Gold Had Its Best January Effect Ever And A Flight To Quality Trend Is Emerging For Best In Breed Miners, Developers With High-Quality Project And Explorers With Important Discoveries
Companies discussed in this report are Agnico Eagle, Alamos Gold, McEwen Mining, Goliath Resources and Power Nickel.
One of the greatest seasonal trends to follow is the January Effect because it has been a solid indicator of what is in store for the year ahead. I look at it as an indicator of the sentiment of fund managers and investors for what they see coming in the year ahead.
Gold had a tremendous start to 2025 with the best January Effect I’ve ever seen for the metal.
Fund managers and investors are no different than regular folks, as a new year starts, it is a time of reflection on the past year and a look forward to the year ahead. Where they put their money in January is something I watch as it helps forecast the year ahead. When they are optimistic at the beginning of a year it is often a good year for that asset.
Many look at it only as a stock market indicator, but I look at it when considering any metal or market. I don’t think it is a perfect seasonal indicator by any stretch, but it is a pretty solid rule of thumb to consider.
One indicator on its own does not make a trend. When I look at the January Effect as an indicator of the year ahead, I first consider the year that passed. Last year gold had a fantastic year, going from the bottom left to the top right of the chart.
The combination of a powerful gold bull market in 2024, and an extremely strong January Effect make for a terrific setup for gold in 2025.
Paying attention to the technical indicators without considering the fundamentals is pretty useless.
A key driver of gold’s bull market in 2024 was the Death Spiral of Debt, put into cruise control by the alarming cost of servicing the debt. Plus, the purchasing power destruction of fiat currencies, and worldwide stagflation, are all extremely bullish for gold.
During 2024, gold made a series of record highs, and in January has set new record highs. Based on the combination of the strong past year and January Effect, gold is perfectly positioned to have another year with a series of record highs.
When it comes to the fundamental drivers of gold, there is a Death Spiral of Debt emanating from America and throughout the world. Gold is at record highs against every fiat currency including the US dollar, because all fiat currencies do well is destroy purchasing power. Plus, although many don’t talk about it, the world has a stagflation problem that is about to become more problematic in America.
With Trump’s tariffs and mass deportations plans, there will be an immediate slowdown in the economy and a pretty serious uptick in inflation. Stagflation is about to get much worse in America, very quickly.
So, the technical indicators for gold are perfectly in place for gold to have a better year in 2025 than the remarkable one it had in 2024.
The fundamental reasons are even stronger with the Death Spiral of Debt making the cost of servicing the debt unsustainable. The fiat currency system is broken which is why gold is outperforming every fiat currency including the US dollar. Plus, at a time when the US economy doesn’t need a slowdown, or an uptick in inflation, Trump’s tariffs and mass deportations will push the economy further down the stagflation path.
What has me most excited is that I am seeing some bullish action in the gold stocks. I’m seeing some that are making impressive breakouts. Now I’m not one of these gold stock bulls that believes we need a rising tide lifts all boats trend. In fact, I don’t want to see that at all because it is frothy and doesn’t last long.
I certainly do want to see a flight to quality type metals bull market where investors focus on best in breed gold miners, high-quality mine developers and explorers with important discoveries. Which is exactly what I see developing as gold has started the year off with a powerful January Effect after having a remarkable year in 2024.
Until around mid-February of 2024, the gold stocks had gone through a bear market for a few years, that got them down to historically low valuations, then they started coming off the canvas. But, they were still in a cup half empty sentiment throughout 2024, even while gold was doing great.
Gold stock investors didn’t have much conviction and every time they stumbled, fear of the light ahead being a train approaching for a head on crash prevailed. Some of my friends that are gold and gold stock bulls mentioned to me that gold stocks were like watching paint dry.
I took that as very bullish, it was the kind of action and sentiment that happens early in a bull market. They start from bear markets which have people on high alert thinking that more punishment is around the corner after each rally.
What I’m expecting to see next is that more investors start looking at the gold cup being less empty. And as we move through the year, confidence will build and we will see a transition to the cup being half full.
