The Trend Is Your Friend - Here Are Some Examples Of Friendly Trends For Gold And Gold Stocks
Yesterday, I wrote an article about why I see gold will become the world reserve currency as the US dollar (USD) has many fatal flaws. Today, I have some charts to emphasize the trends.
Let’s start with the USD chart which is showing a series of lower highs and lower lows since around the middle to latter part of April.
Above is the yearly chart for the USD index chart from Finviz.Com
I would first point out the big drop in early August that happened when the jobs numbers came out that surprised the market. If you want to know what is happening with the economy, the jobs market holds the key.
The economy is shedding full-time jobs and increasing part-time jobs. There is speculation that there are some massive revisions about to come out that show the past year’s jobs growth data was highly manipulated and grossly overstated the jobs numbers. If that is the case, the full-time jobs decrease is more severe and the part-top jobs growth was much lower.
What, the government statistics were manipulated for the benefit of the party in power and to match the narrative of the Fed? You don’t say?
I once told a friend if he wanted to know if it was raining, look out the window, it is much better than listening to weather forecasters. In that light, all one needs to do is ask workers how strong the job market is when they are losing a full-time job to take on two part-time jobs to make less money.
The bottom line is the jobs market is in trouble which by extension means the economy is in trouble. The Fed is about to enter a rate cutting cycle and get back into increasing their balance sheet.
The gold chart shows a much more friendly trend for the gold bulls than the USD bulls.
Above is the yearly chart for the gold futures chart from Finviz.Com
Since the lows in October, 2023 the chart is showing a classic bullish trend. Earlier in the year, prior to the breakout in early March, I wrote reports discussing the basing pattern and that gold was primed for a breakout above $2100. In those same reports, I had mentioned that after the breakout we would see a series of new record highs throughout the remainder of 2024. So far, so good.
The most bullish trend I follow is when a chart is seeing higher highs and higher lows. Everybody gets excited about the higher highs, but just as much can be learned from the pullbacks. They are mild and short lived signalling a very powerful move is in motion.
In my report yesterday, I explained why I see gold on the way to becoming the world reserve currency. The basics of it are that the USD has many fatal flaws while gold has plenty of shining examples of why it is the soundest money.
Another forecast I’ve been reporting is why I see gold on a path to $20k within 10 years. Along that journey the next key milestone is $3k which I believe we will see this year.
USD vs. Gold
It is clear that the USD is in a bearish trend and gold is in a bullish trend. Both are friendly trends for gold. It is not a coincidence that they are happening just before the Fed goes into a rate cutting cycle.
A few things will happen during the rate cutting cycle, the Fed will lower rates to move back toward the Free Money Era that has helped cause the Death Spiral of Debt.
The other is that the US is going to issue a lot more debt no matter who wins the election because they will both keep spending like drunken sailors. Which will result in the Fed’s role of being the buyer of last resort will be revived and they will dramatically increase their balance sheet.
Gold is well on its way to $3k before the end of 2024.
Gold Stocks Are The Place To Be
The top 2 picks of gold miners in the Rocks And Stocks News reports are and will continue to be Agnico Eagle and Alamos Gold.
One of the first things I would point out in the Agnico Eagle chart above is that it had a Golden Cross in December, 2023. Then the 50-day moving average stayed pretty close to the 200-day for a couple months. Since then the 50-day has created a significant gap with the 200-day. While both are in very strong trends.
It has a powerful trend of higher highs and higher lows, with new highs setting new record highs for their stock price.
The key fundamentals are in charge, as they have had 3 consecutive quarters of record free cash flow. They are also making great strides on increasing production and bringing down costs of production that are already well below the average cost of production for their major gold miner peers.
As a leading major gold miner, they are doing exactly what they are supposed to in a gold bull market by significantly outperforming the bullish action in gold.
Alamis Gold had their Golden Cross in March, and just like Agnico Eagle, the 50-day moving average is well above the 200-day. While both the 50-day and 200-day moving averages are very bullish.
They are also making record highs in free cash flow, while also making great strides to increase production. On the costs of production they are hitting it out of the park. They are already producing gold well under the industry average for big miners and are on their way to bringing their costs to well below $1000 per ounce.
Their shareholders are being well rewarded with excellent stock performance that is outperforming the bullish action in gold.
As they have a series of higher highs and higher lows, each new higher high is at record prices for their stock.
Developers
McEwen Mining is a gold miner and developer of a world-class copper project in Argentina.
I zoomed out so you could see back to the second half of 2022. This is when I first had Rob McEwen on for an interview at Rocks And Stocks News. Which morphed into a fantastic series of interviews since.
Back then, I wanted to have him on because I felt they were a tremendous turnaround pick. They are still in the midst of a turnaround.
Currently, I believe they are trading for a significant discount of the value they should be getting for their interest in McEwen Copper. They own 48.3% of the shares in private company McEwen Copper and a 1.25% NSR royalty on the Los Azules project which is 100% owned by McEwen Copper.
