Election Year In 2024 With Fed Ready To Lower Rates Which Will Put Pressure On The USD And Cause Gold To Set New Record Highs
Gold is set up to have a great year in 2024, with gold stocks primed to do even better. Companies discussed in this report include Goliath Resources, Exploits Discovery and Hercules Silver.
2024 is shaping up to be a very good year for gold and the gold stocks, as well as for other metals stocks. There is still a huge divergence between gold and gold stocks, but I am seeing signs of improvement.
First to act in an improving trend for gold stocks are the majors and ETFs. Several of them bottomed in early October and are trading up significantly from those lows. This trend is also playing out in the mid-tiers, smaller miners, developers and even into some explorers.
There are several reasons to be bullish on gold. Key reasons are that the Free Money Era after the 2008 Global Financial Crisis has caused a Death Spiral of Debt. American debt is now at $34 trillion, with interest on the debt over $1 trillion. The American debt crisis is not sustainable and has only been made worse by the Fed jacking up rates dramatically in 2022 and 2023.
In the December 2023 Fed meeting, there was a shift in their comments from being aggressively hawkish to down right dovish. It is not a coincidence that 2024 is an election year, and that they are making the switch to dovish interest rate policy to help the Biden administration bribe voters. They will need lower interest rates and more debt to persuade voters to vote for a Democratic administration, not a Trump administration. Who wins remains to be seen but it is clear the Fed is going to lower rates in 2024, likely starting in March.
Not only do they seem to prefer Biden over Trump, they also have the debt crisis to deal with which will help them justify lowering rates. They will declare victory over inflation when their fuzzy math government stats show 3% inflation or lower, despite real inflation being much higher. The debt is so severe that the weight of it is unsustainable, spending keeps rising and will continue with two hot wars to help finance.
Another key reason to be bullish on gold is that since the 2008 Global Financial Crisis, Eastern central bankers have been buying gold. With 2022 and 2023 being new record highs for gold purchasing in this trend. They are on gold buying sprees that have never been seen before.
The Eastern central banks see the writing on the wall. Not only is America in the midst of a Death Spiral of Debt, so are many other Western countries. The Eastern central banks are putting themselves on the Gold Standard for very good reasons. Some Western central banks are starting to join this move as well which will likely increase.
It was economic suicide for President Nixon to take America off the Gold Standard in 1971. Since then money printing has gone wild. Causing hyper-inflation in the 1970s and in the past couple of years. President Biden, Fed Chairman Powell and Treasury Secretary Yellen would have you believe it is not hyper-inflation. But, they can’t fool consumers that see what real inflation is every time they have to pay for stuff. Consumers know that inflation is much higher than the silly stats put out by the government statisticians.
Milton Friedman talked about how inflation is always a product of monetary policy. In 2020, there was around $4 trillion USD in circulation, at the end of 2023 it had ballooned to around $19 trillion. If the White House, Fed and Treasury were being honest, they wouldn’t need to wonder where the inflation came from, they would only need to heed the words of Milton Friedman. But of course they won’t. Neither will the Washington politicians take responsibility for their role of spending like lunatics to get the debt up to $34 trillion.
The Democrats and Republicans have been on a spending spree since Reagan came into power. When he came into office, the debt was a little under $1 trillion, when he left office it was nearly $3 trillion. Successive presidents ever since, right up to Biden, have consistently overspent and now the debt is $34 trillion and the interest on the debt is over $1 trillion and growing.
The money printing and debt are not a left or right political thing, all politicians love to spend like pigs at the trough with insatiable appetites to spend. They and their accomplices at the Fed, Treasury and Wall Street, are the ones to blame. None of them will take their respective credit for making the problem which is why it is a Death Spiral of Debt.
Economics has a way of fixing stupid, it was extremely stupid to end the Gold Standard and give politicians and other agencies a wide open money printing press and a credit card with no limits. The Eastern central banks are wise to the story and returning to a Gold Standard as will the rest of the world. As they have been doing this, they pushed gold to record highs in all global currencies.
Based on all of these various issues and more, gold is in a bullish trend against all fiat currencies that only looks to go much higher.
Eastern central banks buy a lot of gold as do the people in China and India. They don’t buy gold stocks. Which is why there is such a big divergence between gold and gold stocks. Canadians, Americans, Australians and Europeans buy gold stocks. We are seeing signs that they are getting more bullish on gold stocks.
