As recession indicators flash and trade wars worsen investors rush to buy gold
Yesterday the US 2 year Treasury bond yield temporarily fell below the US 10 year yield. This signals a chance of a US recession within the next 1-2 years. This resulted in investors rushing for safe assets such as gold. Combine this with a worsening US-China trade war and you can see why gold has recently moved to a 6 year high of US$1,529 per ounce.
Gold price history 2015 to August 2019 – Gold prices surging the past 3 months
Geopolitical instability is also another major factor. The equity market has been impacted by the Hong Kong riots, Brexit, and other rising political tensions in the Middle East. Fears of a global economic slowdown have investors falling back to the safe haven that is traditionally gold.
In times of high inflation gold is traditionally a great hedge and a way of preserving your monies value. The gold price also benefits from periods of ultra low interest rates in offering an alternative to bonds and savings accounts that give low returns.
The increase in central bank buying is another driver in the rise in gold demand as most central banks buy gold as a way to protect against a fiat money collapse, or rampant inflation weakening a currency. Investors tend to focus more on gold when other assets are losing value.
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Gold is not only bought as an investment, it is also used in other areas such as industry and jewelry making. India’s annual gold demand is equivalent to about 25% of the total physical demand worldwide making them one of the largest consumers of gold. Traditionally there is a surge in jewelry demand during the festive and wedding seasons. As emerging economies grow gold’s demand is also becoming a contributing factor in its price increase. The world will consume an estimated 4,370 tonnes of gold in 2019, up slightly from 4,364 tonnes in 2018.
In the last several weeks many junior gold mines have seen good upticks in their market value and offer an opportunity for investors to gain exposure to the gold sector. In fact, strong performing gold juniors in bad economic times can not only diversify your portfolio but they can boost returns.
2019 looks like being a stellar year for gold and gold miners
Below are 11 of the best junior gold companies we follow closely at InvestorIntel. They include both gold producers and explorers/developers. For further information please click on the links.
Alkane Resources Ltd. (ASX: ALK | OTCQX: ANLKY) is a small gold production company with multi-commodity exploration and development projects predominantly in the Central West region of NSW, but also extended throughout Australia. The Tomingley Project is expected to produce about 40,000 ounces of gold in 2019. The Company is also well known for its rare earths project known as the Dubbo Project which has a potential mine life of 70+ years. Read more here.
Angkor Gold Corp. (TSXV: ANK) is the first North American publicly-traded mineral exploration company in Cambodia. They are a project generator with a focus on gold, silver and base metals exploration as well as oil and gas. Read more here.
Eastmain Resources Inc. (TSX: ER | OTCQX: EANRF) is a Canadian gold exploration and development company focused on the James Bay area, Quebec, Canada. Eastmain has several gold projects and indicated resources of ~1.089 million ounces of gold grading on average 6-8g/tonne. Read more here.
Goldplay Exploration Ltd. (TSXV: GPLY | OTCQB: GLYXF) is focused on the discovery of gold-silver deposits in Mexico. Goldplay 100% owns a 250 sq. km exploration portfolio in the historical Rosario Mining District in Sinaloa, Mexico. To date most discovery has been silver, however recently they hit high-grade gold. A recent drill result intersected 1 m @ 204.6 g/t gold (Au), and 155 g/t silver (Ag). Read more here.
Harte Gold Corp.(TSX: HRT) is Ontario’s newest gold producer through its wholly-owned Sugar Zone Mine in White River Ontario. Harte has ~1.7m ounce I&I resource grading between 6-8g/t and gold production ramping up. Excellent exploration upside with a 30 km strike potential with only 5km so far explored. Read more here.
Noble Mineral Exploration Inc. (TSXV: NOB) is a Canadian-based junior exploration company holding in excess of 79,177 hectares of mineral rights in the Timmins/Cochrane area of Northern Ontario, upon which it plans to generate joint venture exploration programs to further expand on all its exploration and development programs. Read more here.
Signature Resources Ltd. (TSXV: SGU | OTCQB: SGGTF) is a Canadian gold exploration company with advanced and early exploration assets. Their core asset encompasses the Lingman Lake Gold Mine with an historic estimate of 234,648 oz of gold, and two new early exploration projects. Read more here.
TerraX Minerals Inc. (TSXV: TXR) is a junior gold exploration company that has assembled a highly prospective land position on the doorsteps of Yellowknife in the Northwest Territories, nearby to other successful gold projects such as the Giant Mine (8.1 M Oz Au at 16g/t) and Con Mine (6.1M Oz Au 16g/t). Read more here.
TNR Gold Corp. (TSXV: TNR) uses a lead generator business model and has been successful in generating high-quality exploration projects around the globe. Apart from gold they also have copper and lithium projects. Read more here.
West Red Lake Gold Mines Inc. (CSE: RLG | OTCQB: RLGMF) is focused on gold exploration and development in the prolific Red Lake Gold District of Northwestern Ontario, Canada. The district is host to some of the richest gold deposits in the world and has produced 30 million ounces of gold from high grade zones. West Red Lake’s 3,100 hectare property has a 12 km strike length and 3 former gold mines, and contains 1.1 million inferred ounces of high grade gold (7.57g/t) which remain open at depth. Read more here.
Matthew Bohlsen is a Senior Editor for InvestorIntel.com. With a Graduate Diploma in Applied Finance and Investment (similar to CFA), and a Graduate Diploma in ... <Read more about Matthew Bohlsen>