Stocks are up: Gold is up More
USA News Group News Commentary
LOS ANGELES, September 27, 2017 /PRNewswire/ --
USA News Group - It's unusual for both gold and stocks to do well at the same time, but that's exactly what's happening right now.
It seems the markets are wrestling with both fear and greed. Fear appears to be on top as gold gains.
Emerging companies that could provide safe harbor from world events with gold resources in play include Pershing Gold (NASDAQ: PGLC), Corvus Gold (OTC: CORVF)(TSX: KOR), Otis Gold (OTC: OGLDF)(TSX-V: OOO), and Bullfrog Gold Corp. (OTC: BFGC).
It seems that confidence in the American economy has lifted the S&P 500 an impressive 9% higher this year.
But gold, which is thought of as a safe place during times of fear, is doing even better. The precious metal has soared 12% this year to nearly $1,300 an ounce, putting it on track for the best performance since 2010.
Major producers are enjoying the rally, alongside smaller companies who have significant gold resources under development.
Being undervalued is a bonus for Bullfrog Gold Corp. (OTCQB: BFGC), which is perfectly positioned to take advantage of this market with one of the best gold projects (based on price per ounce) in Nevada. The company is tapping a known region with very favorable mining it gained from a former Barrick operation.
Other miners with strong gold in ground economics are part of the trend including Pershing Gold (NASDAQ: PGLC), Corvus Gold (OTCQX: CORVF)(TSX: KOR.TP), and Otis Gold (OTC: OGLDF)(TSX-V: OOO.V), all of whom have interests gold resources on trend in Nevada.
GOOD FOR GOLD?
One likely factor for gold's rise: investors who've been forced to chase the rising stock market are trying to hedge their bets just in case something goes wrong.
But what could go wrong?
Well aside from political unrest from the likes of North Korea and Iran, the markets are trying to grapple with hyper-growth, and a looming deadline to raise the U.S. debt ceiling among other things.
Pundits say that looking ahead to the battles in Washington, gold is a "smart and defensive way" for investors to diversify their portfolio ahead of an increasingly uncertain near-term environment.
Ray Dalio, the founder of the world's biggest hedge fund, warned that investors should have 5% to 10% of their assets in gold due to the risks of political instability.
While political uncertainty can't be good for every sector, it's certainly put the focus on owning gold.
QT IS AN X FACTOR
There is one factor that could also send gold soaring: QT or Quantitative Tightening.
The U.S. Federal Reserve is embarking on a new path that started several years ago with QE (quantitative easing) and now must find its logical end. QT, which is the opposite of QE, is expected to have the same effect as raising interest rates.
Ranging from 2008 to 2013 the Fed had three different spurts of QE. Eventually, it reduced (or tapered) its purchasing program to zero by 2014. The problem now is the Fed has been holding lots of extra reserve money. It is currently stuck with $4.5 trillion in bonds purchased on its balance sheet.
The Fed has announced that it will begin shedding the excess bonds through QT by about $600 billion per year immediately. This is money that will come back out of the real economy.
Many analysts are suggesting this could knock the wind out of the stock market and send stocks falling, triggering an even greater gold run.
BULLFROG GOLD UNDERVALUED
If gold is to continue its strong hand, then undervalued producers like Bullfrog Gold Corp. could be some of the best values.
The company's flagship property, known as the Bullfrog Gold Project, is located 120 miles to the NW of Las Vegas, Nevada, that includes an ex-Barrick pit that recovered 2,300,000 ounces, and the northern third of the Bullfrog deposit.
Among the company's peers in the region, Bullfrog remains as the single steepest discount on gold-in-the-ground valuations.
The Bullfrog Gold Project has already produced gold up until Barrick Gold (NYSE: ABE)(TSX: ABE) terminated production in early 1999.
The economics of the project were different then, as gold prices at the time averaged less than $290 per ounce.
Innovation in the mining sector has improved the economics of this play, and for Bullfrog, with the infrastructure already in place, along with the mounds of data that came with the property, straight from the vaults Barrick, bring tremendous value to the project as a whole.
Bullfrog Gold has announced estimates in its 43-101 report this June 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.
Bullfrog is approaching the project with all expediency; they want to bring it to the producing stage as quickly as possible.
Whether juniors like Bullfrog Gold Corp. end up on top of the gold market push, there is something to be said for the exuberance about the shiny metal.
Once again gold is proving itself to be a source of major profits for investors and safe haven against the unknown and unpredictable.
POTENTIAL COMPARABLES
Pershing Gold (NASDAQ: PGLC)
Pershing Gold is an emerging Nevada gold producer on a fast-track to re-open the Relief Canyon Mine, which includes three open-pit mines and a state-of-the-art, fully permitted and constructed heap-leach processing facility. Pershing Gold is currently permitted to resume mining at Relief Canyon under the existing Plan of Operations.
Corvus Gold (OTCQX: CORVF)(TSX: KOR.TO)
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.
Otis Gold (OTC: OGLDF)(TSX-V: OOO.V)
Otis Gold has a resource estimate of 520,000 ounces on its Kilgore Project. The company is currently valued at $42.17 million, leaving their gold with a valuation of $81.10/oz of gold.
For a more in-depth look into BFGC you can view the in-depth review at USA News Group: http://usanewsgroup.com/2017/09/24/gold-discount-2-2-2/
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