Since many gold stocks, mainly in the larger names, bottomed in early October 2023, then have gotten stronger since, green is showing up on the gold stocks trend. Even if the crowd doesn’t believe it yet. Getting in ahead of the crowd can be very lucrative for investors with vision and I think the crowd approaching is one to get ahead of.
The stage is set for 2024 to be very bullish for gold as the Fed lowers rates. This will put pressure on the US dollar and drive gold much higher. As gold sets new records in USD terms, it won’t take much optimism of new buyers coming into gold stocks to push them much higher as they are starting from such low valuations that haven’t been around since just before the 2001 to 2011 gold bull market.
Things are shaping up nicely for gold to be good in 2024 and gold stocks to be better.
In The News
At the beginning of a new year, the news flow of gold stocks and other metals stocks is strong, with 2024 following this trend. It is often a bullish seasonal trend because the Tax Loss Selling Season is over.
I have a few companies to discuss that had impressive news and wanted to offer my insights into what stood out in their news for me.
Please don’t forget, these are my opinions, they aren’t buying recommendations, it is up to readers to speak with their financial advisors to determine what makes sense for your risk profile. My risk profile is different than most, I’m very bullish on gold, gold stocks and other metals stocks.
Plus, I am a risk taker at heart and love the treasure hunt for new discoveries and following companies that have made new discoveries to develop and mine them. You can consider me biased about everything I talk or write about. I’m no different than anybody that has an opinion on anything, I’m biased in that I want to be proved correct. I use my 30 years of experience in mining to base my opinions on, so I like to think my guesses are fairly well educated.
Goliath Resources (GOT.V)
Goliath Resources is my highest conviction gold discovery story. They have drilled over 65k metres on their Golddigger project in the prolific Golden Triangle of British Columbia. The region they are in is well known for big high-grade mines. Particularly important is the Red Line which is a key geological marker that all the mines in the Golden Triangle are found in close proximity to. Their Golddigger project is in the sweet spot of the Red Line that runs beside and through the Golddigger project.
This week they put out an important news release from drilling they did during the 2023 drilling season. The key highlights for me is that they dramatically increased the modeled size and gold grades at their Surebet Zone, Bonanza Shear Zone and made a new high-grade gold discovery at their Golden Gate Zone. Surebet is in the sediments, Bonanza Shear is at the bottom of the sediments where they come into contact with the top of the volcanics. Golden Gate is in the volcanics.
At the beginning of the 2023 drill season, the Surebet Zone was modelled to be a target with 5,500,000 m3 volume at 6.31 gpt AuEq. After the 2023 drilling season the model was updated to see a 24% increase in volume to 6,800,000 m3. Equally as impressive was the increase in grade by 43% to 9.04 gpt AuEq. This zone has seen significant drilling that as the drilling density has increased it has enabled better modelling of the zone which remains open.
At the beginning of the 2023 drill season, the Bonanza Shear Zone had less than 30 drill holes and at the end of the season it had over 100 drill holes. It went into the 2023 drill season modelled to be a target with 13,000,000 m3 at 2.71 gpt AuEq. This zone also saw a remarkable increase in volume and grade. The calculated potential volume increased by 15% to over 15,000,000 m3, while the modeled grade increased by 200% to an average grade of 8.14 gpt AuEq. At the beginning of the season due to less drilling than in the Surebet Zone, it wasn’t as well understood, but with the additional drilling and increase in the modelled grade and volume it is clearly emerging as a higher priority target than the impressive Surebet Zone. Another important factor to point out is that the Surebet Zone and Golden Gate Zone dip to the southwest with a slight offset yet they fit nicely together and point toward the same heat source. Meanwhile Bonanza Shear is more flat with a gentle dip to the northeast. Which begs the question, where is its source? I don’t think that at this stage it is a stretch to think it comes from a different heat engine, or another portion of the same heat engine, or the possibility that there could be a series of feeders that caused the mineralization. This is an excellent problem to have for a new discovery. This zone is also open.
