It Couldn’t Be Better For Gold

Written by Gerardo Del Real
Posted May 11, 2020

I’ve been urging you for months to get positioned ahead of the herd and I’ve speculated that 2020 would see a surge in M&A, quality exploration, and the beginning of a new discovery cycle.

The result of declining reserves, too many companies, and a gold bull market, that I believe will prove to be a historic one, has set off an influx of capital in the resource sector that will change the landscape of the mining space for years to come. 

The M&A box is well on its way to being checked.

This morning SSR Mining (TSX: SSRM) (NASDAQ: SSRM) agreed to acquire Alacer Gold Corp. (TSX: ASR; ASX: AQG) creating an intermediate gold producer with a combined market cap of over $4 billion. 

Last week TMAC Resources (TSX:TMR) announced it was being acquired by SD GOLD at a very opportunistic C$1.75 per share, which is equivalent to US$149 million. The deal was done at a 52% premium to TMAC’s 20 day-volume weighted average price (which is of little comfort to long-term shareholders who still remember the days when the stock traded north of $14 per share, but that’s another story for another day).

Financing activity has also picked up. From producers to explorers, companies are topping off their treasuries.

Fortuna Silver (TSX: FVI) (NYSE: FSM) just announced a $60 million bought deal financing. 

SolGold (TSX: SOLG) announced a US$100 million (up to US$150 million) NSR financing with Franco-Nevada on its Alpala copper-gold project in Ecuador.

Mawson Resources (TSX: MAW) (OTC: MWSNF) also announced that it is raising C$17 million. The company’s flagship Rajapalot gold project in Finland and recent entry into a dominant land package in the Victorian goldfields in Australia have caught the attention of the market and the financing will provide capital for aggressive exploration in both jurisdictions.

Quality juniors doing quality work are finally being rewarded and looser purse strings should accelerate the next wave of badly needed discoveries. 

The macro backdrop — while worrisome for many — couldn’t be better for gold

Trillion-dollar deficits that aren’t sustainable and a government here in the U.S. that has decided to go the corporate socialist welfare queen route (not good when you are the world’s reserve currency) are forcing even the most sophisticated speculators and investors to re-evaluate asset allocations.

Hedge fund titan Paul Tudor Jones recently told CNBC, "Gold is going substantially higher. Store of value for 2,500 years. Production growth of bullion is 1% annually while the Fed is creating money supply at a 30% pace.”

In a recent Bloomberg article, Jones also predicted gold could rally to $2,400 and possibly to $6,700 “if we went back to the 1980 extremes.” 

Jones recently mentioned Bitcoin as an alternative asset class that has caught his attention and his checkbook. 

Whether gold goes to $2,400, $6,700, or just stays at the $1,700 level, there are opportunities in the space that should not be ignored if you are looking to make real money from this cycle.

The new trend is one that is sure to accelerate, the move away from public assets — think government bonds, which is why central banks are now bidders of last resort — to private ones like gold and, yes, even Bitcoin.

To your wealth,

gerardo-sig

Gerardo Del Real
Editor, Junior Mining Monthly and Junior Mining Trader.

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 Outsider Club, Junior Mining Monthly, and Junior Mining Trader. For more about Gerardo, check out his editor page.

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