Gold Digger: Is gold the ‘ultimate contrarian investment’ right now?
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Gold had its worst month since November 2016 in June, down 7% to $US1,779/oz.
Mining and exploration stocks have followed suit. This bearish trend creates a buying opportunity, experts say.
Boutique investment advisory firm head Frank Holmes says gold is the “ultimate contrarian investment” right now.
Contrarian investors purposefully go against prevailing market trends by selling when others are buying, and buying when other are selling.
The theory is that markets are subject to “herding behaviour” amplified by fear and greed, making markets regularly over-and under-priced.
Right now, gold is under-priced, Holmes says.
“Bloomberg reports that the S&P 500-to-gold ratio is nearing its highest level in over 15 years,” he says.
“As of this week, it takes close to two and a half ounces of gold to buy one ‘share’ of the S&P 500. That’s up significantly from September 2011 when two-thirds of an ounce of gold was enough to get you entry.
All of this points to the fact that gold is extremely undervalued right now, and no one seems to be paying much attention, he says.
“What I do know is that all of the traditional drivers of the gold price are firmly in place [record money printing and high inflation — making the yellow metal very attractive.”
Here’s how ASX-listed gold & silver stocks are performing:
Scroll or swipe to reveal table. Click headings to sort. Best viewed on a laptop
Earlier this week the Venture Minerals (ASX:VMS) – Chalice Mines (ASX:CHN) JV announced a ‘Julimar lookalike’ target at the South West Nickel-Copper-PGE Project in WA.
Emu’s ‘Sunfire’ project happens to be right next door:
Right next door to EMU Sunfire’s 1 km long nickel-copper geochem anomaly, Chalice announces new EM anomalies at Venture’s South West Nickel-Copper-PGE Project.
Right next door to EMU Sunfire's 1 km long nickel-copper geochem anomaly, Chalice announces new EM anomalies at Venture’s South West Nickel-Copper-PGE Project. pic.twitter.com/ERxWmTbY0X
— EMU NL (@emuasx) June 30, 2021
Nearology for the win.
Early stage aircore drilling has pulled “exceptional” hits like 12m at 2.78g/t gold from surface, including 4m at 7.63 g/t at ‘New Bendigo Main Zone’, part of the Tibooburra project in NSW.
“MHC has always believed that there is sufficient material at the New Bendigo Main Zone to cornerstone a near surface resource; for us it was about lifting the grade and accessing similar mineralisation to that historically mined,” chief exec Kell Nielsen says.
RC drilling has now been planned to target the higher grades at Main Zone.
Last week the explorer applied for a planning permit to construct and operate a 180,000 tonnes per annum gold toll treatment plant – to treat ore from third party mines — at its mothballed namesake project site in Victoria.
Nagambie says the plant would “re-invigorate the Victorian gold mining industry with processing capability, creating and supporting ongoing employment in the region”.
More bonanza gold grades from Challenger’s flagship ‘Hualilan’ project in Argentina.
Highlights include 15.6m at 71.7 g/t gold equivalent, or 70.9 g/t gold, 59.1 g/t silver and 0.2% zinc. This includes a 4m section grading over 200g/t.
“These are the best results we have seen at our Flagship Hualilan gold project – 4m at 201.6 g/t gold is outstanding,” managing director Kris Knauer says.
“The results confirm our view that the strongest mineralisation is likely to be in the Hualilan Hills which are yet to be drilled.”