Gold Digger: Gold about to hit next leg of bull market and stocks are cheap, expert says

The gold price itself had 12 months of consolidation. Now we are entering a new stage of a bull market which Barry Dawes of Martin Place Securities believes “will take it much, much higher”.

In the big scheme of things, the pullback we have seen over the past 12 months is ‘small beer’, Dawes told the Virtual Gold Conference earlier this week.

“Now everything is aligned up for gold prices in the decade to be very strong,” he says.

“The short and medium term looks very good; the long term looks very good.”

Punters should look to the big gold stocks in the US – they are the ones that matter, Dawes says.

“They are the stocks that we need to follow, because when there is movement in the Philadelphia Gold Index, we know that the big money is flowing into the sector,” he says.

The Philadelphia Gold and Silver Index, which includes 30 mega cap precious metal mining companies, is one of the most watched gold indices in the market.

“We are seeing [sentiment] turn now – when we look at individual stocks, when we look at the Philadelphia Gold Index — it certainly seems to me that things are [moving in the right direction],” Dawes says.

“All these different indicators are telling us that gold stocks are under-owned; gold is under-owned,” he says.

“Now there are a lot of cyclical and secular features coming together at one time. The market response should be very, very strong when things turn.”

Rick Rule, well-known gold bug and president & CEO of Sprott US Holdings, also believes a recovery in the gold price – and the value of gold stocks — is imminent.

“I think gold and precious metals equities are already in recovery. I believe the cyclical decline is over, and we will soon resume a secular bull market.”

ASX gold stocks are cheap

When things do turn, Aussie gold stocks – which are also cheap — will be world leaders, Dawes says.

“We are leading the world in terms of gold production, in terms of company balance sheets, dividend polices,” he says.

“[Aussie listed miners] have robust earnings, exploration programs that are fully funded and doing wonderful things for the sector. We are leading the world.”

Winners & Losers

Here’s how ASX-listed gold & silver stocks are performing:

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WEEKLY SMALL CAP STANDOUTS

Nexus Minerals (ASX:NXM)

Three holes drilled at the ‘Crusader’ prospect – part of the ‘Wallbrook’ project in WA – have pulled up more thick, high grade gold.

Highlights including 14m at 8.80g/t (within 19m at 6.57g/t from 141m) follow on from previously announced hits like 10m at 6.42g/t (within 17m at 3.97g/t from 182m).

$26m market cap Nexus has now hit Crusader mineralisation over +600m of strike and down to +500m deep.

“These high-grade results from the Crusader prospect have again shown excellent continuity of mineralisation with broad, high-grade gold intersected,” managing director Andy Tudor says.

“With highly encouraging results from the first 11 holes in this drilling campaign, we are eagerly awaiting the results from the further 8 holes drilled (including diamond tails) in the current exploration program at Crusader.”

If current drilling at the adjacent ‘Templar’ prospect returns the goods then this gold-rich corridor will be 1.6km long.

“The diamond drilling currently underway at Templar is delivering some very interesting core, increasing our confidence in the Crusader/Templar 1.6km+ corridor with every drillhole,” Tudor says.

Iceni Gold (ASX:ICL)

The gold explorer has raised $2m from an “unrelated sophisticated investor” at 22.5c per share – a slight premium to the current share price.

This mystery investor will own about 4.5% of the shares on issue, Iceni says.

The explorer, which only listed on the ASX in April, say the funds raised will ensure that the company’s planned exploration program at the flagship 14 Mile Well project “will not be impeded”.

“As previously announced, the company has completed its initial diamond drilling campaign at the Deep Well Target and is currently undertaking its initial drilling campaign at the TOTK Target,” Iceni says.

“Drilling to date has identified significant hydrothermal alteration associated with existing gold anomalism and the company considers that this drilling justifies a more extensive drilling program than was initially planned.

“Funds raised under the placement will be applied toward further diamond drilling at the Deep Well and TOTK Target areas as well as to undertake a detailed seismic survey along the 35km long Danjo Batholith to build on the exploration work undertaken on the 14 Mile Well project to date.”