Markets are hitting all-time highs, investors are pounding their chests after the latest mega moves in tech, and it has been more than a year since the last serious sell-off.
This calm situation in equities stands in contrast to a number of negative situations in play, including expectations for declining GDP growth, consumer doubt, a Federal Reserve preparing to launch a plan for “quantitative tightening” and growing political circus in Washington. The dollar’s weakness, on a technical basis, is at its most extreme since 2011.
“BILLIONAIRES ARE PILING INTO GOLD”
Whether you like Trump or you don’t like Trump, you’re likely to agree on one thing, he’s thrown a wrench into the U.S. political machine. It remains to be seen what comes of that, but the president’s actions so far have some billionaires expecting his disruptive political influence to spill over into the investing world.
And right now they are piling into gold to hedge against market uncertainty. We’re talking billionaires like Jacob Rothschild, David Einhorn, and Ray Dalio who all own gold.
Gold has attracted interest for millennia, and even today, investors like the idea of a physical store of value that can protect against the inflationary pressures that periodically plague monetary systems. Although there are smart ways to invest in gold as a commodity, many investors prefer the potential for growth and income that gold stocks provide.
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While the gold price cooled off significantly after the US election in November, analysts are saying that the yellow metal is poised for a lift in 2017.
Gold mining stocks offer exposure to gold prices, but they also introduce the opportunity and risks involved with mining operations. Specific mining assets can pan out better or worse than anticipated, and when that happens, stocks can rise or fall regardless of whether the price of gold climbs or declines.
Larger gold mining companies have a wider array of assets that help diversify their overall portfolios, leaving them less vulnerable to problems at any one particular mine.
And the potential for a gold breakout could be right around the corner! Looking back at gold’s performance since 1979, August and September are big months for the yellow metal. What is the cause? No one really knows but there are some theories that have been thrown around.
The adage “sell in May and go away” is common in the mining sector. Investors are back from vacation and ready to deploy their cash in a big way. On the other hand, the largest financial crashes have occurred in September and October, investors also buy gold to hedge their portfolios.
Also, the European Central Bank and 20 other European central banks are currently governed by a Central Bank Gold Agreement, which ensures all banks operate with transparency and do not engage in large uncoordinated gold sales.
The Agreement dictates the limit in sales, and resets every September, meaning the market may see less selling activity.
In the last 38 years, August had only 14 years of negative returns, while September had 13. Regardless if these theories are true or not, its hard to ignore the decades of data that suggest the best months of gold are yet to come.
But Gold’s next move could already be written on the walls!
The iShares Gold Trust is an exchange-traded fund that owns physical gold. Owning shares of the trust is basically equivalent to owning gold but without the need to take possession of it and store it yourself. The trust owns around 6.744 million ounces of the yellow metal.
The interesting thing about exchange-traded funds is that their share counts go up and down with demand. Essentially, when investors want more iShares Gold Trust shares, more are made, increasing the share count. And when investors are moving out of the ETF, shares are redeemed, reducing the share count.
It’s a complicated process, but an increasing share count shows increasing demand for the trust. And in this case, for gold!
The share count trend has been nothing but up at iShares Gold Trust lately. At the start of 2016 iShares Gold Trust had roughly 508 million shares. By the end of that year, the share count had increased to 655 million shares, a nearly 30% jump.
The share count has continued to head higher this year, with the number up to 701 million as of June 28. That’s another 7% increase through roughly the first half of 2017, bringing the increase over the last year and half to nearly 40%!
One Junior Gold Miner Could Hold The Key For “Ground Floor” Investors!
While mines have finite lives, companies operating them don’t. To stay in the business, miners either have to find new mines to replace depleting mines or acquire mines from junior miners engaged mainly in exploration.
With declining reserves and a lack of new discoveries, miners can use the mergers and acquisitions option to replace reserves and grow. With speculation on increasing gold prices rising, there could be a huge land grab about to hit the markets ahead of this anticipated move!
This puts the opportunity for investors at the forefront when considering investments in lower cost, exploration stage junior miners.
