The gold miners are hitting new lows while equities are hitting new highs.
Obviously this has caused some of our readers great concern as the
fundamentals clearly do not support such a move where wealth in the earth
assets are trading at significant discounts, while U.S. bank assets are
trading at a premium.
Does this possibly mean we should sell our mining
assets trading at historic discounts to their asset values for propped up
banks and housing stocks?...No, this may be a trap.
Indeed the large gold miners have been underperforming, but gold, silver,
the juniors, uranium, rare earths are bottoming and have not violated their
Graphite stocks have made explosive moves higher indicating
investors are growing increasingly aware of how basic commodities are
essential for a pump-primed economy where we may see soaring inflation.
All of our technical indicators are showing that we are nearing the end of a basing period in gold and silver. Gold has been basing between $1900 and $1600 for eight months. Silver has been consolidating for 12 months and has not broken 2011 lows at $27.50. We believe both gold, silver and the miners are undervalued and oversold presenting a buying opportunity.
For the first time in many years, the gold miners are at their cheapest
levels when compared to the general equity markets and to the underlying
metal. Precious metal assets are on sale and it is now a buyers market not
Wall St. tends to attract investors to stocks that the crowd is
bidding up, while ignoring companies that are trading at significant
undervaluations to their peers and to the overall market.
One company which is currently trading at a significant discount is International Tower Hill Mines, which is developing one of the largest mother-lodes of gold
(20+ million ounces) right here in the United States in the mining friendly
area of Fairbanks, Alaska.
Currently investors are valuing THM's resource
at $17 an ounce. This value is way below their peers.
The company has just announced a district wide exploration program
commencing at Livengood.
For many months we have been waiting for this news
of an aggressive exploration program. "With our Money Knob deposit sitting
at over 16.5 million ounces in the Measured and Indicated, and 4.1 million
ounces in the Inferred, resource categories, it is important for us to look
in new areas of our land package to see if we can find additional gold
deposits," stated Jim Komadina, Chief Executive Officer. "In addition, as
the Livengood project progresses toward permitting and development, it is
crucial to begin engineering data acquisition so that regulatory and
community engagement can begin. The condemnation drill program is designed
to enable Tower Hill Mines, Inc. to be ready for these important
discussions in the first quarter of 2013."
Livengood will be one of the primary deposits to be developed. The real
challenge behind Livengood is one of scale as it is one of the few marquis
20+ million ounce mines in North America.
Livengood is an economic orebody and will produce gold in the future. Tower Hill is currently doing their homework on the metallurgy as it is crucial for permitting and the economic impact is huge. A pre-feasibility study should be produced by the third
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Disclosure: Long THM