Garimpeiro suspects that a medium-sized “V” shaped recovery in lithium stocks is taking shape.

But until he is convinced the recovery is underway, he is sticking to the relative tranquility of the gold space. A safe harbour if you like.

Gold has been a good performer in the year to date. It’s up around 5% to $US2,034/oz (mid-week) which follows on from its 8% rise to $US1,943/oz in the 2023 (calendar) year.

While the Aussie gold producers continue to battle rising costs and labour shortages, the truth is that they have never had it so good in Aussie dollar gold price terms.

The Aussie dollar gold price of $3,112/oz (mid-week) is within a whisker of the all-time high of $3,167/oz last October when prices took off in response to the Hamas attack on Israel.

Before and after the attack, gold was nevertheless tracking higher on the great unwind in global interest rates, with high rates the mortal enemy of non-yielding physical gold.

The unwind was put on hold last week by the US Federal Reserve until it sees more evidence that inflation was moving “substantially down to 2%.’’

Still, gold has held on to its near record levels. So when the unwind gets going in earnest later this year to a slide in to recession, gold could well set new highs.

What is more certain is that the market is not treating gold stocks as if the gold price is at near record levels, and with the interest unwind to come. The producers have done well since October but have not exactly shot the lights out.

The developers and explorers have been smashed. Capitulation comes to mind. Lithium and nickel prices woes look to have prompted a mass exit from anything speculative, even if as is the case with gold, things are as good as could be hoped.

So banking on the coming interest rate unwind to fire up the gold price, Garimpeiro has gone looking in the developers/explorers space for stocks poised to benefit when investors put away their Chicken Little books.

He found a couple in Bellevue and Spartan. Both have suffered from the lithium-inspired capitulation in the resources sector for no good reason.

Gold price, tick. Newsflow from projects, tick, cheaper than they were, tick.

Bellevue Gold (ASX:BGL): Trading mid-week at $1.29, down 22% on its starting point for (calendar) 2024.

Not strictly a developer but it is still in the ramp-up phase at is namesake mine in WA’s Northern Goldfields.

First production was in October and the recent December quarterly gave the impression things were going well. It’s on its way to eventual annual production of 200,000 ounces at sector leading costs.

Should that bear out as 2024 unfolds, the market will market will shift from valuing the stock on a discounted cashflow basis to a free cashflow multiple basis.

That’s a long way of saying it is a candidate for a substantial re-rating by the market.

Spartan (ASX:SPR): Trading mid-week at 45c, down 12% from its starting for the year.

It was mentioned by Garimpeiro in July last year when it was an 18c stock and the market was just warming to its game-changing Never Never discovery at its Dalgaranga project in WA’s Murchison region.

It’s game-changing because it sits in the shadows of the 2.5Mtpa Dalgaranga processing plant which was parked up in November 2022 because it was struggling to make money processing less than 1g/t feed.

The high grade Never Never had been discovered some months earlier and the idea was that maybe it could underpin a higher grade future for Dalgaranga.

That is now well and truly the case with the Never Never resource standing at 950,000oz at an impressive grade of 5.74g/t. There are five rigs whirring away now ahead of a resource update planned for mid-2024.

The current resource was based on depths down to 500m. There have been hits at 600m since, and some holes are planned to be pushed down to 900m.

The market is expecting a decision on a restart this year, possibly leading to first production of high margin ounces in the second half of FY2025.

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