Is the Gold Market Warm Enough To Jump In?

Gold prices have consolidated some after a Fed announcement that three interest rates cuts could be on the way this year helped push them to record highs this week. Some analysts say jump in; the new gold market is already underway.

"After almost four years of going nowhere, gold has this month broken out into what looks set to be by far its biggest bull mark to date," Technical Analyst Clive Maund wrote Monday.

The precious metal was trading at US$2,173.73 per ounce Monday morning. Federal Reserve Chairman Jerome Powell's statement came after the Federal Open Market Committee (FOMC) met this week.

But Maund said the clues are much further back in time. Looking at a chart for gold going back to 2000 shows that beyond the gold bull market of the 2000s, the price has "marked out a fine example of a gigantic Cup and Handle base which is of such a magnitude that it can support a massive bull market," Maund noted.

"It has just this month, at last, broken out of the top of this completed base pattern, so for investors in the sector, there is still almost everything to go for," he wrote.

Other experts agreed. Writing for Forbes, Jesse Colombo said that in recent years, the yellow metal "traded in a directionless manner that frustrated and confused even the most fervent gold investors."

But "gold has been following a clear uptrend line," Colombo wrote. "According to the most basic principles of technical analysis, gold's uptrend will remain intact as long as it stays above that uptrend line; a trend in motion tends to remain in motion."

The Catalyst: A Bull Market of 'Awesome Magnitude'?

CNBC reported that in a research note, Citi analysts "described themselves as 'medium-term bullion bulls,' calling a 25% probability of gold averaging a record US$2,300 per ounce in the second half of the year. Their base case remains US$2,150, and they reiterated a 'wildcard' call for trade reaching US$3,000 over the next 12 to 16 months."

The analysts described gold as a "recession hedge" and said it could be lifted by tailwinds from uncertainty around the U.S. election this fall.

Analysts from CPM Group were less optimistic about a long-term rise, Kitco reported.

"Gold prices have sold off most every time they have tested resistance levels, and as prices test strong support levels, investors step back into the market, initiating new longs once more," the analysts said in a note, according to Kitco.

"It is unclear if prices will continue to climb in the near term, but they already have made strong gains, suggesting the potential for a short-term pullback on profit taking. A retrenchment in prices could push gold back toward $2,075, which could potentially present a buying opportunity should the upward momentum continue."

Maund pointed out that many gold stocks (like the ones highlighted below) "are woefully undervalued relative to gold itself," as can be seen in the graph at left showing gold miner stocks vs. the price of gold.

"So, given that gold has entered a bull market that is likely to be of awesome magnitude, it should be clear that the upside potential of the better stocks in this sector is truly massive and that, despite their gains of the past couple of weeks they are still at exceedingly good prices compared to where they are headed," Maund wrote.

Blackwolf Copper & Gold Ltd.

Blackwolf Copper & Gold Ltd. (BWCG:TSX.V) has a history of finding bonanza-grade results, Red Cloud Securities analyst Taylor Combaluzier noted, a record of success that prompted strategic shareholder Frank Giustra to increase his stake in the company in late October of 2023.

Blackwolf recently announced that it found grades as high as 19.9 grams per tonne gold (g/t Au) on the company's Cantoo property, located in Alaska's Golden Triangle.

Combaluzier rated Blackwolf a Buy with a target share price of CA$0.55 and a more than 350% increase. The company's stock could have even more potential, he noted. "Positive exploration results and/or a discovery could potentially help drive the stock price higher."

In January, analyst J. Taylor included Blackwolf Copper & Gold in a list of gold, energy, and tech stocks to look into as the economy moves into a possible recession. A Couloir Capital report also rated the company a Buy in December 2023 and gave the company a share target of CA$0.39.

Maund looked at the company's stock patterns on October 24, 2023, and rated the company a Speculative Buy. Maund commented, "On its 6-month chart, we can see that the Head-and-Shoulders bottom pattern that has been forming since August, with a big buildup in upside volume over the past week or so that has driven the Accumulation line strongly higher and thus points to an upside breakout soon."

Refinitiv provided a breakdown of the company's ownership and share structure, where management and insiders own approximately 17.98% of the company. According to Refinitiv, they include Executive Chairman Robert John McLeod with 1.98% of the company, CFO Susan Marie Neale with 0.61%, CEO Morgan Lekstrom with 0.17%, and Corporate Secretary Lindsey Le Ho with 0.02%.

Refinitiv reports that institutions own approximately 4.62% of the company, including Crescat Capital L.L.C., with 4.13%.

Frank Giustra, a strategic investor, owns about 14.3% of the company.

According to Refinitiv, there are 123 million shares outstanding, while the company has a market cap of CA$14.71 million and trades in the 52-week period between CA$0.09 and CA$0.49.

Goldshore Resources Inc.

