All Roads Lead To Gold And Recently Mr. Market Has Given Gold Stock Bulls A Great Bargain Hunting Opportunity

Gold stocks featured in this report are Newmont, McEwen Mining, Goliath Resources and Xali Gold.

In response to Trump’s tariff tantrum, the market threw the golden baby out with the bathwater. Not realizing that all roads lead to gold and the gold stocks.

Futures opened on Sunday night with additional selling pressure on stocks, bonds are up and yields down, the US dollar is under pressure and it looks like gold is short-term oversold and ready to rally any day.

The big move after Trump’s tariffs has been to jump into bonds, which ignores the $9 trillion elephant in the room. When that amount of debt has to be rolled over in 2025 the question that needs to be answered is who is going to buy all the debt piled onto what is needed beyond that to run the government’s spending and servicing the debt.

At some point the bond vigilantes have to look at the supply of debt and the potential buyers to soak it all up. By starting a trade war with every American trading partner, the buyers outside of America will go on a buyer’s strike. Beyond that you have the American buyers that have to be nervous, which leaves the potential that the Fed will have to resume its role as the buyer of last resort.

Trump’s team and the MAGA crowd believe that Trump is purposely trying to tank the stock market and economy to force the Fed to lower interest rates. If that is the strategy, it is an expensive bet. Wall Street stocks have already shed trillions in market value. If it works they will save a few hundreds of billions on the debt servicing costs. Not very artful deal making.

The economic ramifications of such a gamble are also very expensive as the economy was already slowing and inflation increasing. This was due to a combination of mass deportations and the threats of tariffs. Both cause immediate problems for economic growth and inflation.

Meanwhile, Bessent is auditioning to be Yellen 2.0 by cheerleading everything Trump does and is adamant there won’t be a recession. Maybe the economy won’t slip all the way into a recession, but without a doubt it is going to slow.

Wall Street is speaking loud and clear saying the economy is heading toward a recession and the market into a prolonged bear market. How deep the recession and correction seem to be their only questions.

Wall Street stocks were already priced for perfection, but with the tariffs it looks like the Es in the PE ratio are about to drop with the Ps. That certainly is not perfection.

All Roads Lead To Gold And Gold Stocks

Gold sold off since Trump's tariff tantrum, but is in a perfect storm. Nothing has changed concerning the long list of reasons to be bullish on gold, it is only getting better.

The Death Spiral of Debt is getting worse by the day with the unsustainable cost of servicing the debt. Plus, the $9 trillion that needs to roll over this year to higher rates is going to make the cost of servicing the debt rise at an alarming rate. If Trump gets his way and gets a rate cut, it will put wind in his sails to keep spending to grow the debt which is exactly why he doesn’t want to be hamstrung with a debt ceiling. A recession, or even a slowdown close to one, will make these issues even more troublesome.

Trump’s tariff war has weaponized trade, after the dollar has already been weaponized. I don’t see a quick fix to the trade war because any country giving into Trump’s bullying tactics to negotiate within someone that can’t be trusted on trade deals (see Canada and Mexico) needs their head examined.

Adding on that the American economy is heading quickly toward troublesome stagflation only adds more power to the gold bull market. Stagflation is the last thing the Fed wants because they have no weapons to fight it off. Cut rates to help the economy and stock market throws inflation under the bus. Keep rates where they are to fight inflation and they throw the economy and stock market under the bus.

It is a lose-lose situation for the Fed and a win-win for gold.

Mr. Market threw the gold stock bulls a gift on Friday, making for some terrific buying opportunities. I was fortunate to take advantage of bargains and made a few purchases, which I will mention shortly, and also have a new pick for my list of gold miners.

Newmont Corporation

For the past year, I have been reluctant to add Newmont to my picks because they were underperforming due to digesting Newcrest and selling off their non-core gold mines. Now that they are through those two hurdles, I am ready to add them.

When it comes to the top 3 gold miners, I had focused on Agnico Eagle because they were firing on all cylinders and still are, as they keep executing brilliantly and their shareholders have been rewarded with their stock significantly outperforming gold. Agnico Eagle is still my favourite pick as a major gold miner, but now I am ready to add Newmont to my pick list because I think they are about to get much stronger.

Newmont is trading well below its 52-week high and multiple year high set in 2022 and even its 1987 high. But, now that they have incorporated Newcrest into the company and also did much better on their sales of non-core gold mines, they are in a good position to see their stock outperform gold in a significant way.

They are no longer the highest valued gold miner in the gold mining business, that position belongs to Agnico Eagle, but they are still the largest gold producer. The first quarter of 2025 should be a fantastic quarter for them as gold reached its highest price for a quarter ever.