In 2024, we saw strong moves in best in breed miners. My top pick of the major miners, Agnico Eagle, had a stellar year, significantly outperforming gold. They had a series of quarters with record free cash flow, and made moves to increase their production while also keeping the cost of gold production well below their peers.
Another of our favourite gold miners that we wrote about several times during 2024 is Alamos Gold. They are very similar to Agnico Eagle. In that they made records in free cash flow in 2024, and made great strides to increase production and dramatically bring down costs of production when they already produce gold for much less than the average cost of production compared to their peers. Like Agnico Eagle, they also significantly outperformed gold in 2024.
I was also pleased to see my highest conviction gold explorer with an important discovery, Goliath Resources, had a terrific January as it announced a spectacular hole of 10 metres of 132.93 g/t of gold. This caused a dramatic breakout and earlier this week they received a strategic investment from another of my favourite picks, McEwen Mining, in which both companies get C$10 million worth of stock in each other.
There is very good potential that McEwen Mining and Goliath Resources holding a significant amount of stock in each other's company could create a bullish loop. Where one goes up and it is bullish for the other.
They both have a lot of pending news. McEwen Mining is working on an updated resource for their gold project in Ontario, in addition, they are currently doing a large drilling program at that project. Plus, at their world-class copper project, they are scheduled to announce a feasibility study in the first half of 2025.
Goliath Resources has 89 holes pending from their 2024 drilling season. Almost all of the pending holes had visible gold, which included abundant fine-grained visible gold and also coarse-grained visible gold.
In the pending holes are 12 that were from the Treasure Island target that I think is going to become an exciting VMS discovery (with high grades of gold and copper) that is a complement to their high-grade Surebet gold discovery.
Once all those results are announced, then they will have a couple of months to plan their 2025 drilling season. At the peak of the 2024 drilling season, they had eight drill rigs spinning at the Surebet discovery that made it their best season ever. Which means another big drilling program at Surebet om 2025, and I think they are also going to have a big drill program to flesh out the Treasure Island VMS discovery.
Back on November 18, 2024, I made Power Nickel a new pick and in a short period of time they have almost doubled in price. They have a high-grade copper discovery at their Nisk project in Quebec that is blessed to be a polymetallic discovery with thick intersections.
It is no wonder they have legendary mining investors Rob McEwen, Robert Friedland and Gina Rinehart on their shareholder roster. Plus, a highly respected expert in polymetallic deposits has joined their board of directors. This group of people jumping onto the team is an excellent sign of the quality of their discovery.
It is an exceptional evolvomg discovery, which has high-grade copper with excellent continuity and plenty of room to expand on their discovery and make new ones. Their team feels they have the potential of a Norilsk in Canada project. Based on what I see from their drill results, the Truth Machine says their optimism is not misplaced.
I’m ready to make them my highest conviction copper explorer with an important discovery. They have several holes pending and have started up the drills for their 2025 winter season. In early March is the PDAC, and I suspect they will be one of the most talked about companies amongst investors at the conference, and big miners should be circling their booth as well.
All the best,
Allan Barry Laboucan
Disclosure
Allan Barry Laboucan is a shareholder of Goliath Resources and holds warrants to purchase additional shares. He is planning to increase his position in Goliath Resources and also make an initial investment into McEwen Mining. He is also making plans to make an initial investment into Power Nickel.
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Allan Barry Laboucan, the founder and owner of Rocks And Stocks News, has extensive experience in the mining sector, beginning in 1993. Since 2005, he has been reporting on the sector. He has worked with talented geoscientists in geology, geochemistry, and geophysics throughout his career in mining. Allan applies the expertise gained during his career to evaluate sponsors and sector picks for reporting purposes. Whether a company is a sponsor or a sector pick, it undergoes the same rigorous review process, with coverage focusing on significant news or developments. Allan may hold shares in companies discussed in the reports, whether they are sponsors or picks, and he discloses such holdings when relevant.
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