The Bullish Path Is Clear For Gold And i-80 Gold
When it comes to the price of gold, it's been under pressure this year because of the relentless rate hikes by the Federal Reserve. I think the writing on the wall is very clear that the next major move by the Fed is to stop raising interest rates and then to lower interest rates.
You don't hear anymore about them talking about reducing their balance sheet because they haven't been able to. You take the biggest buyer out of the market, the Fed, and how are you going to get rid of $7 trillion worth of debt they hold?
They can’t reduce their balance sheet or raise interest rates much more. I think investors are becoming more aware of the reality that the economy and housing market is in trouble. Interest rates on 30-year mortgages are over 7% which is very troublesome for the real estate market which was built on near zero interest rates for the past 14 years.
The real estate market is already starting to show big cracks in the market. Look at the housing starts, they're dropping dramatically. There is an ominous drop in housing starts looking back over the past 50 years. In 1972, 1977, 1980 and 2004 they dropped off a cliff. But the drop this year is the most severe. This is a result of a housing market built on excessive cheap debt and now it has been shell shocked by the Fed’s relentless raising of interest rates this year. The housing market is clearly in deep trouble.
It looks baked in the cake that the Federal Reserve is going to raise interest rates in early November, which in itself is somewhat of a precedent as they usually don’t make any moves during a midterm election. They seem hellbent on fighting a battle they are losing with inflation and don’t care if they tank the economy. The economy is already slowing and is in recession, now the question is how bad of a recession will it be.
They keep raising interest rates at the pace they have been and they will cause a deep recession, and follow that by not taking blame for it. As expected, they will go with a 3/4 percent interest rate increase next week. What is less expected is that they also start talking about their concerns for the slowing economy.
The USD currency market is starting to show cracks as well. The USD index recently peaked at a little over 114, earlier today it was below 110. Meanwhile, gold, silver, copper and other commodities priced in USD are showing green on the screen.
Gold, silver and copper, as well as other commodities are setting up for big moves. Yet the stocks for mining related companies are valued like they were back in the year 2000. Our current situation parallels 2000, back then the USD was strong, precious and base metals were weak and the mining stocks were extremely cheap. Here we are again, on the verge of a bull market like the 2001 to 2011 metals bull market.
I’ve been working in the mining sector since 1993, and been through several bear and bull markets. But the most spectacular bull marke by far was the one from 2001 to 2011. Of particular note was that in 2000 very few believed it was coming. Much like the sentiment for mining stocks now.
Investors that are prepared by buying gold stocks and other metals stocks now are going to make a lot of money in the coming bull market. If they buy quality stocks at insanely cheap valuations and hang on for the bull ride.
One of my favorite stories for investors that want exposure to gold mining stocks is i-80 Gold. It trades on the Toronto Stock Exchange with the stock symbol IAU. They also trade on the New York Stock Exchange with the stock symbol IAUX.
Today, somebody with a large position was indiscriminately selling the stock down. It traded more than 10 times the average daily volume, they certainly aren’t selling for fundamental reasons as i-80 Gold has been on an impressive run with their drilling news.
Both gold and i-80 Gold have made important bottoms. The sell off today in the price of i-80 Gold is creating a tremendous opportunity for investors that want to be into gold stocks with less risk than the explorers. I love exploration, in the case of i-80 Gold you get exposure to both gold moving stronger plus exploration and mining success that is unparalleled.
I-80 Gold is a product of Premier Gold being bought out, with Premier’s assets in Nevada spun out, so i-80 Gold is only a little over a year old. They have done tremendous things since they became a publicly traded company.
They have a world class gold project at their Granite Creek project. The project had seen historical mining. They drilled below the old mine workings and found the Ogee and South Pacific zones.
What impresses me the most about their drilling is the remarkable high-grade gold continuity. It's now extended over 600 meters along strike and open to the north and at depth. High-grade continuity is king in gold mining and they have it, this is what makes for a high margin mine. Randomly distributed gold in a deposit is a recipe for disaster as there is just too much dilution of waste rock and high-grade gold.
You don't need me to tell you about the impressive high-grade gold continuity, the truth machine has spoken with their drilling results. Just go to their website and look at all the news releases from drilling at Granite Creek. Look at the maps with cross sections and long sections that clearly show tremendous high-grade gold continuity.
Granite Creek is in elephant country to their immediate north is a 20 million plus ounce gold mine in the exact same kind of rocks as what i-80 Gold is finding in their South Pacific zone. So the South Pacific Zone has a lot of room to grow. The drilling is suggesting that it's wide open at depth and open along strike to the north with outstanding continuity.
