The Latest Round Of Shifts For Central Banks Could Signal Gold’s Next Bull Run
We’re hearing a lot in the news right now about how this situation is unlike anything we’ve seen before. Is it, or is it something eerily similar to a not-so-distant past? During the 2008 financial crisis, the world saw a period of a housing market meltdown. This, in turn, led to banks failing and the government stepping in. The same banks that are looking to flush money into the market right now, are the same that bailed out Wall Street providing massive sums of money and liquidity.
What’s funny is at the same time banks bailed out the market, the government was bailing out banks. This period of financial crisis truly opened the market’s eyes to what companies were up to at the time. As a result, many abused loopholes were closed as to not repeat this ever again.
Read More: Now Is The Time To Buy Junior Gold Stocks
From 2008 to 2011 and again in 2012, gold prices and gold stocks saw the biggest run to the highest highs in the recorded history of the yellow metal. Where rates were drastically low, the government was shoveling money to help the economy, and the general currency crisis put a chokehold on monetary policy, gold prices and stocks chugged higher.
Latest Policy Moves Signal Buy For Gold Stocks?
While we don’t want to repeat the sins of our former market leaders, we’ve got an eerily similar set-up. The highly contagious coronavirus or COVID-19 has shuttered markets, closed down businesses, and crippled economies of scale. Some broader sector stocks like airlines haven’t seen prices this low in years. Many are asking for a bailout even before we’ve realized the full ramifications of the coronavirus. Before the beginning of the 2008 financial crisis, gold prices were in line to reach record highs (at the time).
Then the Federal Reserve and other central banks around the world decided to cut short-term interest rates while implementing quantitative easing programs. As we already know, by 2011, gold reached its all-time high of $1,920.70. Today’s environment, though hosting a higher stock market level appears to be the same as 12 years ago. The Fed Funds rate has been dropped to 0% with global central banks following a similar path. More quantitative easing is also in the cards and now we’ve got people like Ray Dalio suggesting that the government will need to offer bigger bailouts from the COVID-19 blowback.
Gold has a storied history in the financial system and has long been thought of as a safe haven asset. With the recent rout in the market that included gold prices, now could be an especially important time to have the shiny metal and gold stocks on your radar. The current financial make-up could be compared to that of 2008 and if the same result holds true, gold prices could be in line for another move.
Top Gold Stocks To Watch
Keeping all of this in mind, what are some gold stocks to watch right now? Assuming you already see that the sector is trading at a discounted level to its 2020 highs, there are many to choose from. Something to consider is that the smaller-cap gold stocks tend to outperform larger companies in the sector. The main reason why is that lower prices offer larger percentage gains along with a more speculative, risk-taking mentality. Consider the following chart:
|Company||Price In 2008||Gain During Last Gold Rush|
|Royal Gold (RGLD)||$23.75 (Oct 28)||324% @$100.71|
|AngloGold Ashanti (AU)||$14.86 (Nov. 20)||256% @$52.86|
|Newmont Corp. (NEM)||$21.47 (Oct. 24)||237% @$72.42|
|Wheaton Precious Metals (WPM)||$2.91 (Nov. 25)||1,536% @$47.60|
While all of these are prime examples of the massive gains presented by gold stocks, the one that stands out is the small-cap (at the time). Not only did Wheaton Precious Metals climb from $2.91 to highs of $47.60, it still trades well-above $20.
Is IMC International Mining The Next Wheaton?
In looking at small-cap gold stocks right now, IMC International Mining (IMCX) is one of if not the only gold stock that hasn’t pulled back to a meaningful decline at all. This is considering the fact that IMC hasn’t broken below $0.40CAD since February. On top of that, the company has just closed a multi-million dollar acquisition for Thane Minerals in northern British Columbia.
Thane holds a 100% interest in the Cathedral property, located in north-central British Columbia. The Cathedral Project covers 51,136 acres and is situated in the Quesnel Terrane along with the northeast contact of the Hogem Batholith. This is a suite of rocks hosting porphyry copper-gold deposits. But the fact that Cathedral is still in a relatively unexplored portion of the northern Quesnel Terrane means that IMC International Mining Corp. (CSE: IMCX) (OTC: IMIMF) has a real opportunity to strike gold first.
Just look at the figures from these other mining claims. It highly suggests that the IMC International Cathedral property could have the same if not greater potential for gold and other precious metal discovery in our opinion.
The Mount Milligan copper-gold porphyry deposit contains a combined Measured and Indicated Mineral Resource of 243.9 million tons (Mt) at 0.134% Cu and 0.226 grams per ton (g/t) of gold, containing 717.7 million pounds of copper and 1,769,000 ounces of gold as well as an Inferred Mineral Resource of 11.0 Mt at 0.306 g/t gold and 0.125% Cu, exclusive of Mineral Reserves.
The Kemess Mine produced approximately 3 million ounces of gold and 700 million pounds of copper over the life of the mine. Near the Kemess Mine is the Kemess Underground Project, also owned by Centerra Gold. This separate deposit is currently in the development stage and has not been approved for production.
Keep in mind that outside of Kemess and Mt. Milligan claims, the Quesnel Terrane hosts past and planned production of 50 billion pounds of copper, 28 million ounces of gold, and includes 16 producing and development projects. So will IMC International Mining be the Wheaton Metals of our time?
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