Month: May 2021

Heading into Memorial Day weekend, American motorists will see the highest prices at the pump since 2014, according to AAA. Gas prices now average $3.04 a gallon nationally – reflecting a jump of more than $1.00 compared to the same time last year.

A rising gasoline price is just one of many emerging symptoms of a larger inflation problem:

• A lack of housing inventory, low interest rates, and surging costs for building materials are pushing home prices through the roof.
• Billionaire Warren Buffett recently complained that he is seeing significant inflation pressures throughout the supply chains of businesses he owns.
• Beef is becoming increasingly unaffordable for many grocery shoppers, and rising food costs are forcing already beleaguered restaurants to hike menu prices.

These examples are even being confirmed by the government’s own notoriously understated Consumer Price Index (CPI) and Producer Price Index gauges.

The latest CPI data shows inflation running at a 4.2% clip while producer prices have shot up 6.2% from a year ago.

The inflation surge should alarm investors who are positioned in dollar-denominated paper assets. But they can’t say they weren’t warned.

It’s not just gold bugs who have been warning of higher inflation. The Federal Reserve itself has been trumpeting its intent to raise and keep inflation rates above 2% for an extended period.

Now the Fed is trying to downplay the recent surge in consumer prices as “transitory” so that it can continue to pursue extraordinary stimulative monetary policy – while egging on Congress to rack up gargantuan deficits and dole out trillions of dollars.

Federal Reserve Bank of Chicago President Charles Evans said on Tuesday, “I have not seen anything yet to persuade me to change my full support of our accommodative stance for monetary policy.”

Meanwhile, San Francisco Fed president Mary Daly told CNBC, “I am firmly in the transitory camp.”

When queried about double-digit rates of housing appreciation bring average home prices 30% above the 2006 peak, Daly said they were “supported by the strong economy.”

How can an economy mired in lockdowns and restrictions for more than a year with tens of millions of people reliant on emergency government aid be regarded as “strong”?

It’s strong only in the worldview of those who see currency creation and its effects on prices as a legitimate substitute for productivity and real growth.

Daly went on to gloat about “monetary policy actions we’ve taken that support balance sheets for households by lowering interest rates and allowing them to put more money in their pockets.”

In other words, she views Federal Reserve Note money itself (inflation) as an engine for prosperity.

“Higher prices can be seen as evidence that President Joe Biden’s economic and health policies are working,” claims CNN, even while acknowledging that the undesirable effects of rising costs could eventually become a problem for the administration.

As long as the Fed and the media can focus on rising home prices and stock market indexes, they can continue to peddle the myth that inflation creates prosperity.

But when the rising costs of living for struggling wage earners and retirees begin to drag on the economy and financial markets, the peddlers of inflation will have to change their tune.

The precious metals markets often serve as an indicator of when inflation turns from being perceived as “good” to being revealed as “bad.”

A gold price surging to record highs would be like the canary in the coal mine to investors concerned about inflation risk. It would signal that trust in the U.S. currency is waning, that the Fed needs to tighten monetary policy, that stock and bond markets are vulnerable.

Gold prices rallied this week to over $1,900 an ounce.

Although gold and silver markets have taken a back seat to copper, lumber, and other commodities for most of the year, precious metals have a chance to exert leadership as the stimulus-fueled economic recovery narrative recedes and the realities of inflation come to the fore.

Many economists including Joel Naroff are decidedly not in the “transitory camp.” According to Naroff, “I think we have a greater risk that this will be an extended period of inflation rather than a transitory period.

The Fed is expecting the risk to fade as the government support winds down.

But if President Joe Biden’s infrastructure and family programs are passed, the Fed could be in trouble.”

The spending already set to take place this year will bring the federal budget deficit up to the previously unthinkable level of $3.1 trillion.

Neither the White House nor Congress have shown any signs of pursuing fiscal discipline. They are hoping, along with Federal Reserve policymakers, that the massive expansion in centrally directed cash infusions will provide a lasting boost with only “transitory” effects on price levels.

In the months ahead, the precious metals markets may indicate a different reality is playing out – one perhaps more akin to late 1970s stagflation. If so, then it will be a difficult investment environment for holders of conventional stocks and bonds who have not diversified into the safe havens of physical gold and silver.

