The Death of Gold

by Gerardo Del Real

Across all funds, gold ETFs have seen outflows for 13 consecutive days.

That's tied for the 7th-longest streak of outflows in the past 15 years.

The tone from subscriber emails and sentiment from the Twitter-sphere leads me to believe we are close to a bottom in the gold price.

Some perspective is helpful.

Gold is down nearly 9% this year... but it’s actually up approximately 9% year-over-year.

The gold miners are down some 17% year-to-date.

The juniors — as always — are down quite a bit more from recent highs.

Gold’s recent woes are directly correlated with the move higher in real yields — a move that accelerated recently with a 40 basis point rise in one week.

What to do?

Hold or add to quality names. I’m adding.

And I’ll give you two free ones since several of you have written asking.

The first is Perpetua Resources (formerly Midas Gold) (NASDAQ: PPTA)(TSX: PPTA), which is down some 50% in the past three months.

The Stibnite Gold Project is one of the highest-grade, open pit gold deposits in the United States. It has bipartisan support and should receive its permit later this year.

As uncomfortable as it is to watch a stock pullback or consolidate, this is a perfectly healthy pullback that correlates with gold finding its legs.

Perpetua has always traded in line with the gold price, and this pullback is no exception.

Look at a three year chart of Perpetua then look at a three year chart of gold.



Perpetua is an excellent speculation at these levels.

The second is one I talked about last week.

K2 Gold (TSX-V: KTO)(OTC: KTGDF).

Earlier this week, I told you that K2 had an excellent project — the Mojave gold project — run by an excellent team and a team that has the network to go out and diversify its project base by sourcing other projects.

All some of you heard was that I would not hold it through the mining permitting phase.

Let me be clear, K2 Gold will have a fantastic 2021.

My comment about not holding through the mining permit period (though I said that might change) is simply my preference for explorers.

Permitting for a mine is a milestone — if achieved — that would be years away.

There will be a lot of drilling before that happens. Drilling I believe will prove successful in outlining a significant resource.

But I tend to gravitate towards the explorers.

With a few exceptions — Perpetua for example — I personally don’t typically hold through the permitting period, as I like to reallocate gains to higher risk/higher reward plays.

There will be a lot of drilling and share price appreciation between now and then for K2, and a lot can change.

Right now, I’d be adding not selling.

As Rick Rule is known for saying, “you’re either a contrarian or a victim.”

Everybody wants to be contrarian but no one wants to buy the pullbacks.

I’m buying the pullbacks and the portfolio is once again filled with companies under my buy up to prices after a strong run in the copper and uranium names.

Take advantage of these pullbacks.

Let's get it!