Gold mania used to just live on Wall Street. Now it lives on Main Street, and a Biden Administration promises to add multiple fast lanes, paving the way for the next stunning discovery stock to soar.
In August, in the summer of the pandemic, gold broke above the magical $2,000 per ounce zenith and although they backed down a bit, continued to unleash a torrent of forces conspiring to fuel a furious rally.
Gold mining stocks performed even better, outpacing physical gold by a significant margin.
Both the VanEck Vectors Gold Miners ETF (GDX) and VanEck Vectors Junior Gold Miners ETF surged over 50%, more than 1.5x the gain by gold bullion.
But the really big gains were found in the explosive junior explorers…
Canadian junior Amex Exploration (TSX-V:AMX) is up a juicy 128% over the past 12 months and a staggering 800% over the past five years.
Even smaller Starr Peak Mining (TSX.V:STE; OTC:STRPF) is aiming for the next big discovery and it may have even more upside than Amex, with the stock skyrocketing 300% in 12 months.
As of the U.S. presidential inauguration, gold’s outlook has improved even more dramatically.
Biden is about to unleash another massive stimulus package on the market--to the delight of gold bulls.
Source: Yahoo Finance
AMEX hit very high-grade gold in three distinct zones including its iconic 100% owned Perron Gold Project located in the mining-friendly jurisdiction of Quebec.
But if you missed out on the mad Amex rally, don’t worry…
Starr Peak could be positioned for an Amex encore.
It’s sitting adjacent and adjoining Amex’s monster discovery. To add to this flare, a few Amex directors became early investors in Starr Peak as well.
And Starr Peak’s prospects keep getting better…
Last year, Amex was merely a very good speculative play, but now has something more solid going on. They continue to add to the size of their property with one of the largest planned drill programs of any gold exploration company in Canada.
Starr Peak commenced drilling on their stellar land package in January, which was a major producer in the 1900’s. As of March 10th, Starr Peak added a second drill rig on their property and is drilling in full force. We expect to see the highly-anticipated drill results from the Company in the coming days/weeks and will continue all summer long.
Here are some solid reasons why another gold boom could be just around the corner--and why gold explorers like Amex and Starr Peak could be poised for yet another year of big gains.
Another massive stimulus package
In the second half of 2020, gold was beginning to lose some steam, with prices pulling back 10% from the August all-time high as a barrage of potential Covid-19 vaccine candidates gave the world hope that the worst could finally be in the rearview mirror.
But that was long before Joe Biden ascended into the Oval office.
One of the biggest debates in Washington right now is about another giant stimulus package, which could give the gold rally some much-needed juice.
The market is expecting more fiscal stimulus measures to be "announced very soon," providing support for gold, says Chintan Karnani, chief market analyst at Insignia Consultants, after Treasury Secretary nominee Janet Yellen told the Senate Financial Committee yesterday that the U.S. should "act big" on boosting the economy.
After all, the U.S. and global economies remain weak due to the third-and fourth-waves of Covid-19 infections and persistent lockdowns that are keeping businesses from operating at full capacity.
The unemployment situation is already dire, with U.S. jobless claims on another uptrend as the pandemic rages.
The fact that the economy still needs another huge shot in the arm speaks volumes about the state of the economy--which is exactly the kind of uncertainty that drove gold to its record rally in 2020.
But more importantly, those massive stimulus packages could come back to haunt the global economy in a big way.
Last year, New York Times bestselling author and founder of 'The Bear Traps Report' Lawrence ‘Larry’ McDonald has warned of the ‘cobra effect’ whereby the stimuli designed to save the economy will instead ‘‘...cause a hyperinflationary economic collapse.’’
Larry sounded an eerie warning of signs of a “Lehman-like drawdown’’ developing in the markets and that “...we are at the early stage of the biggest cobra effect in the history of economics.”
The cobra effect that Larry is alluding to is the school of thinking that says that every human decision brings with it unintended consequences.