      

Source: Bill Powers for Streetwise Reports   05/26/2021

Ian Murray, CEO of Matador Mining, sits down with Bill Powers of Mining Stock Education to discuss why he came out of retirement to run the company and why he believes Matador is the most undervalued gold company operating in Newfoundland.

Matador Mining Ltd. (MZZ:ASE; MZZMF:OTCQX) is the most undervalued gold stock in Canada’s hottest jurisdiction of Newfoundland, says Ian Murray. Ian thought so highly of Matador Mining’s potential that he came out of retirement a year ago to become its executive chairman. Prior to Matador, Ian was the executive at the helm of Gold Road Resources, overseeing its gold discovery and advancement.

Ian stated, “So here [at Matador Mining] you’ve got this gold bearing shear zone in a tier one jurisdiction with a very supportive, Newfoundland government and Canadian government wanting more exploration, more mine development on the island. And it can be sitting on what I think, as the saying goes, is a gold mine. It is 120 strike kilometers, which has never been tested except in one area where we’ve got 840,000 gold ounces. So for me, it was, ‘Wow, this is fantastic. Let’s build up another team here.’ At DRDGOLD, that was over a tenbagger when I was running that company. Gold Road went from 5 cents to a $1.90 for shareholders. And I see at Matador, we can do exactly the same thing here. Be smart with the exploration, make the big discoveries, build up the critical mass, and then look at converting that into production and into cashflow for shareholders.”

Bill: Please share about your success at the helm of Gold Road Resources (ASX:GOR) and your success in the industry.

Ian: Gold Road was a great story and the most important thing is have fun. So in Gold Road, we built up a very good exploration team. We owned an untested greenstone belt in Western Australia. It’s 1,200 kilometers from Perth where I’m based; that’s probably 800 miles from Perth so it’s not close to the city, it’s far away. And we knew that we had to discover a big enough deposit to build a new mine. You can’t have a small 200,000 ounce deposit. You’d never going to be able to develop it. You needed to have 10 year plus mine life and over 100,000 ounces of gold. And I challenged the geologists; there was already a million ounces in resource, but I challenged the geologists. I said, “How do you know what you’ve discovered is the best system? I know you found the easiest system to find, but you haven’t found the best system.”

And then they went off, they did the targeting across this massive greenstone belt, came up with the targets. We then got the money, funded it, they went out and explored and then they discovered Gruyere. And we discovered it in September 2012 and we had the maiden resource by July 2013 of 3.5 million gold ounces. It’s now over a 7 million ounce gold resource with a 15-year mine life with very low operating costs and generating significant cashflow. But that was my second foray in the gold mining space. I started in South Africa with a company called DRDGOLD, which is listed on the NYSE. I was chief financial officer there, and then I became managing director. And that company had 90% of its shareholders in the U.S. trading through the ADR program, and we traded 500% of our issued capital per year.

And that’s a company that had old mines in South Africa, but we ran them very effectively, made good money for shareholders. And that share price was a tenbagger in South Africa with through the ADR program. I left South Africa, moved to Australia, got involved in Gold Road, built up a very good team of geologists to do the work. We found an amazing project called Gruyere, built that mine. And then I decided to retire at the end of 2018 and focus on non-executive roles.

Bill: So I want to focus on two things here, your experience with American investors, obviously with DRDGOLD, you’ve had experience with American investors. Matador Mining is a Australian company with its flagship project in Newfoundland in Canada. But now you’ve just listed on the OTCQX to reach American investors. The ticker symbol, I should note is MZZMF. The website is matadormining.com.au. So I want you to talk to my American audience, of course, but also talk about why did you come out of retirement to take on the helm of Matador Mining? What did you see with your experience? You didn’t need to do it, but why did you step back into this role?

Ian: I’ll first start with the U.S. shareholder base. So, in South Africa, with DRD, I used to get across to the U.S. once a quarter. Do the road shows, attend those gold trade shows down in New Orleans, New York, San Francisco. And I really enjoyed speaking with the U.S. investors. They were incredibly passionate, and that was the time when gold hit $254 an ounce. So it was the dark days, but the investors were there. They had faith that gold could go a lot higher and it has. I really enjoyed speaking to those investors and hearing their passion. And while they were diversifying away from the U.S. dollar into the gold industry, both physical gold and gold stocks.

