The interest in gold mining stocks intensified this week as analysts saw further reasons to believe the precious metal itself can sustain its current form and pointed to junior stocks as the best way to benefit should a sustained rally materialise.
Stewart Thomson suggested on Goldseek that the latest, tiny “price correction” in the precious metal may already be done, and gave a long list of reasons why the rally should resume.
“Whether gold rallies from the current $1306 support zone or from $1280 is not important. What’s important is the overall strength of the market, both fundamentally and technically,” he said.
Brien Lundin, CEO of Jefferson Financial, set out his strategy for making the most of a potential rally by investing in junior gold mining stocks. He said that the gold price in particular was poised after 2019’s initial gains, with dollar weakness and the softening of the Fed’s stance providing some indication that it can follow the trend of 2016 and 17 - but broken in 2018 - by building further on its early gains.
He added: “If you want to play the potential that we are going to have a sustained rally in gold and silver this year, what you want to have initially are the companies - the juniors - that have large-scale resources already identified. They are going to move first and they are going to move very rapidly: they could double or triple. After that initial move, if [the gold rally] is sustained, you want to start playing around with the exploration plays.”
One junior gold mining stock that is hoping to move from exploration play to the proven resource stage soon is Auryn Resources, the “technically driven” company with a flagship gold project at Committee Bay in Nunavut and the Sombrero copper-gold project in southern Peru.
This week executive chairman Ivan Bebek, who has already built two successful exploration companies alongside his trusted team, said big miners had already approached the firm on a confidential basis over Sombrero, and talked up Committee Bay’s potential to dwarf their previous successes thanks to the use of artificial intelligence to predict deep hidden deposits.
At Committee Bay, which Bebek described as some of the best gold prospecting land in Canada, the company is using an artificial intelligence programme to tell it where to drill this summer, and expects to get the computer’s predictions by the end of February.
“The real discoveries are going to come out of Committee Bay, we think, this season,” he said. “We have drilled 250 holes [...] and we’ve brought in the computer to process all that data. It’s going to be one of the most exciting drilling programs that I’ve been part of.”
Bebek said that he believed AI was an important part of the future of mining and metals exploration, with the firm’s own algorithm predicting deposits with 99% accuracy in tests. Auryn’s computer system is 1,000 times more powerful than a human brain and Bebek said this could crunch data that would previously take decades in a matter of months.
He added: “The future of major discoveries is either hidden deposits, or like Sombrero those that were overlooked, or it’s contentious areas were landowners wouldn’t sell.”
With AI and machine learning tools becoming faster every year and savvy miners working out the best ways to use them, this provides an exciting new dimension for junior explorers in particular and could prove a differentiator in the junior gold stocks market in the years ahead.