Rocks And Stocks News Special Christmas Report

I got inspired to write this report on Christmas Day, I hope you are enjoying Christmas Day and this is my little present to you.

This time of the year is always a period of reflection for me. One of those things that popped into my mind is how I started off research and reporting on the mining sector back in 2005.

Part of the reason for that is I recently started using Substack and I’m really enjoyed it. To the point that I’m going all in with Substack. I’m now pointing my website visitors to my Substack page. I’m transitioning my podcast to Substack and posting all my videos on Youtube and Substack.

The reason is simple, they make it extremely easy to bring all my reporting together, intergrate my email list to easily distribute my work to followers, and they provide excellent statistics.

In the past I had to go to several sites, including my own to put my work out, now I can basically do it in one or two places at the press of a button to get my work out.

When I started researching and reporting on the mining sector, it was purely by emails to a group of friends and associates in the mining sector. One of my readers was Pat Bolland who worked at the Canadian business television station BNN. In 2007, his producer contacted me to see if I was interested in coming on to chat with Pat about my reports and the companies I followed.

It was an exciting period for me, I was on the channel regularly and we were in the midst of a bull market for gold and other metals that started in 2001 until 2012. It brought me exposure to a much larger audience to talk about the industry and my picks.

At heart, I’m a treasure hunter. I started working in the mining exploration business in 1993, and have loved it ever since. Research and reporting on the sector has offered me the opportunity to talk about topics I have a passion for.

After 2012, I stopped being asked to appear on BNN, I wasn’t the only one. A correction in mining stocks had started and they slowed down covering the explorers and mine developers. They really pretty much abandoned the sector.

The Canadian brokerage house analysts and business media did the same thing. Business media in Canada switched to focus on the largest companies in the natural resource space. Brokers found tech stocks, weed stocks and crypto stocks were a lot more lucrative to report on because their brokers could do much larger financings and generate bigger commissions in those kinds of stocks.

This created an opportunity for me as I liked to appear on camera, despite having a face made for radio. So I started using Youtube to conduct interviews of mining company executives and do my sector reports. As the saying goes, when one door closes often another opens.

My time appearing on BNN gave me some valuable lessons, it gave me experience in being asked question in a pressure packed environment on national television. I also got to be the one asking questions as I would sometimes appear as a co-host and ask guests questions.

Another major lesson I learned was viewers wanted good picks that had the potential to go up relatively quickly, so I needed to use stock charts for timely picks. Until that point my research and reporting was mainly focused on good picks, with strong stories. Blending good picks with timely indicators has helped me greatly ever since.

The main reason that I was so focused on the quality of picks was because during my career in mining, I had the good fortune of working with extremely talented people in geology, geochemistry and geophysics. But, for investors, they also want timely picks and using charts helps me deliver that combination to my audience.

Since starting on Youtube with my interviews of executives of mining companies, I’ve been blessed to talk to some of the best known executives in the business and many up and coming executives. This has given me and my audience tremendous insights into what the executives of these companies focus on.

For those that have watched or listened to my shows, it is pretty clear how much I love talking about rocks and stocks. Which is why a couple years ago I stopped reporting under the name Allan Barry Reports and founded Rocks And Stocks News.

Lately, as I started using Substack because they make it so easy, it has reminded me that a lot of my audience came to know about my reports through the reports I wrote. So more and more, I’ve been thinking about writing reports again.

I will still be doing my interviews and many of my sector reports on video through Youtube and here on Substack. I will also be providing some of my reports through podcasts here on Substack. In addition from time to time, I will add in the odd written report on Substack as well.

I’m seeing some trends developing that I think will make investors in this space a lot of money. Two key ones are 2022 has been a challenging year for a lot of mining related stocks. We are now seeing valuations at record historical lows. The last time this happened was in the late 1990s and the year 2000.

Then in 2001, a decade long bull market for gold and metals stocks started. A key reason for the mining stocks to be so cheap in the year 2000, was because the USD had been on a long term bullish run that had put tons of pressure on gold and other metals priced in the USD.

Fast forward to 2022 and we are seeing history repeating. In the chart below, you will see for most of 2022 the USD had been on a powerful run. Below is the chart on the USD index which is the US dollar against a basket of global currencies. As you can see it was moving up against practically every global currency. It was fueled by the relentless interest rate increases by the Federal Reserve in their effort to fight runaway inflation.

Chart courtesy of Finviz.com

When the Federal Reserve is raising rates, big investors buy the US dollar so they can buy US bonds at rising rates. But, as you can see in late September it topped and has had a significant correction since.

While the Federal Reserve has been fighting a losing battle against inflation, they have raised interest rates aggresively yet inflation has been much less than transient and very stubborn. While they have been relentlessly raising rates, they are breaking things.

