Junior Gold Miners: Gold Price Rally Is Perfect Timing For Summer Drilling Season
The current gold price rally is coming at a perfect time for junior gold miner stocks.
Right now, we are just heading into the prime months of the summer drilling season for junior gold exploration companies.
The gold rally means that the market's attention will be focused on these stocks as they announce their drilling programs and then report results in the summer and fall.
As I described last fall, many of the best investing opportunities will be Canadian companies listed on the TSX Venture Exchange and on U.S. Over The Counter (OTC) exchanges.
In the past two years, the Canadian market has already shown great interest, selectively, in certain junior gold exploration stocks that make significant new gold discoveries on their properties.
The current gold price rally (GLD) (PHYS) is coming at a perfect time for junior gold miner stocks (GDXJ) (JNUG) (GDX).
The true junior gold miners are companies who own properties and projects that their geologists' research has indicated to have the potential to host significant gold deposits of a large enough size and a high enough grade to be profitably mined.
To prove this potential to investors, to the market, and to senior gold mining companies who may bid to acquire them at a premium share price, the most critical key step is to carry out substantial drilling programs on their properties and projects.
If and when a junior gold explorer is able to report drill results showing high-grade gold (such as over 15 grams of gold, around half a troy ounce, per metric tonne of ore) extending over a substantial width of drilling (over 10 meters of width are much more significant than results over narrower widths), that is what typically attracts the attention of the market.
In recent years, dozens of stocks with results like these have rewarded early investors and shareholders with extraordinary gains, as I will describe below.
And right now, we are just heading into the prime months of the summer drilling season for junior gold exploration companies.
Most properties and projects with the potential for significant gold mineralization are found in areas with rugged terrain and challenging climates. Although there are plenty of exceptions where ground work and drilling can be conducted year-round if mild weather cooperates, nevertheless the majority of drilling on gold exploration projects occurs during the late spring, summer, and early fall months of the year.
This is why the timing of the current gold price rally is so fortuitous for junior gold explorer stocks this year: The gold rally means that the market's attention will be focused on these stocks as they announce their drilling programs and then report results in the summer and fall.
Canadian OTC Junior Gold Stocks Offer The Biggest Gains
As I described last fall, in my article "Junior Gold Miners: A Canadian Stock Picker's Market," many of the best investing opportunities will be Canadian companies, with their primary listings on the TSX Venture Exchange. U.S. investors can buy shares of these stocks on the Over The Counter (OTC) exchanges. Typically the ticker symbols are 5 letters and end in -F.
In the past two years, the Canadian market has already shown great interest, selectively, in certain junior gold exploration stocks that make significant new gold discoveries on their properties.
My research shows over 50 junior gold miner stocks on the TSX Venture Exchange that made gains of 90% per month or more over a few months' time at some point in 2017 or 2018. Many of these gains were based on the companies reporting a significant new gold discovery from a drill hole result showing a high grade of gold mineralization in the ore over a certain drill hole width. In some cases, simply the expectation and anticipation of such a discovery result was enough to fuel such a surge in the stock price.
Out of the 50 or so big gainers in 2017 and 2018, about 20 of them were achieved by stocks big and substantial enough to get their market caps over C$50 million (almost $40 million).
If you combine all the market caps of all of these stocks at their peaks, they represent a total of over C$4.4 billion, or about $3.35 billion.
I cannot describe and analyze all of these stocks in this article, and some of my analysis is reserved for subscribers to my Stock & Gold Market Report service. But I will show some significant examples of the trend that I am talking about, so that you can see the kinds of gains that have been made on these gold exploration stocks when they report a significant discovery in a drill result.
The most famous gold discovery story of 2017 was certainly Novo Resources (OTCQX:NSRPF). In July 2017, they announced the discovery of large gold nuggets at their Purdy's Reward project in the Pilbara region of West Australia, and over the following months, they promoted their discovery widely. The resulting stock price surge was truly extraordinary:
As you can see in the chart, the stock price soared from under C$1.00/share in July 2017 to as high as over $8.50/share in October 2017. It was almost a 1,000% gain in 3 months, and at its peak, Novo's market cap was as high as C$1.4 billion.
Novo was the only gold discovery stock that was getting a substantial amount of attention from most investors - it may be the only one of these stock gain stories that you have heard of. But in fact it was not alone in the summer and fall of 2017.
At the same time, a nickel discovery in British Columbia by Garibaldi Resources (OTC:GGIFF) sent its stock soaring as much as +3,000% in 3 months, and its market cap reached as high as over C$500 million. Garibaldi also got a lot of attention, and its success seemed to rub off on a number of junior gold explorer stocks in British Columbia as well, who also made huge gains at the time:
The gold discovery success stories continued in the summer and fall of 2018. Westhaven Ventures (OTC:WTHVF) announced a high-grade gold discovery at its Shovelnose property in British Columbia with a series of drill results in October 2018. The market responded enthusiastically:
Yes, that's a +620% gain in 2 months, a C$15 million stock that soared to over C$100 million.
The 2019 Drilling Season Is Heating Up
Now it is that time of year again in 2019, for the junior gold stocks' summer drilling programs to begin, and then for the results and potentially massive stock gains to come rolling in over the course of the summer and fall.
The stock gains above are just a selection of representative examples, of a trend that has taken hold in the junior gold miners market the last two years. You can't catch even a piece of these gains with generic index funds like GDXJ or JNUG. You have to dig into all the stories of small Canadian stocks like these, and research the best and most promising investment opportunities in gold exploration discovery plays. Or you can subscribe to an investment service that does this. There are many such services out there on the market - mine is one of them.
Right now, I am actively adding to and refreshing my top picks for maximum gains in junior gold miner stocks in the Stock & Gold Market Report portfolio. I am focused on those stocks that are most likely to grab the market's attention with impressive gold drilling results this summer and fall. I encourage you to check it out and subscribe today!
My subscription service, the Stock & Gold Market Report, offers:
Complete model portfolioTop 7 junior gold miner stock picksMassive potential gains for 2019Value beyond the initial stock picks - valuable guidance about:
When to take profits, when to sellWhen to let winners rideWhen to cut lossesWhen to hold through volatilityWeekly portfolio updates and commentary on global financial marketsFocus on the precious metals & miners marketCheck it out and subscribe today!
Disclosure: I am/we are long PHYS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: I am long many junior gold miner stocks. Further details are available to subscribers of the Stock & Gold Market Report.
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