Canada's main stock index futures rose on Thursday supported by higher bullion prices. A survey showing domestic exporter confidence has hit its best level in more than 20 years came after gold prices continue to face under pressure of a downward correction. Although the yellow metal still hasn’t settled above the psychological resistance of $1,800 an ounce again, the current support levels of $1,775, $1,760 and $1,745 signal that a sustained global recovery is underway.
Spot gold XAU= rose 0.27%, buoyed by a slight dip in the dollar. Expectations of imminent tightening of US central bank policy support gold prices and increase pressure on the US Dollar. In his prepared remarks, Fed Governor Powell said the current rise in inflation is likely to be temporary and could return to the Fed's 2% target when supply imbalances are resolved.
In the meantime, junior gold miners have enjoyed mixed performance results so far this year. Investing in gold has proven to be a prudent strategy since the start of the COVID-19 pandemic and sentiment is once again shifting toward inflation hedges.
There are two gold miners on the TSX right now that are a good pick for long-term investors seeking some gold exposure.
Kirkland Lake Gold, which is currently one of the most undervalued gold miners. The company’s sector-specific exposure and current valuation increase the potential of Kirkland Lake of late. Many analysts believe the mining stock likely won’t be this cheap for long.
Kirkland Lake’s high-quality mining exposure and impressive margins make it a top pick for all investors interested in gold miners right now.
The second gold stock made the list due to a surprising discovery. Junior gold miner Starr Peak Mining Ltd. (TSX:STE.V; OTC:STRPF) struck a VMS (Volcanogenic Massive Sulphide) deposit with rock containing multiple base metals, including zinc, copper, silver, and gold in Canada’s Quebec province. VMS deposits are incredibly rare and previously Amex Exploration (TSX:AMEX) has made a high-grade gold discovery right next to the past-producing Normetal Mine.
On its first drill at its New Metal project, which includes the Normetal Mine, Starr Peak confirmed the presence of zinc-rich massive sulfide intervals returning zinc, copper, silver, and gold. These considerable VMS intercepts in the first drill gave way to an expansion of Starr Peak’s drill plans from 5,000 to 20,000 meters.
Starr Peak (TSX:STE.V; OTC:STRPF), whose shareholders include Amex founders, is now waiting on results from its 3rd drill rig. When Amex made a similar discovery last year in the same region, it netted early investors in the mining stock 7,000% returns. Now, analysts think Starr Peak is poised and ready to join these same ranks.