M&A Activity Sparks The Junior Gold Miners to Make Year End Breakout $GDXJ


Following the Great Financial Crisis in 2008, Governments around the world flooded the banks with cash expanding their balance sheets.  Rates were kept artificially low to continue to try to support growth. From 2009 to 2015 rates were cheap but then after six years of going higher the Fed decided to attempt to start tightening.  For 3 more years they tried to raise rates until the market combined with tariff concerns had it worst December in 2018 and the beginning of a massive rotation into precious metals.

Now this year we saw a record amount of negative yielding debt globally and deposit accounts in Germany are being affected.  We also witnessed the inverted yield curve which is a troublesome sign.  The global economy is still weak despite these colossal efforts by Bankers. Now the Fed decided to reverse direction and start cutting rates in 2019.  Gold has broken out into six year highs and mining investment which was ignored for a decade comes back into favor first led by the Australians who came into North America through companies like Northern Star that bought Pogo in Alaska, South 32 which paid billions for Arizona Mining, St Barbara for Atlantic Gold and now recently Evolution for the Newmont assets. 

After the Australians made a move then the majors like Barrick and Randgold and Newmont and Goldcorp merged.  Recently Kirkland Lake has made a friendly offer for Detour and Zijin just bought Continental in Colombia this week.  Osisko made the move for Barkerville in BC recently and Endeavour tried a hostile bid on Centamin.  The junior gold miners look like they are breaking out of its 3 month pullback. Notice the recent share consolidations with Victoria and Gold X as companies look to possibly start uplisting to the American Exchanges.  All these events above are signs gold is already in a bull market. For over 10 years gold investors have been embarrassed as predictions of painful inflation have largely been masked by a record high US Equity Market led by Tech stocks in the Nasdaq and Large Caps in the S&P500 and a booming real estate market globally.  

That could be changing now as there are record inflows into the gold mining ETF's.  Companies need to build up their market caps and liquidity to qualify.  These gold miners need to be more than one trick ponies. Smart investors realize we could be at the top of a credit cycle peak that comes once every ten years.  Junior miners and real hard assets will come back into favor when the bubble bursts like it did in crypto and cannabis. The Algo ETF Funds want these juniors to get bigger and faster quicker than possibly with just the drill bit alone.  Its going to be done through acquisitions.  Major financings are coming back into the junior mining business most notably by stories like Pure Gold, Great Bear, Sun Metals, Integra and Corvus.  All of which have been featured over the years. I expect a lot more M&A to continue in 2020. The overall US Market is still forming a huge megaphone top and I expect a reset to occur especially if Trump is impeached and does not make it to 2020 election.  We could see a huge move past $2000 USD an ounce if this occurs and a huge downside target for S&P500. I really like how some of the recent silver stocks are behaving that Billionaire Eric Sprott has invested in.  Check out the recent action here and stay tuned.

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