So the reason I came out of retirement, I was asked to look at this company called Matador Mining with a project in Newfoundland, which I’d never looked at before because in Australia as an Australian, there’s so many Australian gold companies with projects in Australia. But I had one look at what Matador had, which is 120 strike kilometers of an untested shear zone. At the northern end of that shear zone Marathon Gold has got 4.8 million ounces. At the southern end Matador’s already got 840,000 ounces. There’s over 100 kilometers between those two discoveries with no exploration. In fact, over a 100 kilometer strike length, there are less than 20 drill holes ever being drilled into this area. So in Australia, or any of the known gold districts in North America, you’d have thousands of drill holes over that strike extent. So to me, this was… Going back to Gold Road Resources, what I saw there and the million ounces, but had to find the best system? And that’s the question I had for the geologists in Matador. Yes, we’ve got 840,000 ounces, but is this the best deposit on that belt? The 840,000 ounces is where the mineralization outcrops at surface. So the original explorers there found gold at surface and kept following it down. Some 90% of the tenement is covered in transported material, shallow, transported till between half a meter to five meters.

So it’s not very thick from an exploration perspective, but it is thick enough that no work’s ever been done under it. So here, you’ve got this gold bearing shear zone in a tier one jurisdiction with a very supportive Newfoundland government and Canadian government wanting more exploration, more mine development on the island. And it can be sitting on what I think, as the saying goes, a gold mine. It is 120 strike kilometers, which has never been tested except in one area where we’ve got 840,000 ounces. So for me, it was, “Wow, this is fantastic. Let’s build up another team here.” At DRDGOLD, that was over a tenbagger when I was running that company. Gold Road went from 5 cents to a $1.90 for shareholders. And I see at Matador, we can do exactly the same thing here. Be smart with the exploration, make the big discoveries, build up the critical mass, and then look at converting that into production and into cashflow for shareholders.

Bill: I think you have good fundamental value with the deposit that you’ve already outlined. But as you say, you have this extreme exploration potential that you and your team see. Talk about the deposit, the Cape Ray Gold Project is your flagship. This is at the scoping study level and for my North American listeners, we refer to it as a PEA or Preliminary Economic Assessment. Go over the highlights here before we talk about your exploration program.

Ian: So the 840,000 ounces is in three main areas. Those three areas are within 10 miles of each other. So 10 miles north to south, you’ve got these three areas that host that resource. The main one is central zone with over 500,000 ounces of gold, Window Glass Hill with 230,000 ounces of gold and Isle Aux Morts at 60,000 ounces of gold. So the PEA that we published in May of last year, 2020, that looked at simple open-pit mining of these deposits. When you’re talking a gold mine mineralization, the average depth is about 120 meters below surface. So these are simple open portable deposits trucked in within that 10 mile area to central processing plant. The process plant is stock standard gold mining technology. So crush, grind, chemical recovery, CIL recovery and gravity recovery giving us 96% recovery of the gold in the rock.

Of the 840,000 ounces, 480,000 ounces is the minable component of it. It’s a seven-year mine life. The first four years are particularly good. The average grade mine is 2.6 grams per ton (g/t), but bear in mind, this is open pit. So 2.6 g/t, this would be one of the highest open pit mines in the world that has not yet been developed. So 2.6 g/t for the first four years, 88,000 ounces of gold per year, average AISC (all-in sustaining costs) per ounce produced in the life of mine is under $800 US an ounce. So very low operating costs. The NPV (net present value) of that project is in Australian dollars, $245 million compared to capital spend of $145 million Australian. So in U.S. dollars, you’re talking roughly, probably $180 U.S. NPV relative to $100 Capex. And I mentioned those two numbers because in all the projects I’ve studied and then developed, the key ratio is what is the NPV compared to your capital spend? And you want that to be over 1.2. A factor of 1.2 and here we are talking a factor of 1.8.

And it’s only at scoping study stage, and it’s only a seven-year mine life. The other key number to bear in mind when you’re looking at developing a mine is what is the payback period relative to the life of mine? And the payback period because of that good grade in the first four years is just over one year relative to a seven-year mine life. So you’ll pay off the capital quickly and then the rest of the cashflow goes to shareholders. So from a scoping study perspective, what I learned a long time ago in the industry is the only two outcomes of a scoping study that you focus on, technically, are there any roadblocks that will stop you developing this project? And no, there are not. The metallurgical recoveries are very, very good.

