A Q4 Gold Buyout Boom?

Kids are heading back in school... vacations are coming to an end

And soon, the summer doldrums will be behind us.

Which means we’re entering what I believe will be the most consequential quarter in the junior resource space this year.

The 10-yr bond, the U.S. dollar and the gold price continue to search for clear direction while the juniors continue to present one of the best risk/reward propositions across all sectors.

So what to watch and what to do?

Watch the 10-year because if it breaks down below the 1.30% level in a sustained fashion it’ll trade closer to 1%... and gold will be headed to the $2,000 level in a hurry.

Ditto for the dollar.

Could the opposite occur? A deflationary reaction as a result of the market front-running a taper by the Fed?

Sure, but not likely and assuming the Fed tries to taper, the tantrum the market will throw will lead to another about face.

If there’s one thing we know about J&J (Janet & Jerome) is that they are beholden to the stock market.

You think the milk crate challenge is amusing, watch what happens when/if the Fed tapers.

Which is what makes the junior resource sector such a compelling speculation.

A lot of the price risk has been wiped out during the year-long consolidation and the biggest threat to the gold price right now is a real taper, which won’t last if it happens.

There’s a clear path forward but it requires looking ahead and discipline to hold or add.

Not a lot of fun if you've been holding. But exciting if you’ve been doing what I’ve been doing: writing checks and buying junior mining stocks for pennies on the dollar.

Buying low and selling high requires you to buy low.

Seems obvious but it’s clear by the volume the past few months that there isn’t a lot of interest in the first part of that equation.

The Global Junior Gold Miners Index has only 11% of its members sitting above the 200-day moving average.

Crypto is sexy again and the major U.S. indices continue hitting new highs on a daily basis, which is keeping retail capital from the juniors.

I believe the combination of depressed prices and cash flow positive producers will lead to a wave of mergers and acquisitions that will allow producers — which are historically not great explorers — to start buying up quality exploration companies and smaller producers with the ability to scale through aggressive exploration.

In other words, I think producers will soon do more of what I’ve been doing: Buying quality companies for pennies on the dollar.

Buy low, sell high.

This is the low part.

What are you doing with it?

I’ll be at the Precious Metals Summit in Beaver Creek starting on September 8th.

If you’re around make sure to say hello. It’ll be nice to see a few of you in person again.

Let's get it!

Gerardo Del Real
Editor, Resource Stock Digest

For the past decade, Gerardo Del Real has worked behind-the-scenes providing research, due diligence and advice to large institutional players, fund managers, newsletter writers and some of the most active high net worth investors in the resource space. Now, he is bringing his extensive experience to the public through Resource Stock Digest, Junior Resource Monthly, Junior Resource Trader and Junior Resource Insider. For more about Gerardo, check out his editor page.

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