FN Media Group Presents Oilprice.com Market Commentary
London – November 17, 2020 – Trump loves gold. The White House decor is now a shrine to the precious metal, and there’s enough gold adorning Mar-a-Lago to fill the central bank coffers of your average country. Even his private plane boasts gold-plated seatbelt buckles, gold bathroom fixtures, and gold silk wallpaper. Mentioned in today’s commentary includes: Newmont Corporation (NYSE: NEM), Eldorado Gold Corporation (NYSE: EGO), Pan American Silver Corp. (NASDAQ: PAAS), Royal Gold, Inc. (NASDAQ: RGLD), Wheaton Precious Metals Corp. (NYSE: WPM).
Gold loves Trump, too. It’s been a banner year for the world’s number one safe-haven asset. Gold has experienced a meteoric rise, hitting a record in August when it was up 40% on the year. An unprecedented pandemic-induced economic meltdown, a weakening dollar, and the cobra effect of massive a government stimulus have sent financial markets into a tailspin.
The fear index is at an all-time high, and it’s poised to get worse. Investors are terrified of a contested presidential election. Wall Street giants, most recently UBS–are telling clients to flee the markets and buy up gold.
Trump, for all his love of gold, is spurring the precious metal on by pumping the fear index further with suggestions that his defeat might be the result of a fraudulent vote. In times like these, gold isn’t just a safe haven, it’s a massive opportunity. But here’s what gold loves even more: The transition from Trump to Biden.
Why? Because Trump put in play a crisis situation in which investors have been fleeing to their favorite safe haven. And now Biden is likely to push gold even further by unleashing another substantial monetary stimulus—one of gold’s favorite things.
Amid this perfect setup, the most rewarding potential opportunities are often found among the junior mining stocks, some of which are set to outperform the market in this environment. But the biggest prize is the junior miner that’s made the next major gold discovery—a discovery that could add billions of dollars to its market cap.
We recently saw a stunning high-grade gold discovery by Amex Exploration in one of the most prolific venues in the world–Quebec. Many probably missed the massive 7,000% upside on that one. But another company is hoping for a repeat, and even several Amex directors and shareholders are piling into it.
The company is Starr Peak Exploration Ltd. (STE.V; STRPF) and they are getting ready for a drill campaign right next to Amex’s discovery. As influential gold voices predict $3,000 or even $5,000 per ounces prices in our uncertain future, there’s no better place to be than on the edge of the next big discovery in a venue that is both prolific and largely untapped. And there’s not much time left before Starr Peak finds out more about what it’s got in the ground, and Starr Peak’s stock has already gained 600% this year.
Want to Ride the Gold Train? Head to Quebec
Quebec is already home to at least 30 major venues and 160 exploration projects. Yet, only some 40% of the province’s mineral potential is known today.
The province’s Abitibi Greenstone Belt is where Amex Exploration recently hit very high-grade gold in its Perron Gold Project. In a perfectly timed move, Starr Peak swooped in and scooped up the land adjoining Amex right before Amex’s big discovery.
From then on, Starr Peak has been aggressively making acquisitions to expand its position. After buying up land next to Amex, and then some more … Starr Peak bought up the past-producing gold mine on the other side. Now, it’s got 74 miner claims on some 2,280 hectares in the world’s hottest new gold venue.
Here are some of Starr Peaks recent additions:
- The NewMétal Property contains 53 mineral claims covering 1,420 hectares of highly prospective ground adjacent to the AMEX discovery.
- The Normétal Mine is a past-producing mine from which approximately 10.1 million tonnes grading 2.24% Cu, 5.41% Zn, 0.526 g/t Au, and 44.45 g/t Ag were extracted periodically between 1937 and 1975.
- The Normetmar mine shows a historic resource of 306,000 t grading 11% zinc, of which only ~48,000 t has been mined since 1990. It also shows several gold intersections.
- Rousseau is a bloc of 12 claims covering over 470 hectares in the Rollmac gold zone of 31,298 tonnes grading 11.99 g/t Au (historical) …
- Turgeon Lake gives Starr Peak two more claims covering almost 113 hectares with samples at the water line assaying up to 168.3 g/t Au, 30.2 g/t Au and 23.7 g/t Au (GM 52490) and a drill hole assaying 18.7 g/t Au over 3.09 m, including 68.9 g/t Au and 10.48 g/t Ag over 0.4 m. (historical).
Right now, Amex is drilling with a vengeance. And it’s drilling closer and closer to Starr Peak’s property line. In fact, the most recent set of drill results announced by Amex came from a drill hole less than 1km away from the Starr Peak property line. With each drill, the results are showing higher grade the closer they get to Starr Peak.
Fully Funded to Drill
But Starr Peak Exploration Ltd. (STE.V; STRPF) isn’t just banking on Amex results here. Far from it. Starr is fully funded to drill and it’s planning a drill program at the end of this year. Right now, Starr Peak is identifying targets.
In August, the company signed on top geological consulting firm Laurentia Exploration–the same firm behind the Amex discovery. In early September, Starr launched VTEM (Versatile Time Domain Electromagnetic) system surveys on the main block of its NewMétal property. It also launched high-resolution drone mag geophysics surveys over the entire property, including its new plays of Rousseau and Turgeon Lake Gold.