There’s a lot of space in the area where these deposits are to build the infrastructure. The project is only 25 kilometers or 15 miles away from a major town called Port aux Basques, which is also a port. So to bring in all the materials we need to build the project, we can bring it into that port and we only need to track it 25 kilometers. It’s not like when we bought the Gruyere project in Australia and we had to transport the material 1,200 kilometers or 800 miles to build a project. This is 25 kilometers or 15 miles. So it’s very close, easy to build, so technically there are no roadblocks to stop us going ahead. And the second key point is economically… And as I mentioned NPV to Capex ratio is very, very strong. Payback to life of mine is very, very strong.

So the next question is, well, why don’t we go ahead and develop it? And the reason for that is, as I showed with Gruyere, we may not have found the best deposits there. I want to… As long as we are drilling and growing the resources, let’s do that before we press the button for the pre-feasibility study. All the study work is going on in parallel with our exploration activity, but our aim is to grow the resources, so we do have a longer than a 10-year mine life and longer than or more than 100,000 ounces per year of production. And those two numbers are key to me because at a project longer than 10 years, you’ll get very good, especially for a Canadian project, very good, low cost debt, which leads to low cost equity, so good returns for shareholders. And the second reason is at 100,000 ounces per year with those operating costs of less than US$800 AISC cost per ounce, you’ll generate very strong EBITDA or cash flows, which can go to payback the debt, further exploration on this untested belt and, thirdly, dividends for shareholders. So, yeah, the scoping study or PEA was great, but we all believe we can continue to grow that into something that is really substantial.

Bill: And you’re looking to grow it with a unique exploration method. This is what I want to get into. You are successful with this, with Gold Road. You mentioned you have 120 kilometers of strike on the shear zone and 90% is under till so it’s untested in a sense, but you’re employing this new method. Walk us through this new method and why we should expect better results with it.

Ian: Well, the first thing I’ll say is it’s not a new method. It’s what all the Australian explorers use in Australia.

Bill: New method to Canada perhaps?

Ian: In Australia, we explore under 50 meters of cover, 100 meters of cover, 200 meters of cover. And this is the way we do it because the two options, either you go and you pepper the area with lots and lots of diamond holes, which is pretty much throwing lots of darts at the dart board, or you make the bullseye in the dart board a lot bigger by doing your first pass testing. So what we’ve proved in 2020 is that magnetic surveys show the right structures underground very, very clearly. So previously we relied on the government provided area of magnetic surveys, which are based on 200 meters spaced lines. And that gives you very vague images, but it was good enough as to discover the Angus discovery in 2020, which is the first discovery in 20 years on the belt, by a company that’s only been exploring for the last two years, so great outcome for our team.

So the guys walked on the ground with magnetic backpacks, 30-meter spaced lands and we got very clear images of the structures in the area where Angus was discovered. So that’s proof that magnetics give us the care structures. To accelerate how quickly we get the magnetic data, we flying magnetic surveys. So we’re using helicopters, those helicopters will fly 30-meter spaced lines and 30 meters above the ground. A hundred foot lines and a hundred feet above the ground. They will do that over 45 strike kilometers, 30 miles of the belt first. So we’re doing two phases of aero-mag, the first 30 miles, and then the second 30 miles, close space and that’ll give us clear images of the structures at depth.

Once you’ve got the targets identified from that we then go in with what’s called a power auger. So it’s cheap, it’s quick. So it’s a drill rig built on the back of an ATV, all-terrain vehicle, a track-mounted ATV that can go through the swampy areas. It can go through the snow. It can get to all the remote areas. So we identify targets through the magnetic images. We then test through the transported material with this power auger. So, we drill down and we take a sample of the transported material. Once you get through the transported material and we are at the top of the fresh material, we changed the drill bit to a diamond drill bit. And we get a 20-centimeter sample of the top of the fresh rock as a diamond sample. Both of those are sent away for multi-element assays.

