Strong Signal: Gold Above USD 4,300
Gold expert Markus Bußler remains fundamentally optimistic about gold and silver. Although both precious metals are currently trading largely sideways, he views this as a phase of bottoming out rather than the start of a new downtrend. Gold has recently been weighed down primarily by shifting interest rate expectations in the US. While several interest rate cuts were still expected at the start of the year, the market had at one point even priced in rate hikes. Further tightening of monetary policy would generally be negative for gold. However, following last Friday’s weaker labor market data, the likelihood of this has since decreased. As a result, the gold price gained over USD 100 on Friday alone and ended the week above the USD 4,300 mark. This suggests that the bottom at USD 4,000 has indeed been established and that the time has come for a new gold rally.
Wall Street expert Markus Koch is also bullish on gold. Koch reported last week on his show “Opening Bell” that he himself had built up a position in gold and did not intend to hold it just for the short term. Rather, the investment is geared toward a longer time horizon. Koch, too, is thus betting on the precious metal’s sustained potential and emphasizes that gold is attractive to long-term investors following its recent sideways movement.
It Doesn’t Always Have to Be Barrick Mining
When it comes to mining stocks, Bußler believes the recent price declines are, in part, exaggerated. Many large gold producers continue to generate high cash flows, even as their share prices have fallen significantly. As an example, he cites Agnico Eagle, which generated free cash flow of more than USD 1.3 billion in the second quarter. The weak share prices can therefore be explained primarily by psychological factors, as investors fear further declines in the gold price. Bußler disagrees with this view: “I believe this is simply a mispricing,” meaning an incorrect valuation in the market. For him, this is precisely why there are opportunities in mining stocks. “In my opinion, we are in the bottoming-out phase, and investors should take advantage of this to build positions.”
However, not all stocks are likely to turn upward at the same time. Northern Star appears to be already forming a bottom following its significant losses, while First Majestic continues to search for solid support. But Bußler sees no contradiction in this: “Forget the idea that all stocks will hit their lows at the same time.” He remains positive on First Majestic despite its weaker performance and considers the stock a “Buy” at current levels. Should silver rise more strongly again, he believes the stock could once more outperform the market.
Lahontan Gold: Heading Toward Production with Strong Drilling Results
For Lahontan Gold, the gold price rally is coming at just the right time. The company aims to become a producer in the US state of Nevada as early as next year. The Santa Fe project currently has an indicated resource of approximately 1.54 million ounces of gold equivalent, as well as an inferred resource of an additional 411,000 ounces. But that is not all, as the latest drill results show.
Promising drill results were released last Wednesday. The Calvada East area is of particular interest. There, drill hole CAL26-12R intersected an average of 1.26 g/t of gold equivalent (AuEq) over 12.2 m, including individual intervals with up to 3.29 g/t gold. The drill hole was originally intended solely for groundwater monitoring. The gold zone is also located near the lower edge of the previously assumed open-pit mining area and could therefore be of interest for a future expansion of the known deposit.
Drill hole CAL26-11R could be even more important for the deposit’s future resource potential. Here, an average of 1.10 g/t AuEq was intersected over 13.7 m. “Gold equivalent” means that the value of the silver contained is converted into a comparable gold value. For the first time at Santa Fe, significant gold and silver mineralization has been discovered in younger volcanic rocks along the so-called Summit Fault Zone. This opens up a new exploration area for Lahontan that has hardly been the focus of exploration to date. CEO Kimberly Ann sees this as an indication that Santa Fe’s mineral potential could extend well beyond the deposits identified so far.
The new Slab West target area also provides further evidence of additional resources. Drilling there encountered, among other things, 35.1 m grading 0.21 g/t AuEq and 18.3 m grading 0.22 g/t AuEq. While the grades are lower than at Calvada East, these are comparatively wide and near-surface oxidized gold zones. Oxidized rock is often easier to process in gold projects than deeper-seated ore. Slab West remains open to the north, south, and east and has been historically under-explored. Additional drilling has already been completed, meaning Lahontan could release further results in the near future.
https://youtu.be/QGRV7IfTWec?si=GHVNPooFwSnStJ6n
Last week may have marked the start of a gold rally. Major producers such as Barrick and Agnico have certainly seen strong gains. By investing in Lahontan Gold, investors are betting on a foreseeable start to production. Until then, drilling results should provide momentum. Thus, the chances are good that the resource estimate will be increased soon.
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