How the Calendar May Help Gold Prices
USA News Group News Commentary
03 Nov, 2017, 13:00 GMT
LOS ANGELES, November 3, 2017 /PRNewswire/ --
Gold prices are up 12 percent this year, with futures markets trading around $1,300 an ounce on the New York Mercantile Exchange. Of course the price has softened slightly as summer ended.
However, prospects usually brighten in the fourth quarter.
Another rally in gold will certainly play to the gold miners including Barrick Gold Corporation (NYSE: ABX) (TSE: ABX), Randgold Resources (NASDAQ: GOLD), Corvus Gold (OTC: CORVF) (TSX: KOR), and Bullfrog Gold Corp. (OTC: BFGC).
According to the Commodity Trader's Almanac, gold prices tend to fall in late summer and then rise toward the end of the year as jewelers and consumers get ready for the holiday shopping season.
This gives gold watchers reason to pause and reload for the seasonal price swings.
Major mining companies stand to benefit from strong gold economics including Barrick Gold Corporation (NYSE: ABX) (TSE: ABX), Randgold Resources (NASDAQ: GOLD), and Corvus Gold (OTC: CORVF) (TSX: KOR), who have had significant gains this year.
At the same time junior mining companies including Bullfrog Gold Corp. (OTC: BFGC), are on track to advance from a rising gold market. Bullfrog Gold is developing a former Barrick operation in Nevada where positive news is emerging of a possible Carlin Trend.
Analysts don't seem phased by gold's decline from recent highs and say investors are likely to reload as gold moves.
IS GOLD AFFORDABLE?
According to reports by Rediff Business, gold looks cheap compared to the stock markets that are highly overbought at the moment.
Their report shows gold prices have outperformed the markets -- S&P 500 -- thus far in this century, returning 86% more than the market if both asset classes were indexed at 100 levels starting December 31, 1999, in the latest World Gold Council's Gold Investor report for September 2017.
The S&P 500 has undergone two major contractions over the past 17 years. Gold, on the other hand, has held its value well. That is its appeal as a portfolio diversifier, the World Gold Council says.
At present, the gold-to-S&P 500 ratio is near 10-year lows. That means that gold is extremely undervalued, according to the WGC.
Within the wider group of gold opportunities, junior exploration and mining companies could be the least expensive compared to their potential for upside as gold's price rises.
BULLFROG GOLD SPOT ON
The current gold climate is also bringing some very interesting plays to the forefront. In the junior category, Bullfrog Gold is getting attention for its position in Nevada.
The company has a high-grade flagship property on trend in the perfect spot between Corvus Gold's North Bullfrog and Mother Lode Projects, and the recently announced successes of Northern Empire Resources at its Sterling Gold Project.
Both Corvus and Northern Empire have announced monster grades on their own Nevada Bullfrog projects.
Northern Empire recently reported "extremely exciting results" on its first drill holes for its own Bullfrog trend, the Sterling Property - reporting 1.47g/t over 47.24 meters.
Bigger news came from Corvus Gold's results from a drill program on its Mother Lode Deposit to the SE of Bullfrog Gold's property. Corvus reported 2.69 g/t gold over 37.2 meters, including 11 meters at 5.78 g/t, and the discovery of a new Lower Zone with 25.6 meters at 2.17 g/t gold.
All three companies' projects are hosted in the same structure of the past producing Bullfrog Mine (2.3 million ounces produced).
Bullfrog's flagship property, the Bullfrog Gold Project, is located 120 miles northwest of Las Vegas, Nevada and includes an ex-Barrick pit that recovered 2,300,000 ounces, and the northern third of the Bullfrog deposit.
While the region is well developed, Bullfrog Gold is currently showing the single steepest discount on gold-in-the-ground valuations.
Bullfrog Gold announced estimates in its 43-101 report in June 2017 of 525,000 ounces averaging 1.02 g/t using a gold price of $1200/oz and a base case cutoff grade of 0.36 g/t. Inferred resources were estimated at 120,000 ounces of gold averaging 1.20 g/t.
With those kind of economics and $1400 an ounce gold, Bullfrog would be an amazing value. And $1400 an ounce is a real possibility.
Reviewers expect the demand for physical gold in emerging market countries - particularly China and India, the top-two biggest gold consumers - to support prices in the fourth quarter. Strong seasonal factors and the Fed implementing monetary policies could also push prices.
Commerzbank forecasts gold prices will average $1,300 at year-end and rise into 2018, eventually reaching $1,400.
Investors are onboard and are getting in even earlier than expected. This should give credence to the fall prediction and possibly gold's best quarter.
POTENTIAL COMPARABLES
Barrick Gold Corporation (NYSE: ABX) (TSE: ABX)
Barrick is the gold mining leader, both in terms of size and low operating costs - its all-in sustaining costs (AISC) were down to just $730 per ounce last year. The gold miner also cranked out an impressive $1.5 billion in free cash flow in 2016, which may have contributed to a 42% dividend hike to investors last year. Analysts are predicting another huge dividend in 2017 of 47%. Second quarter 2017 earnings per share (EPS) were also up 57% over the second quarter of 2016, blowing out analysts' expectations.
Randgold Resources (NASDAQ: GOLD)
Randgold Resources Limited explores for and develops gold deposits in Sub-Saharan Africa. It holds interests in the Morila gold mine, the Loulo gold mine, and the Gounkoto gold mine, which are located in Mali, West Africa; Tongon mine situated within the Nielle exploitation permit in the north of Côte d'Ivoire; and Kibali mine located in the Democratic Republic of Congo. The company was founded in 1995 and is based in St. Helier, the Channel Islands.
Corvus Gold (OTC: CORVF) (TSX: KOR)
Corvus Gold Inc. is a North American gold exploration and development company, focused on its near-term gold-silver mining project at the 100% owned Nevada, North Bullfrog project. In addition the Company controls a number of royalties on other North American exploration properties representing a spectrum of gold, silver and copper projects. Corvus is committed to building shareholder value through new discoveries and the expansion of those discoveries to maximize share price leverage in a recovering gold and silver market.
For a more in-depth look into BFGC you can view the in-depth review at USA News Group: http://usanewsgroup.com/2017/10/29/gold_bull_run-2-2/
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USA News Group
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