- This is a good time to consider the big gold producers for when gold equities make an upward move
- Gold ETFs have the opportunity of multiples on the increase in the price of the commodity
- Resource Maven’s Gwen Preston thinks the Troilus Gold Project has the potential to be a “10-bagger”
- The Troilus Gold Project, formerly the Troilus Mine, northeast of Val-d’Or, Quebec, produced 2 million ounces of gold and almost 70,000 tonnes of copper between 1996 and 2010
The following is a transcription of the above video, and The Market Online Canada has edited it for clarity.
Gwen Preston, publisher of Resource Maven, sat down with us at VRIC 2024. She shares her insight into the gold equity market and gives us her expert insight into why she plays the gold stocks over physical gold.
In response to our final question, she reveals a mining company to watch because she thinks it’s a 10-bagger (an investment that appreciates in value 10 times its original purchase price). Preston starts by sharing her take on the gold play in 2024.
Preston: I think what matters is that gold, I think, will break up through the price range that it’s been stuck in for a couple years. And it will break up through there this year, probably when we get news of when that rate cut comes. And when it does, I think It’s putting up its hand. It’s saying, “Investors, I’m making the move.”
I’ve been strong, but now I’m going higher. Generalist interest will come into gold equities. That’s what we’ve been missing. That’s why gold equities are down, even though gold is at its all-time high.
And once we have some generalist interest come into the space, what do generalists buy when they move into a sector? They buy the big producers. They buy producers of, like, upscale. Producers with good margin. And they buy the top-tier development assets, so the ones that are under construction, close to construction of scale. That’s the classic playbook. Those are the ones that move first.
And so I think it’s prudent to buy those now and have those, have that part of your capital deployed, ready for this gold move when it happens.
And then when it happens the trickle-down effect will be significant that – I mean, the juniors are so beaten up – you don’t have to be in those risky ones just now. I think there’ll be opportunity doled out and good gains doled out in those lower-risk, bigger stocks for when that gold move happens.
TMO: What about bullion and gold ETFs?
Preston: The ETFs are a great way to do what I just said. Because all the ETFs buy the big companies. So instead of trying to decide between Barrick and Newcrest and whichever of the big majors, absolutely an ETF is a great way of doing it. The ETF of mining stocks.
Physical, always a great option. Of course the difference, I’m biased, I write about mining stocks as a business. The reason that I choose stocks primarily over physical is simply because of the leverage, right? When gold moves up from $2,000 to $2,300.
You know, that’s a $200 move in the price of gold. That’s a 10 per cent roughly move in the price of gold, but if a producer makes gold at a cost of $1,200, but then gold gains $200, their profit increases a lot more than 10 per cent. That’s the argument, that’s the basis of the leverage argument is that the profits in the miners increase multiples of the increase in the price of the commodity.
And so, obviously the miners have their risks and, and that is part of the game as well, part of the consideration. But that’s why I play the stocks when I think I see a big move coming.
TMO: Is there anybody that you have your eye on that you can mention and think of people should pay attention to?
Preston: I think buying an ETF of major gold miners is a really easy move to do. On the large asset development project front, Troilus (TSX:TLG); TLG is the ticker. I mention Troilus because, am I a little early on it? Perhaps, but they are entering a year now where over the next year they’re about to put out a feasibility study that’s gonna show that their mine is big, like really big.
The costs are gonna come down because of the way that the deposit has grown. It’s a better shape. The throughput is gonna go up. Then they’re gonna line up mine financing because they are also halfway through their permitting process already. This is Quebec. Permitting is pretty quick in Quebec. I think by this time next year they will have permits in hand.
And then they will start to build. A really good comparison stock is Artemis Gold, which is building the big Blackwater Mine here in British Columbia. Artemis Gold, yes, they’re halfway through construction, so they are a couple years ahead of Troilus. Artemis is worth $1.2 billion in this market.
Troilus is worth $120 million. So, and they are very, very similar mine plans, ore bodies, geologies, histories, it’s quite an interesting comparison. So, is there a 10-bagger in Troilus as it goes from pre-permits through financing permits and halfway to construction? I mean, I think that’s reasonable, and that’s in the current market setup.
So that’s the kind of opportunity that I think is available for gold investors.
For more trending gold stories, check out Stockhouse’s gold page and for additional information on increasing the gold in your portfolio, check out more conversations with Preston at VRIC and on where the gold growth in Canada is focused.
As well, check out The Market Herald’s Thematica Gold Report.
At the close Tuesday, gold was trading at just over US$2,036 an ounce.
The material provided in this article is for information only and should not be treated as investment advice. For full disclaimer information, please click here.