Another thing that I think is very important is as you look at the different levels as they get deeper into the system the grade is getting higher. Fundamentally, I think that this is going to make a tremendously profitable big gold mine that could easily exceed 5,000,000 ounces and 10 million to 20 million isn't out of the question. This is without a doubt a world class gold project in Nevada.
Their story doesn’t stop there, they also have a second world class project at their Ruby Hill project. This project saw open pit mining until a wall in the pit collapsed and mining stopped. Then i-80 Gold got their hands on it and they tagged Ruby Deeps with their drilling to the west of the pit.
Their drilling at Ruby Deeps hit extremely thick intersections of high-grade gold. Further drilling continues to expand that Ruby Deeps zone. Equally as impressive is their drilling closer to the pit where they found the 426 zone. The 426 zone is right below the bottom of the historical pit and connects the bottom of the pit to the Ruby Deeps zone.
It doesn’t stop at Ruby Deeps and 426 zones as their regional target generation near them has found additional impressive high-grade gold. What they are showing with the truth machine is this is a world class gold project that can be easily accessed from the bottom of the historical pit where they then have the 426 zone which leads to the Ruby Deeps zone. This easy access means that they can quickly get it into production and narrow the development discount window of the Lassonde Curve down to months instead of years.
All that gold is to the west of the pit, but a little to the north is the BlackJack zone which is a CRD zone. These carbonate replacement deposits can be very valuable. One of the big success stories over the past decade in mining was Arizona Mining that found the Taylor deposit that ultimately led to them getting bought out making their shareholders huge winners.
i-80 Gold recognized the CRD potential, but the previous owners overlooked it because they were only interested in gold, not zinc-lead-silver. Yet the area around Eureka, Nevada where the Ruby Hill project is located has a long history of CRD mines.
So they started drilling to the south of the historical pit and tagged extreme high-grades of zinc-lead-silver. The grades they hit are multiples of the grades that Arizona Mining found at the Taylor deposit. Which ultimately got them bought out for a few times the current valuation of i-80 Gold.
When considering how undervalued i-80 Gold is it is important to consider that when they sold their minority interest in the South Arturo mine, they got a mill that can process sulphide material. This is crucially important because it enables them to process the rock from their various projects. If they had to build their own plant to process sulphide material it could easily cost double their current valuation.
I know investors like comparables, so I have one for you. New Found Gold has made an impressive discovery of high-grade gold in Newfoundland. They currently have a valuation over $800 million, while i-80 has a valuation of $533 million.
I like what New Found Gold has discovered, but they have no resources and they have likely gone through the first peak in the Lassonde Curve on discovery and have a very long development discount window before they reach the mining peak. If they ever do reach that stage, meanwhile i-80 Gold is charging toward production at Granite Creek, Ruby Hill and McCoy Cove.
If I had a choice between taking what New Found Gold and i-80 Gold have it isn’t even close. I would take i-80 Gold assets in a heartbeat, without a doubt.
Which leads me back to the battle we see with a raging bull market for the USD and a depressing bear market for gold stocks. I think these two trends are about to change over the next few months which will be another catalyst for i-80 Gold to unlock shareholder value.
I-80 Gold has plenty of catalysts to unlock shareholder value from their impressive group of assets. You don’t have to take my word for it, I encourage you to go to their website and take a look at their news releases. While you are there, also have a look at their corporate presentations. If you can’t readily see why they are a cornerstone holding for investors in gold stocks, then investing in gold stocks isn’t for you.
I'm fortunate to have i-80 Gold as a sponsor of my reports as it enables me to put out a lot of content for investors in the mining space. I've done a bunch of interviews with the CEO of i-80 Gold Ewan Downie. You can find them here on my Youtube Channel for Rocks And Stocks News.
The reason I've done so many interviews with Ewan Downie is this company has had a phenomenal news flow. Every time they have big news out, Ewan Downie is very gracious to come on my show to do a beyond the news release kind of interview. To do additional due diligence on i-80 Gold I would like to invite you to go check out our interviews.
I’m very confident that if you do the homework, by checking out those interviews, their news releases and their corporate presentations, you'll understand clearly why I'm so bullish on I-80.
I named this article The Bullish Path Is Clear For Gold And i-80 Gold, and I think the overwhelming evidence to be bullish on i-80 Gold is powerful. They are following a similar path as a young Barrick before they became a household name in the gold mining business.
In i-80 Gold you get two world class gold projects at Granite Creek and Ruby Hills with a CRD kicker.
Allan Barry Laboucan
Founder
Rocks And Stocks News
My reports are, for information purposes only, it is important for you to speak with your financial advisors before making any investment decisions. I also think it's really important for investors to do their homework and understand the companies that they're investing in.