Looking Beyond The Headlines To Find The Signal That Is Very Bullish For Gold
Drill, baby, drill. Drilling is the lifeblood of mining. It is what helps miners increase their production and replace old mines with new mines. With new mine developers it helps them enhance the size of their resources and provides the key information that goes into economic evaluations. For the explorers, it is what helps them make discoveries and advance them once they have been made and push them toward development.
During my decades of working in the mining space I’ve noticed some key characteristics of the most successful investors in mining stocks and retail investors. While retail investors are mostly fixated on short-term fluctuations in the stock prices, successful investors are focused on projects and development to move them forward.
There is plenty of noise in mining stocks that affect short-term fluctuations. Such as short-term movement in the metals prices that affect retail investors confidence or lack thereof in assessing news and recognizing when the sector is in a buyer’s market. If news goes out on a day when metals prices are down, the reaction is that the stock price goes down or up slightly and retail investors deem the news to be bad or modestly good.
Whereas successful investors read the news closely to find the signal and make their decisions based on what is important. Retail investors follow the noise, while successful investors follow the signals and ignore the noise.
This is true in all sectors, retail investors look at the headlines and the immediate stock action. They don’t bother to read beyond the headline to dig deeper into what is going to actually move the market beyond a few hours or a day or two.
Yesterday was a perfect example. This weekend Trump put out a post on social media threatening countries in the BRICS alliance that if they don’t keep using the US dollar (USD) for international trade, they will face 100% tariffs. So when the markets opened the USD was up and gold was down.
It is nothing more than a bully’s tactic that doesn’t come from a position of strength, instead like all bully tactics it comes from their own insecurities. It shows that he is worried that the BRICS nations are gaining financial power and want an alternative to the USD for international trade.
He is worried that they will create a BRICS currency that will compete with the USD for international trade. The reality is that a BRICS currency is not going to happen for years into the future. What is actually happening now is they, and other central bankers, are selling USD to buy gold.
They are increasing their reserves of gold to the point that it has surpassed the Euro to now hold second place only behind the USD. Why? Because it is not backed by debt, can’t be printed by governments and is the soundest money.
They see the writing on the wall that the USD can be weaponized, and that America is in a Death Spiral of Debt with the straw that will break the debt camel’s back being the compounding cost of servicing the debt. Plus, the spending addiction of politicians on the left and right, fueled by the Fed. The result is that US debt is in unprecedented supply and buyers of it get paid in a currency that is constantly destroying purchasing power.
Trump calls the USD mighty, when in reality it has lost 90% of its purchasing power since America removed the last vestiges of being on the Gold Standard in 1971. Due to the insane spending of Obama, Trump and Biden, it has gone through another wave of devaluation over the past couple years as their spending caused inflation to ramp up.
Biden gets the bulk of the blame for the inflation because it happened during his term a year or so after he got into office. The reality is that it was the accumulation of debt during the insane spending of Obama, Trump and Biden. Obama was the worst spender of all two-term presidents (Biden deserves an assist for that because he was Obama’s Vice President) and Trump almost beat him in one term and Biden is likely to beat Trump in his one term.
The Fed seems to get a pass, when they are the drug dealer for the spending addiction of the politicians.
Obama, Trump, Biden and the Fed are the cause of inflation and creating the debt crisis which has destroyed the purchasing power of the USD over the past few years and will continue for the foreseeable future. Which in turn is why central bankers in and outside the BRICS nations and Chinese, Indian and to a small extent Western investors are buying gold.
Building economies on debt, and destroying purchasing power of fiat currencies has broken the entire system. A BRICS currency is not the cure, gold is, and the world is returning to the Gold Standard, maybe not in the traditional sense, but the debt and fiat currencies need to be backed up in a more significant way with the soundest form of money, which is gold.
Noise meet signal, it sounds very good for gold.
Mining Stocks In The News
McEwen Mining
Yesterday, McEwen Mining put out a news release with plenty of impressive updates concerning their gold mining projects. It included assay results, geological interpretations and a timeline for updated resource estimates.
The assay results were from the Grey Fox Deposit which is part of the Fox Complex near Timmins, Ontario. The Grey Fox Deposit is in the southern end of the Black Fox project, approximately 3000 metres from the Black Fox Mine which was a 1-million-ounce orogenic gold mine. There is currently a 1.4 million ounce gold resource at Grey Fox that was issued in 2021 with plenty of drilling since that will go into an updated resource to be announced in Q1, 2025.
Grey Fox has six zones, within a vast network of epithermal veins which contain widespread high-grade gold in the quartz breccia zone. In epithermal veins there are two key zones, the quartz breccia which is above the boiling zone (sometimes called the bonanza zone).
What stands out to me is that in the quartz breccia at Grey Fox there is widespread high-grade gold, which is very impressive as it is a mixture of country rock and quartz with the gold in the quartz. This is unusual, usually in an epithermal vein system, you need to get into the boiling zones to hit the high-grade, having it in the quartz breccia is extremely impressive.
Considering the gold grades in the quartz breccia, it makes drilling for the boiling zone below it a very exciting target as it looks to have the potential of being a Hishikari-type analogue.
Another exciting aspect of the Grey Fox zone is that in close proximity, on the other side of a key fault, they have drilled into an orogenic gold zone with excellent grades.
Things are shaping up nicely for McEwen Mining in 2025, which includes drilling at the Fox Complex starting in early January, updated resources at Grey Fox and Stock, and an important feasibility study for McEwen Copper’s Los Azules project.
Power Nickel
They have an impressive high-grade copper discovery called the Lion Zone, in Quebec, which is a polymetallic system. Yesterday, they put out an exploration update detailing recent drilling, plus geophysical and geochemical work they are doing to unlock the potential of the Lion Zone.
Drilling to date has intersected a 550 metre zone that they are doing big step out holes on, in the 150 metre range, and are hitting what they are looking for. Usually, in a high-grade system, step outs are very tight, so to see such big step outs is very impressive. What they are hitting suggests that the system is very predictable and that their geological team have a great understanding of the system.
Helping with the targeting is that the zones are right at the contact of two rock packages that are open for expansion to the east, west and at depth. Of particular note from the news release are cross sections that show the high-grade zone looks to have the potential to get much bigger as they drill deeper as it is hanging together beautifully.
The geophysics are working like a charm as they are being confirmed with the drilling. Plus, they recently added a geochemical expert on polymetallic deposits to their team. He is using geochemistry to understand the zonation of the metals and where to go next with drilling. From an exploration perspective, they are hitting on all cylinders.
As is often the case, great projects attract great people. They are seeing that happen on the geology front and with high-net-worth investors (who have made their fortunes in mining) buying into the stock.
All the best,
Allan Barry Laboucan
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