Why These 2 NYSE Gold Producers are Buying This Junior During a Bear Market

Gold is gaining strength as it may soon close above the 50 day after reversing above the 200 day  moving average after falling below that level last week.  That may have been a shakeout of weak hands below the 200 day as it appears in 2014 money has been moving from the overbought equity market into the undervalued commodities in the form of junior miners.  Look for a close above the 50 day at $1310.

Investors may be preparing for the eventual reinflation, which may have been sparked by Yellen's taper.  The U.S. dollar and general equity market appears to be forming a rounding top while gold, silver and the junior miners are seeing increased accumulation a higher lows typical of new bull market moves.  The key now is asset preservation in a rising interest rate, inflationary environment.  I still believe gold, silver and the industrial metals specifically PGM's, nickel and uranium could soar.

These are the areas that I believe are the safest to be when interest rates are negative and when Central Banks are continuing to fire up the printing press engines.  The overbought social media and marijuana stocks with no earnings could be just beginning to bust.  Look at all the IPO's in social media and pot stocks reminding us of the Dot.Com craze.  While these stocks come back to earth the junior miners could actually soar as The Fed may have to reverse their taper moves and actually increase quantitative easing to deal with the aftermath of the tech/marijuana bubble bursting.

The junior sector has been beaten down for almost seven years on fears of deflation and a slowing global economy especially in China.  Other sectors have reinflated real estate, financials and technology to ridiculously high levels.  I believe the opportunities exist in the junior miners especially the gold explorers in Nevada.

Canamex Resources (CSQ.V or CNMXF) recently announced that Gold Resource Corporation (GORO) has funded the company for the next major drilling program. This investment means that Gold Resource Corp will join Hecla (HL) as a strategic partner. When you see two large NYSE gold producers take significant positions it is time to pay full attention as they did plenty of due diligence in this company which is way undervalued and not yet discovered by the retail market.

There are many reasons these top miners are investing in Canamex. Canamex's Bruner Project is located in Nevada which is probably the top gold mining jurisdiction in the world on 500 acres of private land. This means they may have a shorter permitting timeline. Canamex has excellent infrastucture with grid power only 12 miles away and access to a highway. The metallurgy is excellent with high extractions using lower levels of reagents. They have a historical resource which is growing with a recent drill intercept of 57.9 meters of over 5 g/ton. Canamex is diamond drilling five core holes to test this feeder zone.

The stock sold off as they got back the first hole which did not hit.  However, one should realize four more holes are coming from this area alone.  In addition they will have more than fifty or so further drill holes to assay.

Gold Resource Corp and Hecla did not invest millions of dollars for one drill hole.  There is still a lot more from this drilling program to report.  More drilling is expected from the historic resource before the core drill is moved to the Penelas East discovery where another RC drill will be coming in mid-April.  Do not forget about Penelas East on a different part of the property where they hit 110 meter of over 4 g/ton material. Could they be connected with high grade feeder systems?


The investment by NYSE listed Hecla and Gold Resource Corp may signal that they feel there may be a good chance.  Don't panic from the first drill hole which was disappointing.  Now with cash in hand Canamex has commenced diamond drilling at Bruner. Over 10k meters of drilling will take place in 2014 following up on the high grade feeder zone in the historic resource and the Penelas East Discovery. The company could have good news flow over the next six months as they are putting together a major drilling program in 2014.

See my recent interview with Canamex (CSQ.V or CNMXF) CEO Bob Kramer by clicking on the following link: http://www.youtube.com/watch?v=5MGwSvidbTo

Please call Canamex CEO and Director Robert Kramer for further information: 604.336.8621

Disclosure: I am a shareholder and the company is a website sponsor.


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