One can see that in housing sales which are dropping at an unprecedented pace. The economy has slowed and is running toward a steep recession. The Federal Reserve can see they are breaking things. Chairman Powell recently commented about their concerns for overtightening. They also announced in their December meeting that they are getting close to their peak interest rate level.

In fact, they have started the pivoting process. For several meetings they had raised interest rates by 3/4 of a point, but in December they only raised 1/2 a point. To reach their peak rate they may only have two or three more 1/4 point raises left. The currency traders are seeing the writing on the wall, that the Federal Reserve’s relentless raising of rates is coming to an end.

The bond market is seeing the same thing with the inverted yield curves, irrespective of whatever time frame you want to look at. Inverted yield curves are a very accurate predictor of recessions and they are flashing a signal that the economy is in for a steep recession in 2023.

While the USD is coming under pressure, and the bond market has inverted yield curves we are seeing some interesting things happening with gold, silver, copper, zinc and other commodities priced in the USD.

We can see an interesting trend developing with gold in the chart above. Right around the same time the USD was topping in late September gold had one of three bottoms. Followed by an aggresive breakout in early November. Since then the 50 day moving average is turning up, and gold has traded above the 200 day. The 50 day is heading towards a Golden Cross in January, 2023.

Silver often follows gold, but lately it has been leading gold. It is currently trading aggresively above the 50 day moving average and the 200 day moving average. It has already reached a Golden Cross.

Dr. Copper is also joining the party. After suffering a Death Cross in June, 2023, it is trading above its 50 day moving average and heading toward a Golden Cross. A natural question is if the economy is heading toward a steep recession won’t copper suffer?

As it is priced in USD, it will benefit from a weaker dollar. In addition, the inventories are very low and major copper mining companies are predicting lower production, while demand from electrical vehicle makers is strong.

Ultimately, I don’t think it will be long after the Federal Reserve stops raising rates, that due to the dramatic slowdown in housing sales and a slowing economy will force them into their next round of stimulus. One of the benefactors of this will be governments around the world wanting to move toward more electrical vehicles.

Zinc is also joining the party. It is important for many aspects of our modern lives. It bottomed in October, 2023, and is trending up.

The reason that I highlighted these metals in this report is because I follow them closely as several companies I focus on in my reports are involved in exploration for these metals.

I have a company that is focused on three of these metals and possibly could have all of them. It has significantly outperformed many of its peers. Before I present the company, I wanted to put things into context by providing a chart of the GDXJ which tracks the movement of explorers and new mine developers closely.

As you can see, the GDXJ is closely following the trend in Gold and is looking toward a Golden Cross in January, 2023. I want to present this chart to show how one of my favourite gold stocks is significantly outperforming many of its peers.

i-80 Gold (IAU.T and IAUX.NYSE) is a gracious sponsor of my Rocks And Stocks News shows. I’ve had the pleasure of interviewing its CEO, Ewan Downie, on several occassions. I feel blessed to have them as a sponsor, and that their CEO makes it a point to come on shows shortly after news is out to add context to the news. This gives myself and audience greater clarity.

Many mining stocks have seen 2022 to be a challenging year. But I see some common characteristics of companies bucking the trend. They are actively working on advancing their projects and eager to tell their stories. This is against a backdrop when many market commentators and companies are pulling in their horns and somewhat afraid to put themselves out there and highlight what they are doing.

As you can see in their chart, they are benefitting in a big way from agressively advancing their projects and telling their story. In early November, 2022 the stock broke out remarkably and is trading well above its 50 day moving average and 200 day. It has also gone through a Golden Cross.

The key reason for this significant outperformance compared to many of its peers in the GDXJ was because they had spectacular results out from drilling at their Ruby Hill project.

On November 14, 2022, they put out a news release, this is the headline from that release: “i-80 Gold Hilltop Discovery Yields Bonanza-Grade CRD Mineralization at Ruby Hill.” The highlight drill hole from that news release reported results that included 60.2 g/t Gold, 908.7 g/t Silver, 15.7 % Lead and 1.1 % Zinc over 10.0 m.

As you can see in their stock chart, this news release caught the market imagination. As it should because the in situ metals value of the rock is in the thousands, making it some of the most valuable rock being found anywhere in the world, for any metal.

CRD systems can be very exciting because they can be big and high margin mines. One of the big winners in the exploration sector over the past decade was Arizona Mining. They found a valuable CRD that caused their stock to blast off an ultimately got them bought out at close to $2 billion CAD. Yet, i-80 Gold is trading for less than half this valution.

Another example of how undervalued i-80 Gold is can be determined by looking at their valuation relative to their resources. They currently have resources around 14 million ounces of gold. At their current valuation they are only seeing a valuation around a little over $60 CAD for their gold ounces in resources. To put that into context, during a healthy market for gold stocks valuations of gold ounces in the ground can reach $150 to $200 USD.

