even more extensive work on the project. Ignoring the community in small northern communities is never a good idea, leaving the local Inuit government groups feeling like you aren’t respectful toward consultation and transparent is a horrible plan. The local groups made their concerns known in Dunnedin’s latest permit application and the Nunavut Impact Review Board recommended it be changed substantially or abandoned. Now I’m afraid they will make matters even worse by moving ahead with work this summer using their current permit while the NIRB recommendation is with the Federal Minister. This will further anger the local Inuit groups.
Rubicon Minerals (RMX.T)
This was one of my top past picks that I selected after they had done hundred of thousands of metres of drilling and secured the funding to build their mine in Red Lake, Ontario. Despite moving to building a mine without doing advanced economic evaluation, it looked like they had so much high-grade and considering the costs of drilling off a high-grade to bonanza grade deposit is really expensive it made more sense to build a mine and start making money. The reality of the project couldn’t have been further from the truth. It turned out to be a scam that cost investors a lot of money. Sure there were doubters talking about continuity problems, which you can say about most high-grade deposits, but they were on the outside looking in. I went with the drilling and the fact a lot of sharp people got to look very closely at the data and the drill core. But none of those sharp people put out any red flags about the geological merits of the project. Even when Rob McEwan left as a big shareholder it looked to be more about his difference of opinion with the board. Way too many sharp people looked at that core for them not to see the problems. Nobody said anything, and now one of the board members who was in charge of monitoring how the company conducted themselves left the company to be the new President of the Canadian Institute of Mining (CIM). The CIM is in charge of setting reporting standards for the mining industry, and their new leader just left a company that completely failed when it comes to reporting standards. The industry really doesn’t need this kind of stuff.
As you can see, I’ve been pretty busy of late. As I mentioned earlier, the Allan Barry Reports is in really good shape. I’ve focused for over a decade to get the website and the reports to a point like they are now.
I’m ready to start growing the business end of my work more. I have some big plans and will be talking about them in future reports.
All the best,
Allan Barry Laboucan
P.S. my reports are for information purposes only, before making any investment decisions it is important to do your homework and speak with your financial advisers.
Website Sponsor Messages
My work is made possible through website sponsorship and consulting; I invite you to check out my sponsors.
Premier Gold Mines (PG.T)
Gold focused, with strong projects from exploration to mining in Ontario and Nevada. Visit their website at www.premiergoldmines.com to do your homework.
West Red Lake Gold Mines (CSE: RLG)
Gold focused, drilling high-grade gold, targeting Hinge Zone in Red Lake, with Goldcorp as their partner. Visit their website at www.westredlakegold.com to do your homework.
Wolfden Resources (WLF.V)
Base metals focused, with a discovery of high-grade nickel-copper near Snow Lake, Manitoba. Visit their website at www.wolfdenresources.com to do your homework.