The updated mineral resource estimate (MRE) for Goldshore Resources Inc.'s (TSX.V:GSHR; OTCQB:GSHRF; FWB:8X00) 100%-owned Moss Gold project, fully funded through 2025, has analysts recently re-evaluating the company.

The Ontario project holds an Indicated 1.54 million ounces (Moz) Au at grades of 1.23 grams per tonne and 5.2 Moz Au at grades of 1.11 g/t, the company said. An NI 43-101 technical report is expected soon.

The company also closed a private placement deal worth CA$3.75 million in November 2023 and is well positioned for working capital. It intends to use it to support metallurgical test work to validate the heap leachability of the deposit and a new preliminary economic assessment (PEA). 

Maund rated the company as a "Strong Buy for all timeframes" on February 8, 2024, and said the company's stock was "equally attractive for investors or speculators at this juncture."

Goldshore is on the brink of a big breakout, according to the analyst. "The point to grasp here is that this post-breakout dip has afforded would-be buyers the perfect opportunity to swoop in and pick up the stock at a very low price before the expected bull market gets going in earnest."

Velocity Trade Capital Research Commentary reviewed Goldshore recently and gave the company an Outperform rating with a share target of CA$0.33.

The company provided a breakdown of its ownership, where 26% of Goldshore is held by management and insiders.

According to Refinitiv, Director Brian Alexander Paes-Braga owns 12.03% of the company, CEO Brett Allan Richards owns 2.52%, Chairman Galen Stuart McNamara owns 1.57%, former Director Victor Cantore owns 1.04%, Director Shawn Khunkhun owns 0.40%, Director Kyle Jonathan Hickey owns 0.38%, and Vice President of Exploration Peter Alan Flindell owns 0.24%.

Institutions own approximately 29% of the company, as Sprott Asset Management L.P. owns 5.28%, and U.S. Global Investors Inc. owns 0.54%.

The SAF Group has committed to supporting the company in future financings to raise capital for drilling campaigns — if and when the company’s share price and market conditions warrant a capital raise. 

Refinitiv reports that there are 260 million shares outstanding, with approximately 192.8 million free float traded shares, while the company has a market cap of CA$37.65 million and trades in the 52-week period between CA$0.09 and CA$0.33.

StrikePoint Gold Inc.

Last month, Maund wrote, "This is believed to be the perfect time for investors interested in junior mining stocks to move in and buy StrikePoint Gold Inc. (SKP:TSX.V; STKXF:OTCQB)."

He pointed out that Strikepoint's new flagship Cuprite project is very close to other successful projects in Nevada's Walker Lane gold trend, including Centerra Gold Inc.'s (CG:TSX; CADGF:OTCPK) Gemfield deposit and AngloGold Ashanti Ltd.'s Silicon (AU:NYSE; ANG:JSE; AGG:ASX; AGD:LSE) project.

"For historical reasons, the Cuprite Gold Project is on virgin ground as it was formerly unavailable, meaning that it has never been drilled, and the property is surrounded by the following impressive mines and deposits," he wrote. "Last year saw a lot of activity on the Walker trend nearby, especially by AngloGold, so for all these reasons, the chances of Strikepoint finding something very worthwhile this year at the Cuprite Gold project are considered to be high."

Cuprite consists of about 574 unpatented claims covering approximately 44 square kilometers about 15 kilometers south of Goldfield, Nevada, and 85 kilometers northwest of Beatty. The project is located within the Walker Lane Gold Trend, which hosts AngloGold's Silicon and Merlin discoveries.

The company also controls two advanced-stage exploration assets in British Columbia's Golden Triangle: the past-producing high-grade silver Porter-Idaho Project and the high-grade gold Willoughby Project.

Reuters provided a breakdown of the company's ownership and shares structure, where management and insiders own approximately 1.84% of the company.

According to Reuters, Executive Chairman Shawn Khunkhun owns 0.55% of the company, President and CEO Michael G. Allen owns 0.89%, Director Ian Richard Harris owns 0.13%, and Director Adrian Wallace Fleming owns 0.04%.

Reuters reports that institutional investors own approximately 16.42% of the company, as 2176423 Ontario, Ltd. owns 13.96% of the company, U.S. Global Investors, Inc. owns 1.29%, and Sprott Asset Management L.P. owns 1.17%.

According to Reuters, there are 213.78 million shares outstanding with 180 million free float traded shares, while the company has a market cap of CA$12.83 million and trades in a 52-week range of CA$0.035 and CA$0.085.

Important Disclosures:

1. Blackwolf Copper & Gold Ltd., Goldshore Resources Inc., and StrikePoint Gold Inc. are billboard sponsor of Streetwise Reports and pay SWR a monthly sponsorship fee between US$4,000 and US$5,000.
2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Blackwolf Copper & Gold Ltd., Goldshore Resources Inc., and StrikePoint Gold Inc.
3. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
4.  This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company. 

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