Thursday, October 24, 2013

Charts of the Day -- Junior Gold Explorer Valuations and GLDX

Gold is up as the dollar is down today, and that should help the new picks I added yesterday. Oil is still sliding down a slippery slope.

There is some optimism creeping back into the precious metals sector, but it's not in the junior gold explorers. Take a look at this chart from Stockhouse.com ...



Danny Deadlock at Stockhouse tracks a basket of 45 TSX and TSX Venture penny stocks (micro caps) with a minimum 1 million gold ounces (as per a 43-101 report).

Danny also gives these examples of some of the companies in that basket ...

1) Batero Gold Corp. (TSX: V.BAT, Stock Forum) in Colombia has 6 million ounces near 0.4 g/t with approx. $16 million in the bank. The gold is valued near $0.

2) Sunward Resources Ltd. (TSX: V.SWD, Stock Forum) in Colombia has 11 million ounces near 0.5 g/t with approx. $25 million in the bank. The gold is valued near $1/oz
.
3) Victoria Gold Corp. (TSX: V.VIT, Stock Forum) in the Yukon has 6 million ounces near 0.7 g/t with approx. $30 million in the bank. The gold is valued near $1.50
.
4) Volta Resources Inc. (TSX: T.VTR, Stock Forum) in Africa has 6 million ounces near 1.0 g/t with approx. $10 million in the bank. The gold is valued near $4/oz
.
5) Asanko Gold Inc. (TSX: T.AKG, Stock Forum) in Africa has 5 million ounces near 1 g/t with approx. $185 million in the bank. The gold is valued near $6/oz.

6) PMI Gold Corp. (TSX: T.PMV, Stock Forum) in Africa has 2.5 million ounces near 2.3 g/t with approx. $100 million in the bank. The gold is valued near $9/oz.

So is it a good time to buy explorers?  Danny thinks so.

Let's take a look at a chart of the Global X Gold Explorers ETF (GLDX), which has Volta Resources as its biggest (7.91%) asset. Its other top holdings including Gold Canyon Resources, Seabridge Gold, Torex Gold Resources, and Novagold Resources.


(Updated chart)

It sure looks like we're seeing a double bottom in the GLDX.  Referring to the previous chart of junior gold explorer valuations, you can see that when the valuations of that group went from $18 in June to $22 in September, the GLDX likewise followed with a rally of around 60%.

I have not gotten the bullish "buy" signals on the GLDX that I have on my other picks.  So this is for bottom-fishers and real speculators only. The speculation would be that gold is at least going to rally like it did earlier this year, and that will breathe some life into this beaten-down industry.

Be very careful. And good luck to us all.

2 comments:

  1. Yabut how many of those explorecos have anything that can become a mine at even $1500-$1700 gold?

    ReplyDelete