Shakeout In Gold Meet Breakout
Shakeouts in long-term bull markets are great opportunities to buy the dips. Especially when the shakeout is a spike down which is emotional in nature, not based on the fundamentals of the prevailing bull market. Gold’s recent action is just such a situation.
Nothing has changed regarding what has fueled the powerful gold bull market. The Death Spiral of Debt is still going strong and driving the world back to the Gold Standard (the easy way) or a default on the debt (the hard way) in the future. The straw that will break the debt camel’s back is the cost of servicing the debt.
Chinese and Indian consumers are buying and holding physical gold as are central bankers in the BRICS nations. This recent pullback in gold was driven much more by paper gold than the strength in demand for physical gold and the broken supply chain of physical gold.
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Spotlight On A Pick
This section of the written reports is for highlighting sponsors at Rocks And Stocks News and picks.
Equinox Gold is a Ross Beaty company that is going through a transformative period as they bring the Greenstone Mine into full commercial production. Ross Beaty is a mining legend with several massive successes under his belt that he built using the buy and build strategy for growth.
The Greenstone Mine was discovered by Ewan Downie’s Premier Gold and Equinox took over Premier Gold for its interest in the Greenstone Mine. Then they bought out Orion Gold’s interest to gain a 100% interest just before bringing the Greenstone Mine into production.
On the Lassonde Curve there are two exciting periods, one is on the left side of the curve when a discovery is made. Then there is a valley (the development discount window) when a project goes through economic evaluation to assess its viability, permitting and funding the cost to build the mine and then construction.
Then there is a sweet spot as a project is built and goes into production, and as it moves into full commercial production it goes up the right side of the Lassonde Curve. Greenstone is in that sweet spot now with the Greenstone Mine.
When the Greenstone Mine is in full commercial production, it is estimated to be around a 400k ounce producer of gold per year. Which basically doubles Equinox’s gold production and gets them to the cusp of reaching one of their milestones which is to become a one million plus ounce gold miner.
Often it takes a couple quarters of full commercial production for analysts to get the numbers they want to see from a new mine. Which is why there is an opportunity for investors to position themselves in the sweet spot before large institutional investors arrive.
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Meanwhile gold stocks were only just starting to join the gold bull market prior to the recent shakeout and several of them were taken out to the woodshed.
Prior to the shakeout they were still trading at historically low valuation metrics, suggesting that the gold bull market is in its earliest days. The recent shakeout in the gold price has caused sale prices for many gold stocks.
This recent shakeout in gold has created an opportunity for serious investors that like to buy when stocks are on sale. Which is why I will be trying to add some new picks to the current shopping list at Rocks And Stocks News.
Nothing has changed about the fundamental drivers of the powerful gold bull market and it looks like the shakeout in gold has set the stage for a breakout.
All the best,
Allan Barry Laboucan
Disclosure
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. The business model of Rocks And Stocks News is to fund research and reporting on the sector, picks and sponsors through corporate sponsorship. We are thankful to sponsors for enabling commentary free of charge to readers and viewers of the reports. When reporting on sponsors it is on behalf of the sponsors discussed in the portion of the report mentioning the sponsor. 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 which he discloses when discussing them in the reports.