While gold mining production could plateau or even decline going forward, that doesn’t have to be the case for individual gold miners. Consolidation in the gold industry could lead to bigger mining companies buying assets and thus raising their production profiles.
Case and point: many intermediate and senior gold producers have declining production profiles, thus, giving rise to the further appeal of junior miners in exploration and development.
Kesselrun Resources Ltd. (KSSRF) Is One Junior Gold Miner That Could Have Investors Scrambling Ahead Of The Next Move In Gold!
Kesselrun is a small junior gold miner headquartered in Thunder Bay, Ontario focused on growth through property acquisitions and discoveries. With multiple projects in some of the most prolific regions of North America, the near term horizon could be a major standout for gold investors!
Huronian Gold Project – 100% Owned
Kesselrun (KSSRF)’s Huronian Gold Project is 100% owned by the company. The Project consists of 154 unpatented mining claims and four patented mining claims for a total land package of 5,200 hectares.
The project is situated in the highly prolific Shebandowan Greenstone Belt located in the Abitibi-Wawa Subprovince approximately 100 km west of Thunder Bay, Ontario along major transportation and power routes.
The project hosts numerous significant gold zones including the past producing Huronian Mine that produced 29,629 ounces gold and 170,463 ounces silver from 143,724 tons from 1932-1936 (Ontario Ministry of Northern Development and Mines Production Records).
The project also covers the southwest strike extension of Wesdome Gold Mine’s Moss Lake Gold Deposit.
The Moss Lake Gold Deposit hosts an NI 43-101 compliant resource estimate of 40 million tonnes at a grade of 1.1 g/t (1,377,300 oz Au) Indicated and an additional 50 million tonnes at a grade of 1.1 g/t (1,751,600 oz Au) Inferred (Moss Lake Gold Mines NR February 20, 2013) as well as an NI 43-101 compliant Preliminary Economic Assessment (Moss Lake Gold Mines NR July 29, 2013)!
Bluffpoint Gold Project – 100% Owned
Kesselrun (KSSRF)’s Bluffpoint Gold Project is 100% owned by the company. Kesselrun’s Bluffpoint Gold Project is located approximately 50 km northeast of, and on the same structural trend as, New Gold’s Rainy River mine, which is currently under construction.
First production at Rainy River is estimated for September 2017 at a rate of 325,000 ounces per year (as noted in New Gold’s January 30, 2017 news release). Kesselrun’s management believes Bluffpoint has all the ingredients to host a major gold deposit.
Why Focus On Juniors? The Proof Is In The Profit!
When investors can pick winning gold mining stocks, the outcomes can be life changing. In fact, some of the biggest mining stock breakouts in history have happened with junior miners. Just look at what a small $7,500 investment would have become with a well-timed trade during the early phases of these miners:
New Gold Inc. shares were trading under $2 per share before it went on a breakout run to highs of OVER $6 per share. Early investors who saw the writing on the wall were able to capitalize on a move of 243%! That means $7,500 turned into OVER $18,000
Golden Star Resources was trading at just $0.18 a share before it caught fire and rallied nearly 480%. The run saw the stock break highs of OVER $1 per share and that small investment would now be $35,850!
Vista Gold showed investor exactly what a gold bull market looks like as well. This junior gold miner managed to run from under $0.30 to OVER $2 per share. That gave early investors an opportunity to capture as much as 636% gains! Just think, that $7,500 trade would have been worth almost $50,000!
But Then Again, Billionaires Are Already Scrambling To Get A Head Start
If billionaires Rothschild, Einhorn, and Dalio own gold, you might be tempted to include some exposure to the yellow metal in your portfolio, too. And with all of them citing market uncertainty driven by the Trump administration, you might even share some of their broader investing concerns.
Junior miners have obviously demonstrated how incredible the upside potential can be.
But those have come and gone. Now investors are searching for the next gold stock that will breakout. You now have to answer one question: Knowing what you know now about gold, if Kesselrun Resources (KSSRF) is that next big gold stock to run, will you be reading about it later or profiting from it now?