We test for 47 different elements, including gold, but all the pathfinder elements that we know are normally associated with gold mineralization. So through this testing with the auger rig, we don’t have to hit gold. All we have to hit with it are the pathfinder elements that we know from testing on the rest of our belt, where we have the rest of our resources, these minerals are associated. So that’s molybdenum, zinc, arsenic, copper, etc. So where we draw with a power auger and we get these pathfinder elements, we know we’re close to gold; we refine the targeting and then we only put the expensive diamond drilling in when we’ve made that bullseye a lot bigger for us. So the dart is going to hit the bullseye. It’s not going to hit all the other numbers around the bullseye, but we know we’ve got a bigger target to hit. So that’s the strategy for our exploration in 2021. We’re doing what we did in 2020, but we’re doing it on a much bigger scale than what we did in 2020.

Bill: And one of the ways it differs from other explorers, if I understand this correctly, is that you’re looking to do more shallow holes rather than spend money on deep holes. So, you could potentially outline more gold ounces because what you found thus far has been relatively close to surface.

Ian: Well, if you think of diamond drilling, diamond drills down 100 meters to 200 meters, you might get 50 to 60 meters per shift. With the power auger we’ll get 10 drill holes a day. So whereas the diamond drill hole would take you four days to do, we would get 40 of the power auger drill holes, so we are testing a much bigger footprint quicker with a cheaper drilling method as well.

When it comes to the diamond drilling and you raise a good point there about the number of holes. A lot of explorers in Canada are looking for deposits 500 to 700 meters below surface. We’re drilling down to 100 meters, down to 150 meters. So when we say, as we announced when we started our program, we are going to do in excess of 20,000 meters of drilling. If our average drill hole is 100 meters, that’s 200 separate diamond holes, on top of all the power auger holes we doing. So it’s the most cost-effective way for us to explore for shareholders. And the most important thing for us is shareholder money. It’s hard to raise money from the market and we don’t waste any of it. And that is why we’ve come up with these cost-effective approaches, which proved their success in 2020, and have proved their success in Australia over the last few decades.

Bill: And let’s talk your valuation relative to some of your peers in Newfoundland. There’s explorers, as you know, with some very impressive results that over a billion U.S. dollars market cap with no proven resource. There’s other explorers that have an $80 million U.S. market cap with no resource. You have a resource, you have a scoping study, you have the exploration upside you just outlined. What is your valuation relative to your peers?

Ian: Our market cap is in U.S. dollars around $50 million. When we look at our peers on the island… Let’s start at the top. You’ve got New Found Gold, which is listing on the NYAC at some stage. Market cap of $1.2 billion with no resources yet. Yes, they are getting very high-grade intercepts, but we control an entire shear zone, 120 strike kilometers untested. We know there’s 4.8 million ounces at the north. We know there’s 840,000 ounces in the south, and we’re going to test what’s in between those two now. So you’ve got New Found Gold at $1.2 billion. You’ve then got Marathon Gold who’ve got the 4.8 million ounce project. Their market cap is around $600 million. They’ve just published feasibility and they are starting their early works program to get ready for construction, so they’ll be building the project for the next two years.

Then you’ve got the other explorers on the island. Maritime Resources, Labrador, and they were around US$80 to US$100 million, but much smaller exploration programs than ours, and much smaller tenement than ours and no current resources. So you’re right, we’ve got 840,000 ounces. We’ve done the PEA. We’ve shown that that’s very, very economic, but to me, I get really excited about what we haven’t tested yet. That’s where we’re going to come with the big step change discoveries that will move us up in value significantly. If we compare ourselves to the Australian companies that operate in Canada, they are trading at between US$150 and US$200 million and we US$50 million, so there’s a huge valuation gap. And that just comes down to education of the Australian investors, but also we’ve gone for the OTC listing so that we are trading in the same time zone as our project. And we are trading in the same time zone as our Canadian peers are trading, so investors in the U.S. can do the direct comparison to these other companies, see how cheap we are, and then invest in us in your time zones.

Bill: Let’s talk treasury and burn rate. What’s in the treasury? And how fast are you going through it?

Ian: In treasury, we’ve got A$8 million at the end of March; Australian dollars so that’s US$5 or 6 million. We had the same number in December, which some investors may say, “How do you have the same number?” And that’s because we’ve got a number of in-the-money options, which expire in July 2022. Those options are being exercised all the time, and when the people exercise those options, money comes into our treasury. So there’s a further $5 million that will be exercised over the next 14 months. That’ll come in and add to our A$8 million. So, we’ve got A$8 million now, but the way I look at the budget is we’ve got access to $13 million Australian. Our current burn rate is around a million dollars a month. So this money will help fund this exploration program all the way through to very late in the year. And at some stage, as all exploration companies, we will raise money, but we don’t need to rush out and raise money now.

