Gold Hits All-Time High, Silver Breaks Out, Is This the Big Run?

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Commentary: Gold and silver new price breakouts. Mainstream on Gold. Latest from the USA.

(Sorry for the late send today, we are enroute to the Beaver Creek Precious Metals Summit in Colorado, USA to find our next gold or silver Investment)

It’s very hard not to write about gold and silver yet again this week.

Last weekend we said we’d be delighted if silver could touch US$40/oz during the week...

Well, silver soared through US$40/oz on Monday and later in the week hit a new 14 year high of US$41.40/oz.

Meanwhile gold hit a new all time high of US$3,598/oz last night.

Last weekend we also said both commodities were demonstrating some bullish chart patterns that (if technical analysis is to be believed) could be followed up with breakouts higher...

(if gold and silver prices keep surging, small gold and silver stocks like the ones we are Invested in should follow... no guarantees though. Past performance is not an indicator of future performance)

Silver’s chart pattern was a generational ‘cup and handle’. This pattern has been building since the 1970s:

And gold’s chart pattern was in some sort of “ascending triangle”, bull flag:

(for the technical analyst readers out there, we hope we are getting these terms right)

Here is the gold price breaking out of its ascending triangle pattern this week:

The past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

The silver price keeps going up and could soon complete a huge “50 year cup and handle formation” at which point chartists reckon it will run to US$60/oz to US$70/oz (some say even higher).

The past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

We have been going overweight in silver stocks since 2024 and gold stocks since 2023.

In anticipation that this run in silver and gold might happen.

And it’s looking very good, especially the last couple of weeks.

Gold’s run prompted mainstream media headlines like the following:

(Source)

(Source)

Even the crypto crowd are getting in on the action with Tether buying bullion and making investments in gold royalty companies:

(Tether is crypto stablecoin with a market cap of US$168BN)

(Source)

We are definitely starting to see a lot more gold in the mainstream media these days...

We can't say the same for silver in mainstream media yet...

We did note the volume of posts and videos about silver on social media has dramatically increased in our little echo chamber of posters we follow - just not yet from mainstream media.

Which tells us there could still be a fair bit to go in the silver rally once the wider population catches on.

There are far fewer silver stocks than gold stocks on the ASX, which means more capital trying to cram into a smaller number of companies... if the silver price does go nuts.

We also listened to an interview with famous North American investor Rick Rule who said “Aussies have a lot of catching up to do with silver”.

Rick implied that the ASX had catching up to do when it comes to silver relative to other markets (especially in North America).

It was an interesting take from Rick.

Listen to the full interview (timestamped to start at the silver discussion) Hanging Out in Hated Places with Rick Rule (Money of Mine).

Usually, the ASX is far ahead in terms of valuations for juniors relative to the North American exchanges.

But when it comes to silver, the ASX market doesn’t really understand the industry - probably a function of there being very few silver stocks on the ASX.

The ASX knows gold very well...

but it’s pretty hard to find a good silver story on the ASX.

Our team put together a list of all the silver stocks on the ASX during our hunt for more silver exposure, and we could count less than 20 pure play silver stocks across the whole of the ASX...

Anyway, we are still doing due diligence on a few silver names and as ‘out of the closet’ silver bulls, we definitely want to add a bit more exposure in the event that silver really starts to go parabolic.

Obviously while we are hoping to be correct on this, there is always a risk that the silver price could go down... there’s no guarantees in speculative investing.

But IF the silver price does do something big and the “generational price run” we have been talking about does happen, you will probably be subjected to a substantial amount of us bragging about the silver stocks we picked.

(kinda like how we didn’t shut up about picking VUL for like 3 years after it ran over 8,000%)

(past performance is not an indicator of future performance.)

When silver broke out above US$41/oz on Wednesday morning, we put out an update on our three pure play silver Investments.

Check out that note here: Silver hits 14 year high - what happens next? Here’s our ASX silver stocks

If you can't be bothered clicking on that link, here’s the stocks we are Invested in.

The three silver Investments in our Portfolio:

1. Sun Silver (ASX: SS1) - the biggest pre-production silver asset on the ASX and in the USA. SS1’s current resource estimate sits at 480M ounces silver equivalent. It could also host a giant antimony resource.
2. Mithril Silver and Gold (ASX: MTH) - 373k ounce gold, 11M ounce silver JORC resource estimate in Mexico. MTH is about to have three rigs on the ground and grow that resource to a ~2.5-3M ounces gold equivalent resource estimate over the next 12-14 months.
3. West Coast Silver (ASX: WCE) - aiming to extend the Elizabeth Hill silver mine. Elizabeth Hill was the highest grade silver mine in Australia when it was last in production in the 1990s. WCE is trying to extend the leftover resources at the mine and hopefully make a repeat discovery on its regional targets.

And here are our Gold Investments:

Producers:

• Kaiser Reef (ASX: KAU) - KAU produced ~4,000 ounces of gold from the first 45 days of owning its recently acquired Henty mine in Tasmania. KAU also owns a processing plant and operating mine in Victoria. KAU just started drilling its Victorian asset, very close to its processing plant, so there is an element of exploration exposure in KAU too.

Developers:

• James Bay Minerals (ASX: JBY) - 1.37M ounce gold JORC resource estimate next door to a joint venture between Barrick and Newmont (N.G.M) which is part of the world’s biggest mining complex in Nevada, USA.
  