As we have already seen with previous packages, the positive effect of these stimulus checks is only short-lived.
Indeed, Larry sees no way out of this conundrum and has warned that any attempts by governments to reverse their course of action is likely to result in a much more severe deflationary depression than if they had not acted at all.
In other words, there could be hell to pay down the line in the form of a very weak dollar…
Which is certain to fuel another gold rally.
Time to Drill Down on The Play That Made Amex Investors Rich
Now, it’s time to drill.
Starr Peak has kicked off its drilling and offers the best off-the-radar exposure.
Starr Peak (TSX.V:STE; OTC:STRPF) has commenced drilling on the Main bloc of its NewMétal property, covering the past-producing Normétal Mine, from which ~10.1M tonnes of 2.15% Cu, 5.12% Zn, 0.549 g/t Au, and 45.25 g/t Ag were produced. This is aimed at minimizing the risk of disappointing investors with its plans, given that Starr Peak has confirmed grades and favorable historic results for the area about to be drilled.
They have identified a number of drill targets, based on a release issued late last year. Investors can likely expect announcements for these drilled holes to be released in the coming months, with Starr Peak now primed to take advantage of their close-ology to that of the neighboring
The anticipation of positive results for Starr Peak stems from the neighboring Perron Property, which was acquired in 1996 by Amex Exploration. Meanwhile, the Eastern Gold Zone was only discovered in December of 2017 during a regional exploration drilling campaign. At the time AMEX stock was trading at about $0.35. Following the discovery, AMEX stock traded well north of $3.00 with a 52-week high of $4.19, or a 1,000%+ increase--a formidable return from a neighboring mining company.
What originally brought AMEX to the Abitibi greenstone belt area of Quebec, Canada was that of a past-producing mine referred to as the ‘Normetal Mine’. This past-producing mine is now 100% owned by Starr Peak. The mine in the spotlight is located just 8+ kilometers to the NW of the village of Normetal, and approximately 110 kilometers North of the town of Rouyn-Noranda. With the announcement that Starr Peak secured a diamond drill rig for its drilling program, Starr Peak identified that it is targeting drilling in the area of the Main Bloc which consists of the areas surrounding the Normetal Mine.
It’s not much of a stretch for investors to anticipate such interest rubbing off positively to that of Starr Peak.
Junior Gold Mining Stocks Are Major Multipliers
Gold Mining Stocks offer the best risk/reward opportunity to possibly multiply your returns over the long run.
That’s the case because junior gold mining stocks react strongly to any gold discovery on their property, compared to major gold producers where a discovery might be small in comparison to the whole company.
When the first round of Amex investors earned over 1,000% returns, it was because the company had no exposure and did something the most major miners couldn’t do: It found a huge gold deposit in the very place that the bigger drillers had failed.
The biggest risk/reward ratio for investors in junior gold is when they jump in before a major discovery, and before a company has sufficient exposure.
That’s exactly what happened with Amex. But the returns don’t stop there: With every stage of proving up and development, Amex stock gets another boost. In the last 12 months alone, Amex is up nearly 130%.
Now there’s excitement and buzz turning to Starr Peak (TSX.V:STE; OTC:STRPF), as they are now in Phase 2.0 of the Quebec gold bonanza.
And the timing is perfect: Gold hasn’t seen this kind of setup in nearly eight decades.
Government-ordered lockdowns have decimated economies everywhere, with the global economy in dire straits as the pandemic rages on.
Unprecedented stimulus packages are being pushed through to the tune of nearly $20 trillion globally, which could spark the classic cobra effect culminating in a hyperinflationary economic collapse.
Central Banks are printing money at the fastest clip in history, leading to a plunge in inflation-adjusted bond yields into negative territory and the dollar’s sudden collapse.
It all triggers alarm over stagflation--a deadly combination of sluggish growth and rising inflation that quickly erodes the value of fixed-income investments. That’s prompted investors to flee into safe havens like gold, the biggest and best of them all.
