If you believe gold is going to go up...Bob Moriarty
Nov 30, 2013
If you belong to the crowd that believes gold is going to go down even further, and that gold is past its prime and will never recover, you should sell every resource shares you own and invest in something positive such as Bitcoin. With any luck you can capture the bottom in gold and top in Bitcoin.
Others such as myself who see no change at all in the basic fundamentals for gold and an increasingly-bleak future for the economy of the world believe gold will go up. If you believe gold will go up, you will stop crying about the shares you own that went down and restructure what you own. Get rid of the crap and pick up some of the real quality shares that are selling for the lowest prices in many years. These shares are going to lead the market higher.
Most of the companies I have outlined below are advertisers. That’s because they are companies I know well. Some are not advertisers but I believe represent excellent value at these prices. These shares are the cream of the crop.
Novo Resources (NVO-C): My favorite stock in the resource world is, naturally, Novo. I have written about them a number of times. About 5.5 million warrants at $.60 on Novo came due today, November 30, 2013. This has brought in selling from those wanting to exercise warrants. But the share price has been higher than the warrant price so it’s a pretty safe bet that most of those warrants have been exercised.
Since Novo has about $7-$8 million in the till now, after the warrant exercise, they will have in the range of $11 million. Novo President, Quinton Hennigh, has been especially conservative in the last year in an effort to conserve capital given the state of the resource market.
The big news this year was the announcement in September that Newmont has bought about 35% of the company at about $.91 a share. Do you really think you are smarter than Newmont with what you buy?
Novo is sitting on a deposit that has the potential to be the biggest gold deposit in the world. It is a Witwatersrand look alike and this year will either prove it or disprove the theory.
Cayden Resources (CYD-V) is another sleeper that has actually performed quite well this year. I covered them in May, they shot up to $1.80 from $.72 before coming back to earth.
Cayden has put together an entire gold district in Mexico. Since my visit they have added to their already giant gold project. In addition, they own a key piece of ground in between two Goldcorp gold mines in the Guerrero Gold Belt. The company has about $10 million in cash.
Pilot Gold (PLG-T): In September of 2012 I wrote about Pilot. The company had just released brilliant results from Turkey and was on the way to $2.40 a share. Their excellent results continued this year as the share price dropped to $.71 a share, down some 66%. It’s not the stock, it’s the market, as all the weak hands throw in the towel.
Pilot recently announced what could be a new district in Nevada at their Kinsley Mountain project with the best hole out of 1300 drilled. The company has three company-making projects. The Kinsley Mountain project has a lot of similarity to Long Canyon some 40 miles north of there. Long Canyon was sold to Newmont for some $2.3 billion dollars. Pilot has a 40/60 JV with Teck in Turkey on a copper/gold porphery called Halilaga and a JV with Teck on a gold project called TV Tower where Pilot can earn 60%.
As of the end of September, Pilot had some $24 million in cash and liquid assets. They have one of the best management teams in the business.
True Gold (TGM-V) is part of the same management team as Pilot Gold. Mark O’Dea is one of the smartest guys in the business and is chairman of both companies. He has worked his magic and monetized assets so each company is well cashed up and has an excellent management team.
I wrote about True Gold recently. Nothing has changed since then. They will be releasing a Feasibility Study in early 2014 and are on track for production in late 2015.
Almaden Minerals has been a favorite of mine since I visited them in May. Almaden is finding gold at a cost of about $3.50 an ounce. They continue to deliver outstanding results and the market seems to not care. The company hit 30.9 meters at an 8 gram gold equivalent grade two weeks ago and announced 101 meters of gold equivalent at 4.2 grams on November 28. The market yawned but those are really excellent grades. The market won’t yawn forever.
The stock has dropped about 35% since May in spite of excellent results and gold being as high today as it was then. That’s utterly irrational. This isn’t one of the worst stocks, it’s one of the best.
Arianne Phosphate (DAN-V): For those who still hate gold and silver, there are other excellent options. I’ve written about Arianne a couple of times. They released a 43-101 about two weeks ago showing a NPV of $1.9 billion. That’s on a company with a market cap of $120 million. That isn’t going to last all that long.
Caledonia Mining (CAL-T) has a 49% interest in a gold mine in Zimbabwe and 100% of a base metals project in Zambia. Zimbabwe used to be the breadbasket of Africa before Mugabe destroyed it. You would think that an 89-year-old guy would get tired of stealing from his people but that seems to not be the case.
On the other hand, CAL pays a 7.5% dividend.
Allied Nevada Gold (ANV-T) is highly leveraged to gold and as such has gotten creamed since gold hit a high in September of 2011. The stock was $46 a share then and $40 a share as recently as a year ago. I made my mind up to do an article such as this on Tuesday of this week when I met with Carl Pescio at the San Francisco Gold Show. His shares were $3.26 when we talked and even I thought that was pretty absurd.
Markets go up and markets go down. The gold market went up every year from 2001 to 2012. Nothing else has ever gone up 12 years in a row and gold isn’t about to go up 13 years in a row. All markets correct. Gold went down more from 1975 to 1976. But I can’t remember seeing any market where really good companies go down 94% such as ANV has.
The company has put in a number of cost cutting measures and is still making a profit. I like the management, I like the project and if you believe gold will go up, Allied Nevada is going to lead the pack higher.
Pan Global Resources (PGZ-V) has doubled in price since September. They have a giant borates project in Serbia with excellent results released recently. I covered them in November of last year. Winter was quiet with little news and the shares drifted down. They have drilled this summer, they hit, and the market is starting to reflect the real value management is creating.
Gold Standard Ventures (GSV-V) owns the Railroad District in Northeast Nevada in the Carlin Trend. Carlin Trend projects are tricky. They are both expensive and take a long time to see results. GSV appears to have hit a major discovery in the Carlin. They keep hitting and the ounces will add up.
The company has slowed down their pace of operations in response to the dead capital markets but they still have about $3 million in the treasury and can keep the doors open. One day investors will want gold stocks. Especially in the Carlin Trend.
NuLegacy Gold (NUG-V) has an interesting JV with Barrick Gold in the Cortez Trend of Central Nevada. Dr Steininger of NuLegacy has a theory that the exciting set of three major (15 m ounces+) discoveries in the Cortez Trend extends to their Iceberg Gold Deposit. These major mines occur every 7 km down the trend to the Southeast. It will take some money for drilling to prove the theory but Chairman Albert Matter has managed to raise money even in this worst of times.
If NuLegacy hits big, the shares will rocket higher. It’s a crap shoot but with the mining industries best geologists throwing the dice. He discovered the Pipeline Deposit in the same trend 23 years ago. He knows the district better than anyone else.
Mundoro Capital (MUN-V) released really boring drilling data in October. The market seems to have been predicting the results as the shares peaked at $.36 in August and continued down to a low of $.18 just recently. Even after funding the scout drilling holes in their latest drill program, the company still has about $.28 a share in cash.
Mundoro is in elephant country and the company has great management. The scout drill results were disappointing but I will take their word that it gave them a lot of information for a future program. The company is well funded and I expect positive results in the future.
Pilot Gold Inc
True Gold Mining
Arianne Phosphate Inc
Allied Nevada Gold Corp.
Pan Global Resources
Gold Standard Ventures
NuLegacy Gold Corp.