Recently, Filo received a takeover offer from BHP and Lundin Mining for a bit over C$4 billion. Filo is a copper development company in Argentina, as is McEwen Copper.
McEwen Copper’s Los Azules is the 8th largest undeveloped copper project worldwide and in the lowest cost quartile for copper development projects. In Argentina, Los Azules is the largest, with the highest grade and lowest costs of production of the copper development projects.
Looking at the valuation in the takeover offer for Filo, and the comparisons between Filo del Sol and Los Azules. Plus, considering McEwen Mining’s interest in McEwen Copper, makes for a compelling argument that McEwen Mining is trading for a significant discount for their copper interest alone.
This gives a zero value for their gold assets. I would point out that Rob McEwen built Goldcorp from a struggling junior miner to a spectacular success during his tenure leading the company. Goldcorp is still one of the most admired gold mining success stories by people in the gold mining space.
i-80 Gold is my current #1 pick as a turnaround story in the gold mining business. I zoomed back to April of 2022, when they first started trading. They were a result of Equinox buying out Premier Gold and spinning out to shareholders Premier Gold’s assets in Nevada to create i-80 Gold.
Since going public, i-80 Gold has amassed a portfolio of three world-class deposits, and two processing facilities in Nevada. They are completely focused on Nevada which is one of the best mining jurisdictions worldwide.
The downward pressure since 2023 is partially because they are a junior that is simultaneously developing three projects into mines. I believe they have suffered from dogpiling by shorts that targeted them partially because of their ambitious growth strategy as a junior.
In a takeover pick in any sector, first they have to stop going down and then improve from the bottom. I think they are at that inflection point now.
The bottom line is that they have the assets to grow into a much larger company and ultimately, I believe they will do exactly that. In the pastm I have said that when looking at a developer you need to pay attention to where they are in the development window of the Lassonde Curve.
They are very close to the sweet spot when a company transitions from developing projects (in their case, they aren’t a single project story) into new mines.
Treasure Hunters That Have Buried Treasures
While most explorers have dismal charts, Goliath Resources is showing tremendous relative strength. Very few can say they are up 100% from their 52-week lows.
The reason is that they have a remarkable gold discovery in the prolific Golden Triangle of British Columbia.
The hightlights for me at Goliath’s Surebet discovery includes widespread gold mineralization that is found in a series of stack zones. What impresses me the most is the transition of visible gold (VG) in their drilling as they have progressed deeper into the gold mineralizing system.
At the top of the system, they found sporadic fine grained VG. As they have drilled deeper they are hitting abundant VG including coarse grained VG. The next milestone I think they will pass is that as they keep drilling deeper they will start seeing abundant coarse grained VG that will lead them to the heat engine that is the source for the entire gold system.
My mentor in geology Bob Darney instilled in me many years ago that exploration prospects start out big and then as you drill them they often get smaller. But, when it comes to a mine, the more you drill them, the better they get.
Goliath’s Surebet discovery is passing the Bob Darney Test with flying colours. Which is why they are my highest conviction gold discovery pick.
Borealis Mining is a brand new publicly traded explorer that I covered for several months before they went public. They are by far the most well prepared private company for success as a public company I have ever seen in my 30-year career working in the mining sector.
They have a stellar project in Nevada that attracted a who’s who of mining to their board while a private company. They also raised C$15 million as a private company during a challenging period for explorers to raise money.
Their shareholder register includes key investment from legendary mining investors Eric Sprott and Rob McEwen. Both of them bought their positions when the company was private.
The largest shareholder by far is Rob McEwen who upon being presented the story decided to take out the vendor’s (Waterton) entire stock position.
What attracted me to the company was the historical drilling and historical mining and its geological similarities to the Yanacocha, which is South America’s best gold mine.
I’m fond of the old mining industry saying that big deposits leave big footprints because it has been proven true so many times. In their case they have a 20 square mile alteration zone which is massive, one of the largest in all of Nevada.
They have a permitted mine and an operating plant to recover gold to make gold bars. Plus, the historical mining and drilling has only touched around 10% of the huge alteration zone.
I am confident they will have great news flow from the little Truth Machine (the drill rig) and the big Truth Machine (the mine) that will help them grow into a much bigger company.
In Closing
It was chart day. I put together a group of charts to show why I am so bullish on gold and a great group of companies in gold mining, developers and gold explorers.
All the best,
Allan Barry Laboucan
Disclosure
i-80 Gold is a sponsor of Rocks And Stocks News, content creation about them is for the benefit of the company. Sponsors also benefit readers of the reports as it makes content creation possible for no charge to readers. Allan Barry Laboucan is a shareholder of i-80 Gold shares and its tradable warrants. Allan Barry Laboucan is a shareholder of Goliath Resource and owns warrants that are well in the money that give him the ability to increase his position. Borealis Mining is a sponsor of Rocks And Stocks News, content creation about them is for the benefit of the company. Sponsors also benefit readers of the reports as it makes content creation possible for no charge to readers. Allan Barry Laboucan is a shareholder of Borealis Mining shares and a consultant to the company.
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.