This past week was a slow news week for the mining stocks, could have had something to do with the volatility that looked more like violentility on the Dow and S&P 500. It’s October and that is always a period of added fear as this is the month that the worst market corrections have happened.
The Wall Street stocks have been stretched on valuations for a long time, so a 10% correction is nothing too serious. I don’t see a 25% correction or anything like that coming, although I think we could see a sideways market that trades up and down from the top to the current level for the next 6 months to a year.
While the big stocks were getting the old what for upside the head, a strange thing happened, gold got stronger. Even while the USD was firming up as well. I had to rub my eyes a few times like one of those cartoon characters to make sure I was seeing things straight.
It has been a long time since gold was the flight to quality play while Wall Street stocks were getting the smackdown, but sure enough it is happening. Is this a new trend, with people finally starting to realize how weak the supply chain is for gold and that it is a good asset to park some money in? Well, I don’t know if it is time to start that parade just yet, but I am optimistic that we could be starting an exciting trend for gold.
I watch gold so closely because is it as a very good bellwether for the entire mining space, where gold goes, often, so goes the mining space. Gold is not alone when it comes to metals with weak supply from decades of underspending on exploration and development to replace what is mined out each year.
We are seeing things shape up for a power move in gold and other metals due to the weakness in supply chains, and solid to strong demand. To me this is a time for investors not to be trying to be trading for quick flips.
This is a market that those building up a portfolio of quality juniors, developers and cheaply priced producers, will be well rewarded when gold and the mining stocks move toward a much stronger market.
Disciplined buying of quality and thinking like an owner of the companies, not stock traders, is the best strategy for investors looking for exceptional performance. One of the reasons I’m so bullish at the moment on mining stocks is all about valuations.
Currently, I’m seeing explorers, developers and even the big miners trading at levels where I would even look at the miner’s stocks. I usually never want to look at any of the big mining stocks, they are usually priced reasonably fairly and they don’t leave a lot of chicken on the bone.
Even now I still wouldn’t touch the big miners, but for those wanting to get into the space with bigger companies, now is your time. The reason I’m not interested in covering any is I think the most poorly priced are the explorers and developers and when the stock picking is solid they will give investors more bang for their buck.
For those wanting to build a portfolio of quality, I’ve been writing weekly email newsletters for the past few weeks that will give folks a good list of stocks to check out. On that note, I have a few new picks to add to the list.
Ross Beaty Building His Golden Swansong
When it comes to company builders in the mining business, Ross Beaty is at the top of the list with only a small group of people in that club. His Equinox Gold Mines (EQX.V) is his latest venture that he has mentioned in public that he wants to build as fast as he can to be prepared for the power move in gold that is shaping up.
I like that way of thinking and his timing is perfect. With the valuations on gold mining stocks so cheap, it means projects are cheap and deals can be done. He isn’t going after exploration, he is looking at buying mines on the cheap that are good margin mines and value can be added.
So with his track record and perfect timing, I think he will reach his goal and I highly advise investors in the space to own some Equinox. It is a must own play to sell out in the coming years when gold is much higher.
Looking at the stock chart, it is also shaping up nicely to gain strength in the short term and long term. It has been as high $1.39 and as low as $0.88 during the past year and closed on Friday at $1.00 even.
During the past couple months, it looks like the bottom is in and it has turned a corner. A few of the key things I like to see is after a bottom is in that the next bottom after that is higher. That has recently happened.
I also want to see that the short term moving averages have bottomed and are starting to flatten or turn up, this has also happened. When I see the moving averages change direction, I want to see if it looks like the short term moving averages will pass the 200 day, this is called a Golden Cross.
We aren’t at the Golden Cross yet, but I can see it getting there within the next couple months. Usually owning after the Golden Cross happens is very rewarding, so hold on for the ride up. When things shape up the way they are, current timing is outstanding to become a shareholder.
Peter Megaw Building Another Mexico Mining Company
Mexico has many great things to offer for junior mining companies. It has exceptional geology, you can work pretty much year round and the exploration costs are low. Very few understand these attributes like Peter Megaw, he was a key person with MAG Silver and their Juanicipio discovery and high margin silver mine.
Peter Megaw is building another company focused in Mexico with Minaurum Gold (MGG.V), their key project is the high-grade Alamos silver project in the state of Sonora, Mexico. This isn’t their only project as they have a strong portfolio of projects in Mexico.
They are more than just an exploration company with a really good project with high-grade and other projects, they are looking for big projects, district scale, to build a mining company. Many juniors say that is what their goal is, but few are able to go from exploration to development and become a mining company like MAG Silver did, but if Peter Megaw did it once, he can do it again. I think he will.
Minaurum’s stock has a yearly high of $0.67 and a low of $0.20, and closed at $0.47 on Friday. Their stock is similar to EQX, they recently made a low, then saw a higher low, this is one of my favourite bullish signals for a stock. I love to see stocks after being beaten down, recover and don’t reach the low after making a low.
Their short and longer term moving averages are also converging, this is a signal to me that they are getting close to an inflection point. With the quality of the people, and their projects and a stronger market for gold and silver, it suggests that when they pass the inflection point it will be a breakout to the upside.
A few weeks ago I made the decision to go back to my email newsletter format. In addition to sending it out to my email subscribers, I also publish them on CEO.CA. Below is the list of companies I’ve picked since changing things up, and links to the reports for readers that have missed any can read those as well.
Winds of Change in Juniors and at Allan Barry Reports
Date of report: Oct. 8/2018
Picks in report: Sokoman Iron (SIC.V), Garibaldi Resources (GBR.V) and Advance Gold (AAX.V)
Allan Barry Reports on A Broken Stock Promotion A New Pick and More...
Date of report: Oct. 13/2018
Stock to avoid: Novo Resources (NVO.V)
New Pick: Royal Nickel (RNX.T)
Update on News: Advance Gold (AAX.V)
First Winds Of Change Now Golden Shoots
Date of report: Oct. 20/2018
Picks in report: Garibaldi Resources (GGI.V), GT Gold (GTT.V), Westhaven Ventures (WHN.V) and Advance Gold (AAX.V)
I’m really enjoying writing these reports on the weekends, using the email newsletter format I used years ago when I first started reporting on the sector.
One of the things that always bothered me about the commentary on the sector is that many only highlight their good picks, I like to make it easy for readers to see all my picks. I’ve been at this a long time, and believe my picks and quality of reporting stand up against any others reporting on the sector, so I like making it easy for folks to compare.
There you have it, a couple new picks with big futures and links to my past reports.
All the best,
Allan Barry Laboucan
Allan Barry Reports
Advance Gold (AAX.V)
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.