How To Play The Looming Gold Rally

LONDON, April 11, 2019 /CNW/ -- The global economy is throwing up red flags on all sides just as Goldman Sachs is saying that 'peak gold' may be less than two decades away. At the same time, over-valued and over-hyped tech stocks are beginning to lose favor among investors who are looking for safe haven assets.  Mentioned in today's commentary includes:  Pretium Resources (NYSE:PVG) (TSX: PVG), Alamos Gold Inc. (NYSE:AGI) (TSX: AGI), Osisko Gold Royalties Ltd. (NYSE:OR) (TSX: OR), IAMGOLD (NYSE:IAG), Kinross Gold Corporation (NYSE:KGC).

We may be about to witness a 'perfect storm' for gold and one group in particular is set to benefit. Gold miners. More specifically: miners who use cutting-edge tech such as drones, 3D geomapping and shale innovations to boost efficiency.

New technology isn't just unlocking new gold veins it's also rediscovering legendary gold hotspots such as the Klondike or Julius Caesar's gold in Romania. With gold prices set to rise, gold miners are gearing up for what could become an unforgettable 2019.

Here are 5 stocks to keep an eye on as you get into the gold game:

#1 Pretium Resources (NYSE:PVG) 

Canadian Pretium Resources is one of the top growth stories in the gold space.

Pretium holds a diverse portfolio of precious metal resource properties throughout the Americas. The jewel in the crown here is the Brucjeack mine in B.C., which is fully owned by the company. A 2016 reserve estimate pegged the total gold reserves of this very mine at 8.7 million ounces. At today's gold prices that's no less than $11.3 billion worth of the precious metal.

This 2,700 ton-per-day high-grade gold mine produced an impressive 154,484 ounces of gold in its first six months. At present, Brucejack is averaging nearly 13 grams of gold per ton of rock mined, a very reasonable output that is allowing Pretium to keep their all-in sustaining costs comfortably below the global gold mining average.

In terms of exploration, the company has conducted extensive geologica   l sampling in the vicinity (15-30km) of the mine and has found deposits with grades as high as 19.25 grams of gold per ton.

Long term, investors are being drawn toward the 100 percent company-owned snowfield property. Besides porphyry-style gold and gold-copper deposits, the property also benefits from molybdenum and rhenium mineralization.

#2 Euro Sun (ESM, CPNFF)

Perhaps the biggest surprise story in gold this spring comes from Romania, where a little-known company just became the first non-state-owned entity to receive a ratified mining license for what could become one of the biggest gold discoveries of the century.

Their secret lies in an ancient Roman gold mine buried deep in the Romanian forest, where Euro Sun has claim to 400 million tons of ore - with $13.3 billion worth of gold and copper waiting to be extracted.

The scale of Euro Sun's discovery cannot be overstated. Once their Rovina mine is fully operational it will likely be the second biggest gold mine on the entire European continent, with a staggering yield of 10.1 million ounces of gold equivalent.

The Rovina mine is certainly not the only Roman mine lying in wait with accessible ore in Europe, but Euro Sun managed to do what big companies like Barrick Gold have thus far been unable to do and obtained a license from the Romanian government to start mining. This is the first time that a non-state-owned company received a ratified mining license in Romania.

Even if the company would never find an additional ounce of gold, the Rovina mine could produce about 150,000 ounces of gold and 50 million pounds of copper a year over several decades.

Industry experts like GMP and Cantor Fitzgerald agree that Euro Sun is significantly undervalued. Cantor Fitzgerald has deemed Euro Sun's short-term target to be $2.10 - a huge increase from its current price. If this sounds too good to be true, just wait: GMP estimates Euro Sun's value could be $3.00, an increase of a whopping 355%.

Right now, in large part thanks to the sorry state of the small mining stock market, Euro Sun is a penny stock. But that could change at any moment. With tons of buzz around M&A in the gold sector, there has been no shortage of rumors about a potential Euro Sun take-over, possibly by one of the many Chinese firms investing heavily in the region.

