Gold stocks – The development companies are lagging the sector broadly
Dave Erfle, Founder of The Junior Miner Junky joins us for a discussion focused on development stage gold companies that are generally lagging the overall sector. We think a lot of these stocks are undervalued compared to the larger miners and many exploration companies. We explain what could help drive a revaluation in these stocks.
Oops my comment on USAS is down below bonzo.
Bonzo, I completely exited it a long time ago and am unlikely to buy it back. I’m not predicting another big drop but that’s what it would take to get me interested. It will rise again but the risk-reward isn’t great when compared to so many peers.
https://stockcharts.com/h-sc/ui?s=USAS&p=W&yr=4&mn=2&dy=0&id=p95372053796&a=969292295
Thanks, Matthew. I sold most of my USAS at 2.30 but was thinking I should sell more, and appreciate your thoughts.
Bonzo, I still have my USAS. In fact I added a tad recently since it is sitting right on its’ lower BB—-if it’s BB doesn’t gradually decline over the next few months I believe it’s seen its’ low—let’s hope.
Thanks, Doc. I sold some more USAS today in order to buy more ESKYF, but I still have a small position just in case.
Yeah, Americas Gold & Silver has just been a mess the last 2 years, and have unfortunately hit a number of startup snags at Relief Canyon, and had illegal roadblocks and union issues at their Cosala operations in Mexico. They also gave Eric Sprott about 40% of Galena in Idaho, which was good in the shorter term, to move operations forward there sooner, but it also gave up a big chunk of the longer term prize there with that transaction.
After trading around a core position in USAS since 2015 (even back to when it was Scorpio Mining and merged with US Silver & Gold to form Americas Silver), and having dozens of positive swing-trades in it over the years, I finally sold completely out of the position on March 18th, after reading about the President of Mexico mentioning that the company should accept his crony Union leader.
I didn’t want to wait around just in case Mexico decided to make an example of them, as that kind of BS wouldn’t surprise me at this point. Also, as Matthew mentioned above, compared to many peers, there are other Gold & Silver operators getting things done on point, on time, and on budget.
I decided to split my USAS position amongst 4 companies – adding to (EQX) Equinox, (WDO) Wesdome, and (CXB) Calibre in March, and (AGI) Alamos in May.
Luckily I avoided some of the panic selling that happened 2 months later in May in (USAS). At this point, it has fallen so much, that if the PMs get any more pressure and Americas Gold and Silver sells off further by 10%+ then I may grab a much smaller position back to play the turnaround story.
It’s very similar to (MUX) McEwen Mining at this point in that they need to prove to the market that they have their operations back on the right track, and that progress is being made. It may be worth it for a turnaround speculation.
Bonzo, I’ve held on to about half of my USAS holdings, which is still a pretty sizeable amount.
I wonder what is going on as everyday this week, someone is smashing the miners into the close. I wonder if some mind of news is in the wings that they feel that demand is going to increase. We will see.
We are close to a low and the mm’s and algos are disguising the sell volume. Been watching this action since august high. They orders are low and buy orders are huge. The smart buyers are accumulating slowly as they know the turn will be explosive eventually like i said the miners will catch a bid imo.
This by no means says that the miners dont sniff a $1764-$1805 retracement here and now. But if it doesnt come it will come from much higher targets.
For the ones who want to know I have been a buyer the last few days and have added the three companies i spoke about.
added scorpio
added brixton ( can still break lower)
the last one i will keep in the hat for now lol.
All and all as mentioned i can see a possible correction here that could take “some miners down”. But also see us going higher and correction from more above.
$1950/$1960 will be broken to the upside sooner rather then much later.
glen
I am looking for a break…above…$1960… June 28 is a big day…. JMO
I will keep your date in mind jerry 😃
Break it will ⏳
Gracias
HEY GLEN……. do not hold me to the DATE……. Just saying that on June 28, the BIS is putting the hammer down …..on paper gold on the books of banks internationally….
But, I would think there should be some banks that will get in line world wide….JMO
Jerry,
Let me rephrase I’m not holding you accountable for if gold does or does not break $1960 by that date. I’m keep in mind the date as important knowledge. Thank you for sharing and sharing is caring 🙂
😃💰🍾🤞
Ditto Glen……. thanks for sharing…. glad to have the reply…… 🙂
That is encouraging that you guys are constructive on Gold breaking above the $1960+ resistance in fairly short order.