Small-Cap Companies Behind Supermajor Discoveries
After years of cost-cutting, gold miners are now ready to spend, spend, spend on exploration – globally. But not in the way you would expect. This isn’t a supermajor game anymore.
Mining majors don’t really explore these days. Instead, they let the junior miners do all the heavy lifting and then buy them up when they make a major discovery, or when they prove it up in the development phase.
That’s why there’s so much risk/reward to junior miners–so much so that Wall Street is expecting them to outperform the market and even short-sellers are now giving them a wide berth. In this case, we’re looking at a small-cap miner sitting right next to another gold discovery. That miner has moved fast to expand its position in a flanking movement. And now, Amex–which has already announced high-grade gold discoveries–is drilling closer to Starr Peak, and the winds of discovery could be blowing in its favor.
The Majors Are Also Looking To Ride The Gold Wave
Newmont (NEM) is the largest gold company on the planet, but that doesn’t mean it doesn’t still have upside potential. Founded in 1916, and based in Greenwood Village, Colorado, Newmont is a veteran miner with one of the top executive teams in the business, and its operations span 11 countries, including gold mines in Nevada, Colorado, Ontario, Quebec, Mexico, the Dominican Republic, Australia, Ghana, Argentina, Peru, and Suriname.
The big news for the company last year was its acquisition of Goldcorp. Though it was controversial at the time, the $10 billion acquisition has paid off in a big way. As gold climbed to record highs thanks to investors piling into gold due to the COVID pandemic, Newmont has seen a boom in its share price. This year, gold has soared from $1282 to over $2000 at one point, and Newmont’s stock rose with it, earning investors as much as 90% returns on their original purchase.
Eldorado Gold (EGO) is another Canadian giant that has had a stellar year. Despite the global COVID-19 pandemic and the extensive measures it’s taken to protect its workers, Eldorado still managed to pull down over $43 million in the second quarter alone. All while maintaining a healthy cash flow of $63.4-million in Q2 2020, increasing significantly from $4.8-million in Q2 2019 and $7.2-million in Q1 2020 as a result of higher sales volume and a higher gold price.
“Our outstanding operational performance during the quarter positions us to continue to generate significant value for our stakeholders. Even while managing COVID-19, we achieved strong quarterly production while seeing lower all-in sustaining costs,” said George Burns, President and CEO.
Wheaton Precious Metals Corp. (WPM) is a company with its hands in operations all around the world. As one of the largest ‘streaming’ companies on the planet, Wheaton has agreements with 19 operating mines and 9 projects still in development. Its unique business model allows it to leverage price increases in the precious metals sector, as well as provide a quality dividend yield for its investors.
Thanks to its aggressive streaming strategy, Wheaton has not only been able to protect itself when it saw its peers take a hit back in March, but it’s also been able to return over 64% for investors year-to-date.
Another stream-and-royalty gold firm, Royal Gold Inc (RGLD) is making waves in the market. Over the past five years, Royal Gold has seen its share price soar by an impressive 233%. And it’s showing no signs of slowing.
Momentum is building behind Royal Gold, thanks to its strong short-term stock activity and rising gold prices. It’s being pegged as a new stock to pick us a hedge against worsening trade conditions brought on by the COVID-19 crisis.
In addition to gold, silver has also had a great year. And Pan American Silver Corp. (PAAS) has reaped the benefits. Though some of its production was taken offline due to the pandemic, Pan American has recently begun resuming operations in some of its most lucrative mines, including its Huaron and Morochoca mines in Peru. Pan American had suspended normal operations at its mines in Mexico, Peru, Argentina and Bolivia in March 2020 to follow through with quarantine measures imposed to slow the spread of the COVID-19 virus, but with Huaron and Morochoca now back online, the company is once again firing on all cylinders.
According to Zacks, the average returns in the Basic Metals sector has been just 3.63% on a year-to-date basis, while Pan American has returned over 50% this year. Since the downturn in March, it’s seen its share price soar from a yearly low of $14.33 to $33.60 today.
By. Archie Faber
**IMPORTANT! BY READING OUR CONTENT YOU EXPLICITLY AGREE TO THE FOLLOWING. PLEASE READ CAREFULLY**
This news release contains forward-looking information which is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ from those projected in the forward-looking statements. Forward looking statements in this release include that prices for gold will retain value in future as currently expected, or could rise based on political considerations; that Starr Peak can fulfill all its obligations to acquire its Quebec properties; that Starr Peak’s property can achieve drilling and mining success for gold; that historical geological information and estimations will prove to be accurate or at least very indicative; that high-grade targets exist; and that Starr Peak will be able to carry out its business plans, including timing for drilling. These forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Risks that could change or prevent these statements from coming to fruition include that politics don’t have nearly the strong effect on gold prices as expected; the Company may not complete all the property purchases for various reasons; it may not be able to finance its intended drilling programs; Starr Peak may not raise sufficient funds to carry out its plans; geological interpretations and technological results based on current data that may change with more detailed information or testing; and despite promise, there may be no commercially viable minerals or ore on Starr Peak’s property. The forward-looking information contained herein is given as of the date hereof and the Company assumes no responsibility to update or revise such information to reflect new events or circumstances, except as required by law.
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