We did it in Gold Road successfully. You get good exploration news, you get new investors wanting to come in, you have the share price moving up, and then you can raise further capital. The other thing I would highlight for the North American investors is when we raised money in July last year, we raised it through the Canadian charity flow-through model. So when we raise money, we raised it at a 45% premium to what the normal market price is. So it’s less dilutionary for our existing shareholders. And it’s a great model and wish the Australian government would adopt it. Canada’s got it. It’s a fantastic model for the exploration companies and for the charities. So we’ve got the cash. We’re kicking off the program. We’ve got more cash coming in from the exercise of the options. And we will have significant news flow through the big program that we are already rolling out.

Bill: And Ian, as we wrap it up, could you just review for us, what news flow should we expect the rest of this year?

Ian: Because we’ve kicked off exploration already, there’ll be news flow coming through from the power auger drilling. There will be news flow coming through from the heli-mag surveys as they progress. But most importantly, there’ll be news flow coming from the plus 20,000 meters of diamond drilling that we’re doing. On top of that, I mentioned that we are doing all the study work in the background. So further metallurgical test work, further environmental test work that we’re doing, all to prepare us so that when you press the button on the pre-feasibility study, when the resource is big enough, all that work’s been done. So significant news flow, because we are so active with all the work that we are doing. We’ll be highlighting new targets that get identified from the aero-mag and the power auger. And we’ll be announcing drill results from the diamond core drilling that could do with the diamond rig. So lots of news; most probably every two weeks there’ll be another announcement out for the market.

Bill Powers is the host of the Mining Stock Education podcast that interviews many of the top names in the natural resource sector and profiles quality mining investment opportunities. Powers is an avid resource investor with an entrepreneurial background in sales, management and small business development. His latest interviews can be found at MiningStockEducation.com.

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( Companies Mentioned: MZZ:ASE; MZZMF:OTCQX,
)

Source: Michael Ballanger for Streetwise Reports   05/26/2021

Sector expert Michael Ballanger discusses the upsides and downsides of trading cryptocurrencies, precious metals and copper, and also puts numbers on the “multibagger” potential of Getchell Gold.

Last week was a gratifying week for a number of reasons but it was also a frustrating one for many of us Ontario-ians that worship the summers out on Georgian Bay. Canadian boating season usually runs from the last week of April to the first or second week of October, so twenty or so weeks out of fifty-two is pretty skimpy especially when I talk to my friends who have dockage in the Caribbean or southern U.S.

We learned late last week that we would finally be allowed to use the marina for this upcoming May Two-Four long weekend (derived from the Seventies term “two-four,” describing a case of beer containing twenty-four bottles purchased from the Brewers’ Retail, and a “must-have” when rocketing up the 400 highway to someone’s cottage in a ’68 GTO with Thrush mufflers and chrome scoop on the hood).

Well, at the last hour, the marina sent us all an email informing us that they would not be opening until next weekend, which means all those spring chores that get shelved in favor of “two-four chicanery” are now back on the front burner. In full protest and resembling a form of perverse self-flagellation, I decided to walk six kilometers and cut the front and back lawn in 30-degree heat just to make a statement, and let it be known that it was one of the silliest antics a sexagenarian can pull off—but highly effective if you are hellbent to say goodnight to your spouse an hour before your usual bedtime.

The blogosphere and Twitterverse were rife with cryptocurrency (and specifically Bitcoin) grave-dancing last week, as the cheerleaders all went collectively silent. The myriad of podcast professors who missed one of the most outstanding trades of the last two decades were giving it the old “See? I told you so!” nauseum that drives me to drink and assorted stimulants and hallucinogens.

I rarely make any public comments on crypto, because while I was one that also missed the trade, I have always doffed my fedora at those who had the courage to take that trade. When asked, I only gave a perfunctory technical assessment once last year, after it rose to $40,000 in a near-vertical ascent, remarking that like Japan’s Nikkei in the 1980s or the NASDAQ in the 1990s, markets that move from “gradual” to “parabolic” are markets that are ready to get smoked.