A few different technicians have mentioned that $1960 zone could be an area of resistance that is hit and then Gold gets swatted down there, and rightly so.
If one looks to the daily Gold #Chart, it’s easy to see how the $1960’s level has a lot of congestion from 2 prior peaks in November at $1966 and January of this year at $1962, as well as a great deal of whip-saw trading there last August and September.
I am looking at the 1960……. as Matthew pointed out…..Yesterday….
Which I thought was interesting ….
The light red fork on the following chart sets a higher bar/hurdle for gold yet it has closed the last two weeks above it and remains above it now. That’s a nice show of strength and resilience considering the move up so far along the looks of the daily oscillators.
https://stockcharts.com/h-sc/ui?s=%24GOLD&p=W&yr=3&mn=0&dy=0&id=p04761918572&a=963028469
Reply to this comment
On June 8, 2021 at 2:38 pm,
David says:
Thanks for the updates. Very timely.
Reply to this comment
On June 8, 2021 at 2:43 pm,
OOTB Jerry says:
Good picture on the RSI……. at 1960…… nice to have that history…. Thanks…
More confirmation in my mind….just saying,…but, I know nothing…
Btw……. I am glad GLEN…. posted the number…… shows he is still in the game…
Iron sharpening Iron… and we are all getting honed in… lol
Thank everyone for the info……..
Agreed OOTB.
As Harry Tuttle (De Niro) states in the film Brazil – “We’re all in it together kid…”
Ex…… 🙂
Ex,
It’s quite possible the $1950-1960 is indeed the one to reject for some backing and filling. We could also be in the bigger right now it’s one or the other that will be a slightly more meaningful one in the sense of shake out. It’s looking more like the $1960 area then up to the $2000 top.. the intermediate top should too around the $2025 as I see it
Someone just needs to light a flame under some of these miners 😃💪
Sounds good Glen. Yes, I’m more than happy to see the miners get moving whenever they feel like kicking it in gear, but we did see a pretty good April/May in the Majors, Mid-tiers, and Royalty companies, and there was a little movement in the Juniors, but nearly enough to get very excited about. It would be great to see a continued breakout, and that would be great for those that are well positioned, but if the sector treaded water or had a mild correction for June and early July, that would be fine as well, to build more energy for a more sustained move upwards.
Basil III I take it. Think the US Bank Crime Syndicate will recognize Basil III?
House of Roth, knows no bounds…. lol……. anyone’s guess, but, that is International Banking…… So, anything goes….
Yes, the US will recognize it. The Federal Reserve is part of the same central banking system and serves the same people. The Bank for International Settlements sits at the top of that pyramid of power.
Thanks for the added comment…….
Thanks for the note Glenfidish! I’m glad you like Scorpio, and I feel good that you bought into Brixton. I’m loaded in BBB, have a bit of Scorpio, but I’ve been holding off on layering into the miners with another round just yet. All the best, and thanks for sharing.
Mind = kind. I have no mind.
“Where Is My Mind?” – The Pixies
Rock and a hard place. A mind is a terrible thing to waste. A chicken in the hand is worth a duck in the bush. There are many more to describe the plight of man in the wilderness. That’s all I got today except added to Eloro and Emerita.
NKSOF (weekend followup): https://postimg.cc/gxzqdd1W
Friday intraday pull back. Chapman Wave F top on Monday.
NKOSF
Bitcoin Price At Risk Of Major Crash To Wipe 2021 Gains Worry Analysts
By Ramish Zafar – Jun 9, 2021
“The cryptocurrency Bitcoin might have its worst days ahead of it after it underwent its worst price shock in history these past few months, believe analysts from Evercore ISI, Tallabacken and Oanda Corp. reports Bloomberg. Bitcoin, which was trading slightly above $63,000 in mid-April, has nosedived to touch $32,000 this week after several events shook market confidence in the world’s favorite cryptocurrency. Analysts believe that should Bitcoin’s price drop below $30,000, a potential major sell-off might result in a downward spiral that results in a price of $20,000/coin.”
https://wccftech.com/bitcoin-price-at-risk-of-major-crash-to-wipe-2021-gains-worry-analysts/
Clover Health Rides Reddit-fueled ‘Meme Stock’ Wave Amid Record-high Trading Volume
Thomas Hum – Wed, June 9, 2021
“Shares of Clover Health Investments, Corp. (CLOV) breached their previous 52-week high of $24.93 in pre-market Wednesday morning. This added to a total increase in the stock’s value of over 110% in the past week amid a Reddit push to short the stock.”