The Golden Gate Zone discovery was a game changer event for the Golddigger project that has only seen minimal drilling into it so far. One reason is that it could follow a similar path as what happened to the grade and volume increase at the Bonanza Shear Zone as it saw more extensive drilling. Another exciting factor is that it seems to be part of the same mineralizing system as the Surebet Zone. If you look at the 3D model, the Surebet and Golden Gate Zones have basically the same dip and they look to be the same system with a slight offset, they fit almost perfectly together. What stands out to me is that Surebet is big and high-grade and the mineralization is in the sediments, which suggests a large high-grade feeder system. Gold Gate is in the volcanics immediately below and had a remarkable hit of 9 metres (~true width) of 34.03 g/t AuEq or 1.09 oz/t AuEq (32.55 g/t Au and 65.71 g/t Ag) approximately 20 metres below the Bonanza Shear. Another impressive hole was in close proximity in the Bonanza Shear at the contact between the sediments and volcanics. It returned 65.00 g/t AuEq (64.88 g/t Au and 8.03 g/t Ag) over 7.90 metres. More drilling will be needed to better understand how these hits all fit together at the point where there is a transition out of the sediments, into the contact of the sediments and volcanics that then continues into the volcanics. It is definitely juiced up with high-grade gold that continues into the volcanics.
They have key questions to answer with the 2024 drilling season. It will be exciting to learn how much room there is for the Surebet and Golden Gate zones to extend into the volcanics and how big the source is that caused their mineralization. Chasing that feeder system will be made much easier because they can go down to the bottom of the mountain to drill it. Equally exciting is learning how much bigger the Bonanza Shear is, and what the source of its mineralization is. Another big picture geological question to answer will be are there a series of feeder zones pumping the mineralization up into the Surebet and Bonanza Shear and are they part of a network coming off one big heat engine?
All the drilling they have done to date, combined with the metallurgical work that shows excellent recoveries, clearly shows that the Golddigger project is emerging as a Tier-1 gold discovery as majors define them. It stands to reason that several gold focused gold mining companies have to be watching closely the developments at Goliath’s Golddigger project.
Goliath is a sponsor at Rocks And Stocks News, Allan Barry Laboucan is a shareholder of Goliath and holds warrants to increase his position.
Exploits Discovery Corp. (NFLD.CSE)
Exploits is what I consider an undiscovered gem of a gold explorer. They are focused in the emerging gold discovery region of Newfoundland where New Found Gold is the leader. They caught my attention when they got a key piece of ground immediately to the north of New Found Gold.
They have only had one small drill program into this project called Bullseye. They hit high-grade to bonanza-grade gold in their first drill program. In the same kind of rocks that New Found Gold has made many impressive gold discoveries. In fact, one of New Found Gold’s exciting discoveries is Everest just on the other side of the claim boundary.
New Found Gold also has another discovery a little further south from Everest called Jackpot. It is also just on the other side of the claim boundary with Exploits. Additionally, the associated structure to Jackpot looks to extend well onto Exploits’ claim.
Yesterday, both New Found Gold and Exploits had news out that has an impact on both. New Found Gold announced a new discovery between Jackpot and Everest called Honeypot. The highlight hole from Honeypot returned 26.4 g/t Au over 7.65m. They sure are hitting a lot of high-grade gold on the other side of the claim boundary between them and Exploits.
Exploits picked a great day to announce that their 2024 winter drilling program is underway on the Bullseye gold project, on the same day New Found Gold announced drill results from their Honeypot discovery. The Jackpot, Everest and Honeypot discoveries are all within a few hundred metres of the claim boundary with Exploits.
This is an orogenic gold discovery camp with the main deep structure being the Appleton Fault. Orogenic gold systems come from very deep crustal structures that are the pathway for the gold to make its way close to the surface. As the mineralization gets closer to the surface, secondary faulting associated with the deep crustal fault is also important as the gold can make its way into them as well.
The Appleton Fault goes through Exploits’ Bullseye project and there is also a network of secondary faults at their project as well. Gold mineralization in their first small drill program checks off another important box to make an important orogenic system gold discovery.
They have learned a lot from the discoveries New Found Gold has made right beside them. Plus they have done additional geological work to help them vector in on where they want to drill on their second drill program at Bullseye that is now underway.
I like finding stories like this that few are paying attention to that are showing all the signs of the potential to make high-grade gold discoveries. Especially when they can learn from discoveries made right beside them with an exceptional team like they have at New Found Gold. I’m very much looking forward to seeing them make progress with their 2024 winter drilling program.
Hercules Silver (BIG.V)
They have silver in their name but the emerging discovery for this one is that they made an impressive copper find. They had been drilling away on a near surface silver discovery, then decided that a big geophysical anomaly below it warranted some holes. They did a handful of widely spaced holes into the anomaly and tagged thick intersections of copper.
I made them a pick in the report off their first hole, simply because as folks like to say, big discoveries leave big footprints. Their first hole definitely delivered with a thick intersection of high-grade copper. It also impressed me that the way they described it geologically was that it was not yet into the guts of a copper porphyry.
