How to invest in the gold and silver sector
As the price of gold and silver has went up, large cap mining stocks are looking to boost their project pipelines. This means there will be takeover targets and many mergers and acquisitions (M&A). Recently Goldcorp (GG) acquired Kaminak Gold Corp for its Coffee project in the Canadian Yukon. Furthermore, Fortuna Silver Mines is in the process of acquiring Goldrock Mines Corp for its Lindero project in Argentina.
It has been shown that when gold or silver goes up 1% the junior miners go up 2% to 3%, amplifying gains. This means your biggest bang for your buck is in promising junior miners that will be either bought out, have later stage projects about to go into production or just huge mineral assets. Buying a miner based on speculation it will be bought out is not the best route but companies that are buyout targets usually have world class or very good mines. This means even if a junior miner is not bought out, it can deliver stunning stock gains based on the valuation of the mines or the mines production.
Here are some examples of good companies that may be bought out or have good mines.
Nordgold (NORD) owns 50.01% stake in Isnard gold project in the French Guiana. The other 49% is owned by Columbus Gold (CGT). In the past Nordgold would buy out its minority partner which happened with High River Gold Mines. This Isnard gold mine has over 3.9 million ozs of indicated gold resources and 1.1 million oz of gold inferred mineral resources. This means these 2 companies together have a near world class mine.
Golden Arrow Resources (GRG) has a mine in Mexico that is part owned by Silver Standard Resources (SSRI). This mine has 155 million measured and indicated silver equivalent ozs. As Silver Standard Resources has a mine very close to Golden Arrow Resources a major development agreement recently took place whereby Golden Arrow Resources will receive 25% of the combined mine while Silver Standard Resources will receive 75%. This values Golden Arrow Resources silver project valuation at CAD$213 million or $2.77 a share up from where its at right now at $1.14 a share.
One of the biggest mineral asset junior miners is Western Copper and Gold (WRN) which has 4.5 billion pounds of copper, 9 million ozs os gold and 50 million ozs of silver. The downside with this mine is that it needs over $2.5 billion USD to get the mine in production and is only worth $115 million CAD meaning it will have to heavily dilute shareholders. Even with the dilution the miner asset is worth over $20 billion USD.
I hope you enjoyed this article any questions will be answered below.
Waiting for SpaceX (or others) to start mining asteroids in space. What do you think about the progress on that?
Honestly I have not followed it in the last 5 years. I remember back in the last gold/silver boom it was talked about. I think even 1 or 2 countries got beyond it. Just seems like a large capital cost but when its done with the right technology in the future it will be a HUGE business. Just look at the video game Star Citizen.
From what I've heard a lot of funds and resources are being put into it. But who will succeed? Being a shareholder in the first company to successfully mine spacegold... or catch a diamond meteorite! that would be something