• Haranga Resources (ASX: HAR) - has a 286,000 oz non-JORC gold resource at 9.28g/t in the Mother Lode region in California, USA. HAR’s ground is where the original Californian gold rush happened. HAR will be the first company to do exploration drilling on the project in decades...
  
• Titan Minerals (ASX: TTM) - has a 3.1M ounce gold, 22M ounce silver JORC resource estimate at one of its four projects in Ecuador. TTM is drilling to try to get that up to ~5m ounces.
  
  

Explorers:

• BPM Minerals (ASX: BPM) - acquired a WA gold project in the same region as the 5.4M ounce Tropicana mine owned in a Joint Venture between Regis Resources and AngloGold Ashanti.
  
• Resolution Minerals (ASX: RML) - Drilling right now, next door to US critical minerals (and gold) stock $3.1BN Perpetua Resources. RML is trying to make a discovery that resembles Perpetua’s giant 6.6M ounce gold, 200M lb antimony resource.
  
• TechGen Metals (ASX: TG1) - has multiple assets spread across WA and a minority interest in a gold project in NSW. TG1’s next big drilling program is on a copper-gold target in WA.
  
• Lightning Minerals (ASX: L1M) - is set to drill its recently acquired Queensland gold-copper exploration project with drilling planned across 5 targets under historical mining activity and strong shallow drill hits. Rigs are booked to start drilling the week of September 15th.

We think there is still a fair bit to play out in precious metals - especially in the very small end.

And according to the Lion Selection Group “Investment Clock”, we are almost at six o’clock, which indicates “boom times”:

(Source)

A quick US critical minerals update

So far we have seen the US government back companies with funding.

Then came the corporates and the investor community following the government backers.

First the government:

1. US$400M direct investment from the Pentagon into MP Materials.
2. A$1.65B in loans from the Australian government to Iluka Resources.
3. US$1.8B loan commitment to Perpetua from the US Export-Import Bank.
4. US$8.9B direct investment from the US government to Intel.
5. A$280M from the Australian government to lithium developer Liontown Resources.

Then industry:

1. US$500M offtake deal between Apple and MP Materials

Then the market:

1. Perpetua Resources pulled off an US$474M cap raise with famous big short investor Paulsen and co cornerstoning the book.
2. $750M capital raise from Investors into Lynas Rare Earths.

What we haven’t really written about is what the beneficiaries of these companies will end up doing with all the cash that ends up hitting their bank accounts.

All of a sudden these companies' projects are funded and/or the corporations have a treasury to put to work (maybe by doing deals...)

We recently saw Iluka do a deal with African rare earths developer Lindian Resources.

Lindian's share price went up ~200% after that news:

The past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

Another Aussie rare earths national champion Lynas recently closed a $750M raise. The AFR reported that they were considering doing deals downstream with the cash raised...

(Source)

The article then featured another Aussie rare earths developer who had a downstream plant but no mine “to provide feedstock”:

(Source)

So Lynas could end up having a similar problem to the ones that the Wall Street Journal reported MP Materials would have.

A big hungry plant, but no feedstock to fill it with...

Here is that Wall Street Journal article related to MP:

(Source)

The question then becomes who can MP and Lynas do deals to secure feedstock?

No one knows, but we are hoping they have both, at the very least watchlisted our Portfolio stock St George Mining (ASX:SGQ).

Or maybe even Locksley Resources (ASX:LKY) if the company can make a discovery with its drilling later this year.

LKY’s project is ~1.4km away from MP Materials Mountain Pass project - the only rare earths asset producing in America.

For now though, SGQ is definitely the most advanced rare earths project in our Portfolio.

SGQ’s project is the largest and highest-grade carbonatite-hosted rare earth deposit in South America...

And the second highest grade REE deposit globally in the Western world.

We note Lynas’ CEO has previously mentioned the company is looking at rare earths assets in Brazil before...

(SGQ’s project is in Brazil)

(Source)

We also noticed a canadian listed Brazilian rare earths stock get US government funding earlier this week.

Clearly the Americans are also looking at Brazilian assets:

(Source)

SGQ’s project as it stands today, is comparable to the two assets owned by both $13BN Lynas and $18BN MP Materials because:

• It sits on the same type of geology (hard rock carbonatite-hosted rare earth deposit)
• It has similar grades to Lynas’s project, and
• It is similar in terms of size to MP Material’s project.

IF Lynas and MP are going to look at assets around the world (and in particular ex-China) surely they are going to be looking at projects they understand really well - hard rock similar to SGQ...

Here is how SGQ’s resource estimate ranks relative to MP Materials and Lynas’ assets - and we think that with some drilling SGQ’s resource could get even bigger (and those 5 rigs are going to help that cause):

(source)

How about Perpetua Resources? What will it do with its cash?

Perpetua received US$1.8BN in government funding/commitments and US$100M from a private placement a few months ago.

Most of that cash will likely go toward building their project and bringing it online.

But mining projects are about scale, IF they see any major discoveries made nearby, they could start to plan their project around including some of the feed from surrounding deposits.

All it would mean is adding a few extra parts to their plant which increases economies of scale...

That’s where our Investment Resolution Minerals (ASX:RML) could come into play.

RML is drilling now, so we could see an update at any day now.

Have a great weekend,

Next Investors