The stock was trading around 60 cents when I made them a pick, then shortly afterward, Barrick made an above market private placement in them. They had actually been buying in the open market after the first hole announcement, and made another investment after they did the above market private placement. I was very surprised when Barrick made these moves as they are usually very selective when they invest in a junior’s discovery. Doing it after the first hole caught a lot of people by surprise and it subsequently traded as high as $1.61, which is their all-time high.
Then on Jan. 2/2024, they announced assay results that didn’t meet the markets expectations and the stock got cut in half from its highs. Whenever a new discovery comes on the scene, in the early days of drilling it is important to keep things in perspective.
It is always a good idea when a stock goes up dramatically in a short period of time to take some gains off the table. Even if you end up leaving bigger gains for others. It went up significantly since I made them a pick and a few months before that the stock was trading around a dime so plenty had chances to take profits.
Getting too disappointed after a junior takes a substantial haircut could cause one to miss an opportunity. Those that were fortunate enough to lock in some gains have dry powder to reload after the haircut.
That’s about as far as I want to go into discussing the swings in the stock and how one can play swings in juniors when they make a new discovery. What is much more interesting to me is putting the drilling and project into perspective.
Their initial handful of holes were kind of wildcat drilling into a geophysical anomaly. No matter what happened with the trading since, I still think they are onto an important discovery. One of the first questions that an exploration company needs to answer is whether or not the geophysics are working to help them find mineralization. My mentor in geophysics always reminded me that sometimes the magic works and sometimes it doesn’t. What they know from the early drilling into this discovery is that the geophysical method they used to pick the holes worked to tag mineralization.
The geophysical method they used had limits to its depth penetration and resolution. So they went in with a more robust geophysical survey. The new one will give them significantly deeper penetration and much better resolution to see the hot spots inside the anomaly. The results of the new survey are pending and should be out soon.
I will look very closely at the new data and will be interested to see how the drill holes appear in the anomaly. What I expect to see is that they were likely on the edge of the main hot spots in the anomaly. Some of their holes ended in mineralization so it won’t surprise me if the geophysics suggest they should have kept going. Hindsight is 20-20, especially when they have additional geophysical and drill hole data. So far they have done an impressive job with their drilling and funding for future drilling and by doing a much more robust geophysical survey.
When Barrick came in, it was a very good sign that they saw potential in the project that it could turn into a Barrick sized target. They are not interested in small discoveries, they need huge discoveries. The fact that they were aggressive in investing in Hercules at such an early stage of exploration speaks volumes to me. The last time I saw them do something like this was when they took over Arequipa in its very early stages of drilling.
Time will tell if Hercules has found a Barrick sized discovery. I like their chances to have something special based on their early work. Along the way I will continue to follow if they can make it bigger or if they have already hit the best it has to offer. Based on what I can see so far, I certainly believe that it has the realistic potential to get much bigger.
In Closing
I opened this report presenting many of the key fundamental reasons I’m bullish on gold for 2024. One of the driving forces for it this year is that 2024 is an election year and I don’t think it is a coincidence that the Fed is turning dovish in their commentary that will turn into dovish interest rate reductions.
I can see a very strong technical trend developing since the gold lows in October followed by a series of higher lows.
I’m also very encouraged to see gold stocks joining the party with many, from the majors down to even some juniors seeing lows in October followed by a series of higher lows.
In this report, I also presented a few companies with news in early January. I’m seeing this in others as well and will be reporting on them in future reports.
All the best,
Allan Barry Laboucan
Rocks And Stocks News does not make buying or selling recommendations. The reports are for information purposes only. Sponsors pay a fee to Rocks And Stocks News for content creation. This funding helps cover the costs of research and reporting on the sponsors and picks that aren’t sponsors. Before making any investment decision it is important for you to speak with your financial advisors to consider your risk profile. It is also important to do your homework. To help in that process, Rocks And Stocks News means to be a gateway by doing reports and interviews of management of sponsors and picks. The reports and interviews should not be considered investment advice. Allan Barry Laboucan is the founder and owner of Rocks And Stocks News, he has worked in the mining sector since 1993 and has been reporting on the sector since 2005. He has worked with and been mentored by very talented geoscientists in geology, geochemistry and geophysics. He uses the skills he has picked up during his career to assess sponsors and picks in the reports. Whether a company is a pick or a sponsor they go through the same filter and are reported on when important news is made that Allan Barry Laboucan wants to discuss on the Rocks And Stocks News platform. He may own shares in sponsors and picks for investment purposes.