Wall Street is already full-on bullish on the precious metal.
OCBC Bank economist Howie Lee says gold back at $2,000/oz. is perfectly achievable, probably by the middle of Q2 as more people are inoculated with the COVID-19 vaccine and with so much cash in the system as demand almost returns to normal and all eyes will people will be on inflation.
Bank of America sees gold at $3,000-an-ounce at the end of 2021.
And if that gold is still in the ground and about to be discovered--even better. That’s the gold that can seriously multiply.
A set-up like this when Amex netted investors in the neighborhood of 1,000% would have multiplied that massive return even more.
And now, Starr Peak is trying to position itself as a mini-Amex in more ways than one. So, this is hoping to be the big re-run.
The Golden End Game: Watch the News Flow
This is all happening in the beating heart of Quebec’s gold country.
Just as gold, in general, has moved from Wall Street to Main Street, Amex has followed suit--attracting institutional investors to keep it off the radar while it grew serious legs.
Starr Peak shares have been on a tear since they doubled down on Perron and kicked off actual drilling, surging more than 300% over the past 12 months.
Yet, at a market cap of just US$47 million, if Starr Peak makes a bona fide discovery, things could look a lot better.
And Starr Peak presents a risk-reward profile that looks very attractive to us.
Other companies looking to take advantage of the gold boom:
In 2021, iconic investor Warren Buffett surprisingly did a 180 on his long-held negative stance on gold when Berkshire Hathaway announced that it would be taking a massive stake in Canadian Barrick Gold (TSX:ABX ) at a time when gold was soaring. Berkshire Hathaway bought more than $560 million in Barrick Gold shares. Buffett often referred to gold as useless for the most part. Buffett’s investment in Barrick and change in tune on the gold front shouldn’t come as much of a surprise, however. As the future of the economy looks more-and-more uncertain, and the Federal Reserve continues to print money at a record rate, solid gold miners like Barrick have drawn a lot of attention for investors, especially considering the healthy 0.96% dividend per share that comes with the purchase.
Barrick Gold has had a particularly tough start to the year, seeing its share price fall from August highs of $29 to its current price of $20.18. That doesn’t mean the company isn’t still a good buy, however. Barrick Gold still has a healthy balance sheet, with debt down and enough cash on hand to remain well positioned and relatively risk-adverse.
Despite its excellent and higher-than-expected earnings, Barrick’s stock price has closely followed gold’s trajectory, with the price of the precious metal falling due to more positive economic news and a flourishing tech sector. But according to many analysts, this may not last much longer, and it is likely investors will pile back into gold again.
Newmont (TSX:NGT) is the largest gold company on the planet, but that doesn’t mean it doesn’t still have upside potential. Founded in 1916, and based in Greenwood Village, Colorado, Newmont is a veteran miner with one of the top executive teams in the business, and its operations span 11 countries, including gold mines in Nevada, Colorado, Ontario, Quebec, Mexico, the Dominican Republic, Australia, Ghana, Argentina, Peru, and Suriname.
The big news for the company in 2019 was its acquisition of Goldcorp. Though it was controversial at the time, the $10 billion acquisition has paid off in a big way. As gold climbed to record highs thanks to investors piling into gold due to the COVID pandemic, Newmont has seen a boom in its share price. Last year, gold soared from $1282 to over $2000 at one point, and Newmont’s stock rose with it, earning investors as much as 90% returns on their original purchase.
Like Barrick, Newmont has struggled in 2021, however, seeing its share price fall from its November highs of $68 to its current price of $62. This path has been very closely related to the price of gold which has also tumbled in the same amount of time. That said, the company still has a lot of upside potential, and with Biden preparing to unleash a new infrastructure bill that will add more debt to America’s $28 trillion bill, investors will likely look into gold again this year.
Yamana Gold (TSX:YRI) is another one of the world’s top gold companies that has seen its share price hit especially hard this year. Yamana has fallen by as much as 25% since January alone, though it has recently started to regain some of its losses.