#3 Alamos Gold Inc. (NYSE:AGI)

The third of our gold stock recommendations is Toronto-based Alamos Gold Inc., a mid-tier gold producer that owns four fully operational gold mines spanning North America - more specifically, in Northern Ontario, Canada and Sonora, Mexico.

Apart from their gold mines in Canada and Mexico, Alamos owns additional development projects at home in Manitoba, Canada with its Lynn Lake project, in Mexico with La Yaqui and Cerro Pelon, an extension of the Mulatos Mine,  and even as far-flung as Turkey, where it owns the Kirazli, Agi Dagi, and Camyurt development projects.

Its Kirazli project is especially noteworthy as the company recently received an operating permit from the Turkish Department of Energy and Natural Resources…

This key development will allow Alamos to ramp up construction, with the goal of kicking off initial production at the mine by the end of 2020. This is exciting news because Kirazli's probable reserves sit at 10,078,000 ounces, or approximately $13 billion in revenue for the company.

Additionally, Alamos Gold also closed a major deal with Metalla Royalty and Streaming, securing $8 million in Metalla shares in a sale of 18 royalties on assets not owned by Alamos. The deal means that Alamos will now own 6.26% of Metalla.

#4 Osisko Gold Royalties Ltd. (NYSE:OR)

This Canadian company boasts an impressive catalog of assets spread across the globe, with plenty more royalties and exploration in development.

Osisko Gold Royalties is currently being watched very closely by investors who have zeroed in on a telling anomaly amongst the vast swaths of data available on all publicly traded companies - you see, the key to successful trading is not having access to the information, but knowing what to look for and what to make of it.

In this case, the movement that has caught the market's eye is that the firm's Mesa Adaptive Moving Average (MAMA) has moved above the Fractional Adaptive Moving Average (FAMA). In layman's terms: there is potentially some major upward mobility in Osisko's near future.

With its investors feeling bullish about Osisko's prospects, the company's stock has climbed at a healthy clip over the last year. To get into the nitty gritty, "shares have moved 6.53% over the past 4-weeks, 58.50% over the past half year and 25.48% over the past full year."

Osisko is a smart, low-risk investment thanks to its steady growth and significantly reduced debt. Investors who were lucky enough to get their hands on Osisko stock in the last quarter of 2018 will be the first to tell you what a rewarding buy it is.

#5 IAMGOLD (NYSE:IAG)

Our last recommendation of the group, but most certainly not the least, is Toronto-based IAMGOLD. The ambitious young company is a fast-growing mid-tier gold miner that looks to us to be on track to become a major player in the gold mining industry.

Sure, the company has faced some recent setbacks, first by postponing its Cote Gold project and now by announcing a plan to lay off 32% of the workers at its Westwood mine. These moves, however, have kept stock prices stable and set the company up for a major rebound.

Many traders are bullish on IAMGOLD, expecting continued appreciation as well as steady growth from the ambitious company.

The company initially garnered a fair bit of buzz when it produced some 214,000 ounces in Q1 2017 thanks to its successful operations in South America and Africa. Now, this past June, IAMGOLD closed a new and highly significant deal with Japanese commodity giant Sumimoto, which will result in the development of a new Ontario gold project.

Right now is the perfect time for investors to get involved with IAMGOLD as the buzz wears off but the projections are rock solid for this quickly-growing commodity.

Other companies to watch as traders turn bullish on gold…

Kinross Gold Corporation (NYSE:KGC)

Kinross Gold Corporation is relatively new on the scene, founded in the early 90s, but it certainly isn't lacking drive or experience. In 2015, the company received the highest ranking for of any Canadian miner in Maclean's magazine's annual assessment of socially responsible companies.

While Kinross posted a significant loss in the fourth quarter of 2018, the company is making strong moves to turn around its earnings, including the hiring of a new CFO, Andrea S. Freeborough.

"Andrea's successful track record at Kinross and throughout her career, including accounting, international finance, M&A, and deep management experience, will be an excellent addition to our leadership team," said Mr. Rollinson. "We have great talent at Kinross and succession planning is a key aspect of retaining that talent for the future success of our Company."

By. Meredith Taylor

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