“The company garnered attention recently as Redditors picked up on its potential for a short squeeze opportunity, gaining CLOV its “meme stock” status with the likes of AMC Entertainment (AMC), BlackBerry (BB), and GameStop (GME).”
AMC Entertainment Says Its 4.1 Million Individual Investors Own 80% Of Stock, Average 120 Shares Each
Jill Goldsmith – Wed, June 9, 2021
“The number of investors who want to own a part of AMC continues to increase,” CEO Adam Aron said in a statement. He said more than 80% of AMC shares are held by a broad base of retail investors — highly unusual for big public companies — with an average holding of around 120 shares.”
https://finance.yahoo.com/entertainment/amc-entertainment-says-4-1-210729566.html
An update/correction to a comment I made in the editorial with Cory & Dave E.
When we were giving examples of Developers than seem grossly undervalued compared to the Net Present Values of their economic studies (not to mention any exploration upside that should be factored in on top of that or for their secondary projects) one of the companies I mentioned was Midas, and they’ve changed their name to Perpetua Resources, but still have the same development project.
The other Developers we mentioned (O3 Mining, Marathon, Probe, Cartier) were also good examples of this valuation mismatch. If I’d been on my game I’d have thrown in a number more like Treasury Metals, Integra Sabina, Newcore, Wallbridge, Liberty, Gold Standard, Bluestone, Nighthawk, Falco, Triumph, Montage, Chesapeake, Goldquest, Maple, Arion, Orca, Lion One, or Fury.
There are 3 dozen more gold developers beyond those that also are greatly undervalued compared to the economic studies projected values. The other thing to consider is that many of the economic studies with multifold valuations higher, compared to current valuations were done at lower metal price assumptions around $1500-$1600 gold. When folks plug in $1800-$1900 gold (the actual price of the yellow metal), then their economic valuations are just that much larger, making the current disconnect even larger. It’s really quite a valuation arbitrage in the developers almost all the way across the board.
Just on more thought on this topic is that there are also a number producing companies with large development stage projects that are not getting hardly any value for these pipeline projects (many of which with very nice resources and economic studies) as they are being strictly valued off their producing assets.
3 examples that come to mind are Endeavour Silver with their large Terronera development project, McEwen Mining with their Los Azules project, and Argonaut Gold with their Magino project. All 3 of those projects are massive and their valuations would huge in separate stand alone companies if they were to be spun out, but they are not adding that kind of market caps when inside of a producing company.
It is just so strange to see massive projects not get anywhere close their intrinsic value inside of so many developers and producers, but then there are exploration stocks with only a few holes, or some great drilling but no resources, no economic studies, and they don’t have a permitted mine (or mines) built, and yet these hot Explorers have insane nosebleed valuations. This is about as dislocated from reality that I remember the mining sector being in all the years I’ve been following it.
There are plenty of drill plays with no economic studies (and often without any major resource estimates) that have $150 Million – $1.5 Billion market caps. Then there are gold producers, with 2-3+ mines that only have a $300 or $500 million market cap. (?) Then there are the aforementioned gold developers, with NPVs of $300 Million – $1Billion that are trading at $60 million – $400 million, again, less than some of the drill plays. It’s really wacky out there folks…
An undervalued producer with 2 operating gold mines, another one on care and maintenance, and blue sky exploration potential currently with a market cap of 58 million is Galane Gold, SYL-GG.
I got into this game in 2008? about.
I have always noticed the same thing EX.
I used to figure I found a good one.
Maybe its at an extreme now because of the money printing and cryptos.
Maybe you have simply found winners. I hope so.
I find it tuff to figure now, it used to be you found a double,triple etc now, with crypto moving to being an accepted currency, there is going to be alot of interest in them over the barbarous relic.
Wood Monopoly?
Interesting Reddit commentary on wood prices: https://www.reddit.com/r/stocks/comments/nrou4z/with_wood_prices_so_high_curiosity_struck_me_why/
“Looking at all of their filings for the SEC tells you exactly why their price has jumped. it will also tell you why the price of wood has also skyrocketed. and it isnt a jump in demand that caused their price to raise or the price of wood to raise. These companies are just selling them for higher prices and pocketing the excess profit.”
Back into GR Silver. Good drill results.
Matthew, Doc, and Ex, do you own USAS or have any thoughts about it? Thanks.