These aren’t the only reasons I make the case that i-80 Gold is undervalued. They aren’t getting much value for the potential to grow their resources. Meanwhile, at their Granite Creek project they have found the impressive South Pacific zone.

The South Pacific zone has a strike length of over 600 metres, it remains open at depth and along strike to the north. It has exceptional continuity of high-grade gold and as they go deeper the grade is stronger. Equally as impressive is that it remains open along strike.

It is hosted in the same kind of rock and near a key structure as a massive gold mine in close proximity. If you follow the rock and structure to the north you run into the Turquoise Ridge mine which is over a 20 million ounce gold mine. To say they are in elephant country is a completely accurate statement.

Without a doubt, drilling at the South Pacific zone at the Granite Creek project will add to their resources. Even better, it is moving toward production right now.

Another place they can add significant gold ounces to their resource base is from drilling at their Ruby Hill project. To the west of the historical Archimedes open pit, they have drilled into the Ruby Deeps deposit that has thick intersections of high-grade gold, excellent continuity of the high-grade gold and is wide open for expansion.

Just above the Ruby Deeps deposit is their 426 zone that is directly below the west side of the Archimedes pit. The 426 zone can be accessed from the bottom of the pit and gives them easy access to Ruby Deeps. An added benefit is that a bigger portion of the 426 zone has more oxide material than they expected. High-grade oxide gold is a wonderful addition to the mix because it can be mined cheaply at high margins.

The Ruby Hill project has shot over the Granite Creek project to become their #1 project because in addition to Ruby Deeps and the 426 zone, to the south of the Archimedes pit they have found the high-grade zinc-lead-silver CRD that also has a unique high-grade gold overprint.

Most CRDs don’t have much in the way of gold, but in the case of i-80’s CRD it has remarkably high-grade gold overprinting the CRD. What is likely causing that is the CRD and gold system came up through the same faulting system. Faults are cracks in the earth that are a path of least resistance that allows metals bearing fluids to make their way close to surface.

Ruby Hill’s CRD has a rare combination of a high-grade zinc-lead-silver CRD with unique high-grade gold. All signs are that this CRD can get very big with extremely high values of in situ base and precious metals.

Whichever metric you want to use they come out cheap, including i-80 Gold trading at less than half the valuation Arizona Mining received in its takeover price. I would add that the grades i-80 has in its CRD are considerably higher than the grades in Arizona Mining’s Taylor deposit resource.

If you look at the metric of their current valuation relative to their known resources makes them cheap compared to more reasonable valuations of ounces in the ground. It is important to point out that based on this metric they are getting close to zero valuation for their realistic ability to add significantly to their resources.

However you slice it, i-80 Gold is trading at a very cheap valuation. Most importantly when looking at their various assets, they have a runway to become the second largest gold mining company in Nevada in the next few years.

I’m seeing similarities to a young Barrick Gold in i-80 Gold, I can see them on a clear path to become a much bigger company over the next few years. I believe they are perfect candidate to be a cornerstone holding for investors that want to be in a high growth gold mining company that is trading at a cheap valuation with plenty of catalysts to unlock shareholder value.

Wrap Up and Reports To Come

I wanted to use this report to explain some of the changes that are happening, and why, at Rocks And Stocks News.

Additionally, I wanted to provide charts to show why I’m bullish on gold, silver, copper and zinc.

I also wanted to discuss i-80 Gold as an example of what can happen when a company has great results and is eager to tell their story. As I mentioned I’ve done several interviews with their CEO Ewan Downie. You can find them on my Youtube Channel.

i-80 Gold is not the only company that I’ve been following with interviews of their executives and talking about in my reports on the sector that have significantly outperformed their peers. You can also find them at my Youtube Channel.

I also wanted to promote some of the reports I will be putting out over the next couple weeks. One of the most reliable trends in the mining sector is the tax loss selling trend. In the final weeks of a year, plenty of good stocks get hammered as investors lock in their losses to write off against their winners. Even good performers can suffer from this as they get sold off in sympathy to the tax loss stocks.

Inevitably what happens if you take advantage of quality companies that are oversold and have catalysts, you will often get remarkable returns in January and February. The final day for tax loss selling in Canada is December 28th, I will be putting out my annual tax loss selling picks on that date.

Another report I have done in the past is a year in review report, I will do the 2022 Year In Review Report toward the end of next week. Following that in the first week of 2023 I will issue my 2023 Year Ahead report. You will be able to find those on my Youtube Channel and here at Substack.

In January, I will continue with regular reporting through my mining company executive interviews and special reports on the sector.

As always my reports are for research only, before making any investment decisions you should speak with your financial advisors and do your homework. A good place to start your homework on the companies I follow is on my Youtube Channel. Then check out the websites of the companies I report on where you should look at their news releases and corporate presentations.

I hope you are enjoying the holidays and I would also like to wish you a prosperous 2023.

All the best,

Allan Barry Laboucan

Founder

Rocks And Stocks News