Cashing in on the Carlin Trend
I have been trying to make the point for the last three months that we are at a major bottom. By every measure of sentiment people dislike gold and silver more than they did at the lows of 2001 and 2008. Gold shares compared to gold are lower than they have ever been.
If you look at a chart of the XAU over Gold, it shows a clear breakout to the upside after a 7-week sideways move. I think investors will soon realize this is the opportunity of a lifetime to be buying shares.
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If you want to ever make money in the markets, you need to be positive when everyone is negative and negative when everyone is positive. It’s opposite to what the “Cheerleaders” are saying but they have never made anyone any money.
The Dow and the S&P continue to show signs of fatigue and I maintain my view that this is a time to be buying resources and a time to be selling the main markets.
I went to visit a great project in Nevada a year ago run by Gold Standard Ventures but I didn’t write about it at the time because I thought their main target needed more drilling. They did that drilling and have come up with some of the best drill holes ever done in the South Carlin Trend. The high-grade discovery hole at the North Bullion Fault was released in late April of 2012. It showed 164 meters of 3.38 g/t gold. But one hole is not enough to make a mine.
Gold Standard drilled another hole showing 124 meters of 4.05 g/t gold and released those results in September of 2012. The market popped from $1.80 to $2.40 before cratering despite the excellent results.
I have been waiting for a confirmation hole to expand the resource. They released that hole a week ago. It showed 73.5 meters of 3.67 grams of gold. Last year’s discovery hole shot the stock up from $1.50 to over $3 a share. The market did get it with the latest hole and the shares went from a dismal $.47 to a slightly less dismal $.83. It’s vital that investors understand that the share prices of the last two months have had absolutely nothing to do with the merits or lack thereof of resource stocks. The prices had nothing at all to do with the price of gold and silver. The prices were solely function of major gold funds being forced to sell anything they could get a bid on. I believe that forced selling is over and the best stocks are recovering right now. The forced sale is over and shares are moving higher soon.
It’s important for investors to understand that Dave Mathewson, Gold Standard’s VP of Exploration tried to pick up the Railroad District for over 20 years for Newmont before going to work for GSV. He was the brains behind the Rain deposit that now contains over 6 million ounces for Newmont. The Rain Gold Mine can be seen from the North Bullion Fault Zone, it’s literally just over the hill. If you compare North Bullion with Rain, the Rain District had over 1500 holes and the best two holes from Gold Standard are better than any of the 1500 holes at Rain.
The North Bullion Fault remains open in all directions. The last hole reported was the first hole of over 5 g/t gold in the lower zone. That means the project could have a lot of expansion potential.
The Railroad project is an entire district now expanded to some 34 square miles held by Gold Standard Ventures. There is a six-mile long corridor from the North Bullion Fault Zone to the Pinon Zone to the south with virtually no drill holes. GSV has completed a series of deals in the Pinon Zone where they now control about 52% of a key section within the Pinon District that contains about 825 thousand ounces of oxide gold in a historic resource. The company paid about $2 an ounce to pick that resource up.
In my view, the sole negative for this company would be the complexity of the deposit. It is so large and has so much potential that it’s hard for an average investor to come to grips with it. I have visited the project three times and been briefed by the brilliant Dave Mathewson a number of times. He told me what they were going to do and when they were going to do it. Without fail, the company came through. The majors get it and raising money has never been a problem but discoveries in the Carlin cost a lot of money and take a lot of time.
For now, the company provided liquidity when the gold funds needed money so the stock has been hammered down. Their stupidity is your benefit. The company has probably the best collection of technical knowledge in the Carlin Trend; they have a real find in the Carlin and are artificially cheap. The stock was near $3 a share a year ago and I think they will be back there again when the junior resource market wakes up out of its coma.
Gold Standard Ventures is an advertiser so I am biased. I don’t own shares but on any pullback, I would be a buyer. The company is open to communication and the website does an excellent job of communication. Do your own due diligence.
Gold Standard Ventures