Both Agnico Eagle and Newmont are ideal candidates for investors that want to be exposed to gold, with the potential to significantly outperform gold while still having minimal risk.

McEwen Mining

I’ve taken a starter position into McEwen Mining and will work toward a full position prior to them announcing the feasibility study for their world-class copper development project. Once that is completed, then they will be looking to take their McEwen Copper subsidiary public, which should be another catalyst for growth.

I consider them undervalued for their copper development project as it is one of the top 10 undeveloped copper projects worldwide, which is also in the lowest cost quartile for copper development projects. I don’t think they are getting much in the way of valuation for their gold mines and gold assets.

In 2024, they produced 135k ounces of gold and will do around the same in 2025, but then they have a new mine coming into production in 2026 that will help them increase their production and bring down costs of gold production. They currently mine gold for a bit under $2000 per tonne, so at the current price of gold they have a healthy margin.

They also have a resource of around 2.5 million ounces (in all categories) at their Fox Complex in Ontario. A reasonable value for that is pretty close to their current valuation.

In addition, they are doing extensive drilling at their gold properties to increase resources and also to make new discoveries.

Considering their gold mines and gold assets, plus the copper project, I see them as being cheaply valued with plenty of catalysts to unlock shareholder value.

Goliath Resources

Goliath Resources is my highest conviction gold explorer with an important discovery. Since recently releasing their 2024 drill season assay results, the stock is around 50% below its 52-week high. They are only a couple months away from cranking up the drills for their 2025 drilling season, so I took the opportunity to increase my position on the dip.

I’ve been following gold exploration projects in the Golden Triangle of British Columbia for a few decades. Two picks from the reports, Pretium Resources and GT Gold, I selected when they were early in their discoveries and they both went on to be taken over. After closely watching gold exploration in the Golden Triangle for many moons, I know how rare it is to find a grassroots discovery of high-grade gold that has multi million ounce potential. That is Exactly what Goliath has drilled a couple hundred holes into with a remarkable amount of visible gold in the system.

Goliath’s Surebet discovery has the drilling results that make me believe that they have the potential to have the most important grassroots high-grade gold discoveries in the Golden Triangle in decades.

I’m looking forward to their 2025 drilling season as I think it will be their best season ever and intend to increase my position prior to the start of the drilling season. My goal is to be fully positioned by the time the drill rigs hit the ground for the 2025 drilling season.

Xali Gold

This is a tiny junior gold explorer that I consider to be under the radar screen of practically everybody. It is what I like to call an undiscovered gem. They have two of my favourite gold exploration projects in Mexico and yet nobody is paying attention. I am, which is why I have purchased a lot of stock in the company recently and intend to buy more.

Their Sarape project is 57 square kilometres, sitting right beside the Las Chispas mine that was a free cash flow machine for Silvercrest which ultimately got them bought out. Silvercrest was a great pick in the reports, which I started covering as they were turning on the Las Chispas mine and through to their takeover. I know the area around Las Chispas very well.

The best place to look for a free cash flow machine of a gold-silver mine is right beside one. Especially when the cluster of epithermal veins on the Las Chispas extends over to the Sarape ground. On Sarape, there is one vein that is 5000 metres in strike, and another that is 2000 metres in strike. Both have only seen a minimal amount of drilling with a half dozen holes into them in total, five into the 5000 metres Sarape vein and one into the 2000 metres vein. All of the holes only went into the quartz breccia zone of the veins and the boiling zones below them have not been drilled yet.

Xali Gold’s El Oro project is also very exciting as it has around 8 million ounces of historical high-grade gold production and only seen minimal drilling. It is somewhat unique to have high-grade gold rich epithermal veins, Sleeper in Nevada comes to mind. Another unique aspect of El Oro is they have drilled into a stacked boiling zone system. Almost always epithermal veins have one boiling zone that tends to be around 300 metres in depth. Having two of them stacked on top of each other, with minimal drilling on the main vein, and practically no drilling on the remaining veins in the cluster, make El Oro an exceptional gold exploration project.

Of course I have to caution that Xali Gold is much riskier than the companies I mentioned earlier. They still need to raise funds for drilling and then make important discoveries. It is a challenging market to raise funding for gold exploration.

Having mentioned those cautionary statements, I am comfortable to say that I have a pretty keen eye for great gold exploration projects and feel that Xali Gold has two. I am comfortable taking the risks of owning a substantial amount of their stock when they only have a CAD $7 million valuation.

All the best,

Allan Barry Laboucan