Its Go Time

Since late 2020, investing in junior gold stocks has been a bear. But, gold has broken out in all major currencies. Given Wednesday’s comments from the Fed Chairman and the strong reaction of the price gold it is All Systems Go!

Monday, December 18, 2023

We have taken a brief pause from writing to attend some important mining conferences in Switzerland prepare for the holidays and wrap up the year.

However, recent market action has only confirmed our expectations, which we have written about over recent months, that It is Go Time!

We believe that 2024 is shaping up to be an impressive year for gold and gold mining stocks.

All Systems Go!

Since late 2020, investing in junior gold stocks has felt like this.

However, gold has broken out against the Euro and in all major currencies.

Senior gold stocks remain in an incredibly volatile ten-year bull trend.

Sentiment Remains Ugly, Despite a Breakout

Nevertheless, sentiment still sucks. We mentioned that in conferences in October, investors were smiling but selling.

Companies are still struggling to raise capital at good valuations.

However, we are witnessing a breakout of a massive head and shoulders bottoming pattern on the VanEck Gold Miners ETF (GDX).

And a very promising double bottom on silver stocks!

Junior Mining Stocks are at Historic Lows

Finally, the smaller junior miners are starting to show a pulse!

Junior gold stocks are massively undervalued and gold stocks are at historic lows versus the price of physical gold.

The chart below shows the TSXV (black line) versus the price of gold (blue line).

And the Chart above from Incrementum's excellent IGWT report, shows that the NYSE Arca Gold Bugs Index of large gold mining stocks is trading far below its average ratio versus the price of gold.

Bottom Line: A Good Environment for Gold and Gold Stocks

Historically speaking, once tax-loss selling ends, the end of December, January and February are the best months for small cap stocks.

We believe that gold stocks could outperform, even if the S&P 500 is weak. 

However, we are starting to question whether this would even happen.  Afterall, Fed Chairman Jerome Powell showed the public (again) last Wednesday that the emperor has no clothes. The Federal Reserve has only one way forward – to facilitate the continual debasement of the US dollar.

Whatever the nominal interest rate will be, it must certainly be negative on a real basis. And as Daniel Oliver has rightly pointed out in his latest note, the future of the US economy will be larger and larger fiscal deficits.

This will be good for gold and gold stocks. As a result, we believe that all the stocks mentioned in Swiss Gold Letter have a favorable risk reward in this environment.

Disclaimer: SGL does not provide investment advice and is not a registered investment advisor.  Always do your own due diligence before making an investment. Investing in securities, especially junior miners, can be risky and never invest money you cannot afford to lose. SGL cannot guarantee the accuracy of the information in this post. SGL and its contributors have attempted to present the information fairly, but it may own shares of companies discussed on this website so bias cannot be excluded. SGL may buy or sell shares at any time.  

SGL or its contributors makes no representations, and specifically disclaims all warranties, express, implied, or statutory, regarding the accuracy, timeliness, or completeness of any material on this website. You should seek the advice of a securities professional regarding any stock transactions. SGL cannot guarantee in any way that it is providing all of the information that may be available. Please do your own due diligence before buying or selling any security.

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