A few days later, BTC traded down to $28,000, but (and this is important) the reason I refuse to gloat over supposedly prescient calls is that it then turned on the proverbial dime and headed straight to $65,000. There are phrases from my past forty-five years carving up markets that come to mind, such as “Hero to Zero” and “Penthouse to the Outhouse,” but all I will say is that the number one enemy of the investment class is a word called “hubris.” The market has an uncanny way of turning victory laps into train wrecks. Never forget that.

As for the crypto space (and Bitcoin in general), it must hold that big uptrend line dating back to March 2020 and since the RSI (relative strength index) and MACD (moving average convergence/divergence) are approaching oversold status, the rout might be coming to an end.

Of course, if that happens, the gold and silver bugs will put away their cymbals and drums and streamers, taking down all of their finger-wagging podcasts and go collectively silent, only to be found hiding under their desks sucking their thumbs in fetal positions.

Just as predictably, the crypto-junkies will be back on their soapboxes, chastising the Boomers for their unfounded allegiances to assets that have survived for 5,000 years. As Jean Baptiste-Alphonse Karr once said: “Plus ca change, plus c’est la meme chose,” or “The more things change, the more they remain the same.” How very true.

The great news for the week was the announcement that my biggest holding, Getchell Gold Corp. (GTCH:CSE; GGLDF:OTCQB) (CA$0.57 / US$0.4834), announced that they closed a CA$2.7 million financing, following it up with the news that an additional CA$646,730 was collected from warrant exercises. Working capital is now a healthy ~CA$4.7 million, giving Getchell management the comfort of being able to get very aggressive in their continuing (and very exciting) drill program at Fondaway Canyon, but also in their maiden drill program at the Star Point copper-gold-silver prospect, also located in Nevada.

Getchell is number one on my list for a number of reasons (valuation per ounce the biggest), but those analysts out there covering the gold and silver producers are astonished that the same disconnect that is happening with Getchell is commonplace right across the board. Companies trading at three times cash flow and six times earnings, or, as in the case of Getchell, US$50 per ounce of in-ground gold (with the Nevada benchmark at US$100/ounce)—and that figure is assuming full dilution, which adds even more cash to the working capital position.

The technical picture for the company looks bright after succumbing to the same corrective malady that has afflicted the entire senior and junior mining space since last August. Breaking that downtrend line in early May and getting the bullish MACD crossover shortly thereafter has set the pick for a move to all-time highs that I think coincides with the drill turning in a few days.

As far as valuation is concerned, it is important to remember that GTCH’s $50 per ounce is based upon the 2017 resource estimate, which is now considered obsolete. The reason it has to be thrown into the waste bin is that the prior operator calculated 1,069,000 ounces with a $1,200 gold price, and modeled it with a 3.43 g/t Au cutoff grade (which was fine back then, but is not “fine” today, with gold approaching $1,900/ounce).

Also, falling into the order of obsolescence, is that no credit is being given for the 2020 drill program, where the results were, to the credit of President Mike Sieb and Vice President Exploration Scott Frostad and their interpretive acumen, simply spectacular, and included the discovery of a new zone, relatively shallow, that will without a doubt add a great many more ounces as well.

The key will be the revised resource calculation, to be completed after the 2021 results are compiled . With two seasons of drill results and a lowered cutoff grade to add to the equation, Fondaway is going to evolve into—at a minimum—a Tier Two asset (2–5 million ounces) and with the blessings of the two Goddesses of Junior Mining—Mother Nature and Lady Luck—it just might evolve into a Tier One asset (5 million ounces plus).

One last remark before I shutter the pompoms and megaphone—new highs in 2021–2022 in gold prices will, in my opinion, result in merger and acquisition (M&A) transactions for the state of Nevada in the US$150–200 per ounce range. Result? Do the math. Getchell is a low-risk, high probability opportunity with multi-bagger potential in the right jurisdiction.

Shifting gears to the other metals, while gold appears to be primed for a test of the 2011 high around US$1,908, one troubling aspect of last week’s action was the poor performance of silver, with no better evidence than the sharp advance in the GSR (gold-silver ratio) to 68.28 from under 65 while closing back above the 100-dma (daily moving average). As I have continually screamed from the highest yardarm for decades, no healthy precious metals advance can occur with silver lagging, and lagged it most surely did, dropping 1.45% on Friday, with gold essentially unchanged.