Earlier this year, Yamana signed an agreement with industry giants Glencore and Goldcorp to develop and operate another Argentinian project, the Agua Rica. Initial analysis suggests the potential for a mine life in excess of 25 years at average annual production of approximately 236,000 tonnes (520 million pounds) of copper-equivalent metal, including the contributions of gold, molybdenum, and silver, for the first 10 years of operation. The agreement is a major step forward for the Agua Rica region, and all of the miners working on it.
In its fourth-quarter earnings call, President and CEO of Yamana provided investors with a glimpse of what’s to come, “In 2022, we are forecasting 870,000 ounces of gold and 9.4 million ounces of silver and in 2023, 889,000 ounces of gold and 8 million ounces of silver.”
Kinross Gold Corp. (TSX:K) may not be as established as some of its century-old peers, but it’s quickly becoming a major player in the industry. With operations across the globe, its big picture approach is paying off. The $11 billion gold giant has mines in Brazil, Ghana, Mauritania, Russia and the United States, and it’s looking to expand even further.
Since 2015, Kinross has seen its share price rise by as much as 400%. In fact, this year alone, it’s already up by as much as 85%. And Kinross is showing no signs of slowing. With a healthy balance sheet, favorable earnings reports, and governments, banks, and retail investors piling into safe haven assets, it’s likely to continue climbing.
Following the trend of the gold market, Kinross posted positive fourth-quarter earnings but has been weighed down by the falling price of gold. The company’s share price has dropped from $7.98 on the first trading day of the year to its current price of $7.20, after falling to a low of $6.19 in early March. Because smaller miners benefit big on even the smallest moves in gold prices, if the price of the precious metal does see an uptick in the coming months, Kinross will likely be one of the biggest benefactors.
Kirkland Lake Gold (TSX:KL) is another one of Canada’s tried and true gold miners. Though not quite as large as Barrick or Newmont, Kirkland is no stranger to striking headline grabbing deals in the industry. In fact, just recently, Kirkland and Newmont signed a $75 million exploration deal that could wind up being a game-changer for the industry.
This alliance will provide Kirkland with cash flow to evaluate new alternatives for the future of the mining complex, dive deeper into its existing properties, and weigh other opportunities where the two gold companies may be able to find common ground in the future.
According to a joint press release, “Newmont has acquired an option from Kirkland on the mining and mineral rights subject to a royalty payable by Newmont to Royal Gold, Inc. (the Holt Royalty) in exchange for a $75 million payment to Kirkland Lake Gold. Newmont can exercise the Option only in the event Kirkland intends to restart operations at the Holt Mine and process material subject to the Holt Royalty”
By. Leonid Agapov
**IMPORTANT! BY READING OUR CONTENT YOU EXPLICITLY AGREE TO THE FOLLOWING. PLEASE READ CAREFULLY**
This news release contains forward-looking information which is subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ from those projected in the forward-looking statements. Forward looking statements in this release include that prices for gold will retain value in future as currently expected, or could rise based on political considerations; that Starr Peak can fulfill all its obligations to acquire its Quebec properties; that Starr Peak’s property can achieve drilling and mining success for gold; that historical geological information and estimations will prove to be accurate or at least very indicative; that high-grade targets exist; and that Starr Peak will be able to carry out its business plans, including timing for drilling. These forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information. Risks that could change or prevent these statements from coming to fruition include that politics don’t have nearly the strong effect on gold prices as expected; the Company may not complete all the property purchases for various reasons; it may not be able to finance its intended drilling programs; Starr Peak may not raise sufficient funds to carry out its plans; geological interpretations and technological results based on current data that may change with more detailed information or testing; and despite promise, there may be no commercially viable minerals or ore on Starr Peak’s property. The forward-looking information contained herein is given as of the date hereof and the Company assumes no responsibility to update or revise such information to reflect new events or circumstances, except as required by law.
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