Also, unsettling was the poor late-week action in the HUI and while it actually was unchanged on the week, I would have preferred to see it best the 325 level, which was the January peak for the miners.

One week ago, I posted the chart of copper showing the overbought readings in RSI and the bearish MACD crossover. Since we had earlier exited the big Freeport-McMoRan Inc. (FCX:NYSE) stock and call positions with decent profits, I have FCX once again in the crosshairs as I fully expect to see RSI approaching 30 and the stock price under USD $38 again before too long.

I have the distinct impression that a great many traders (late longs) are now trapped in the “electrification trade,” and that means there is going to be a bloodletting soon that flushes the kiddies out of their positions. I will be buying back positions, because if there is one trade that leaps off the page at me, it is the copper-electrification-junior developer positions as I look out to 2022 and beyond. “Copper to $15!” were the cheers twelve days ago at USD $4.88/lb. but now that the cheers have turned to tears, I have both barrels loaded with shot and I am hunting down my jettisoned copper positions patiently, and with second half of 2021 as the moon-rocket phase.

The GGM Advisory 2021 portfolio is once again back in gear, with the best performer being Western Uranium & Vanadium Corp. (WUC:CSE; WSTRF:OTCQX), up142.20%.

You will have noticed that in today’s missive, I purposely avoided getting into any discussion of these people that make decisions for us these days, be they politicians, central bankers or public health “officials.” If I ever run for office, I am going to have a battery of “experts” available every time I make a decision, so in the event that I make a completely bonehead move, like locking down a country or threatening to have the police pull people over for violating an unconstitutional “stay at home” order, I can simply haul out the “advisory group” and blame them for giving me “bad advice.”

Then, during the next election campaign I can brag about how I fired the old advisory group and replaced them all with a new advisory group, while telling the voters how concerned I am for public welfare, until I am re-elected to office, after which it becomes an exercise in “wash, rinse, repeat” (lead-filled ashtray heading toward TV screen).

Originally published Friday, May 21, 2021.

Follow Michael Ballanger on Twitter @MiningJunkie. He is the Editor and Publisher of The GGM Advisory Service and can be contacted at miningjunkie216@outlook.com for subscription information.

Originally trained during the inflationary 1970s, Michael Ballanger is a graduate of Saint Louis University where he earned a Bachelor of Science in finance and a Bachelor of Art in marketing before completing post-graduate work at the Wharton School of Finance. With more than 30 years of experience as a junior mining and exploration specialist, as well as a solid background in corporate finance, Ballanger’s adherence to the concept of “Hard Assets” allows him to focus the practice on selecting opportunities in the global resource sector with emphasis on the precious metals exploration and development sector. Ballanger takes great pleasure in visiting mineral properties around the globe in the never-ending hunt for early-stage opportunities.

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Disclosure:
1) Michael J. Ballanger: I, or members of my immediate household or family, own securities of the following companies mentioned in this article: Western Uranium & Vanadium and Getchell Gold . My company has a financial relationship with the following companies referred to in this article: Western Uranium and Vanadium and Getchell Gold. I determined which companies would be included in this article based on my research and understanding of the sector. Additional disclosures are below.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with Getchell Gold. Please click here for more information.
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4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for 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. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Getchell Gold and Western Uranium and Vanadium, companies mentioned in this article.

Michael Ballanger Disclaimer: This letter makes no guarantee or warranty on the accuracy or completeness of the data provided. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This letter represents my views and replicates trades that I am making but nothing more than that. Always consult your registered advisor to assist you with your investments. I accept no liability for any loss arising from the use of the data contained on this letter. Options and junior mining stocks contain a high level of risk that may result in the loss of part or all invested capital and therefore are suitable for experienced and professional investors and traders only. One should be familiar with the risks involved in junior mining and options trading and we recommend consulting a financial adviser if you feel you do not understand the risks involved.

( Companies Mentioned: ELD:TSX; EGO:NYSE,
FCX:NYSE,
GTCH:CSE; GGLDF:OTCQB,
WUC:CSE; WSTRF:OTCQX,
)