It’s rare for a gold stock to have all stars aligned. I’ve found one, and it’s my #1 gold stock to own right now.
Typically, any bit of good news is crammed through the Public Relations machine, and everyone who can even spell “gold” hears about it.
But the best gold companies are not in the business of promotion. They’re in the much harder business of bringing a mine into production while minimizing costs.
So, what are these stars that are now aligned, and what’s the company you should be paying attention to?
As for the stars, the single best time to buy a gold stock – contrary to what you might intuitively think – is before it produces a single ounce of gold. This chart shows the “Lassonde Curve” which is arguably the most important chart in gold investing.
A mine in production becomes a dwindling asset as reserves are depleted.
Note: this chart does not refer to the price trend of gold stocks – it simply shows you the value proposition from a net asset value or cash flow standpoint. Typically, the price chases value as investors wake up to the mismatch between a pre-production stock price and the new productive mine.
But going into production isn’t enough. You also need competent management stewarding the process to successful completion. Here, track record matters. You want to invest alongside managers with a track record of success.
But again… even the most competent managers can’t turn a moose meadow into a gold mine. You also need high grade gold (and hopefully a lot of it) to create large margins – ensuring your costs don’t swallow up your profits.
These factors, you should note, are independent of the price of gold. A high gold price can mask problems with management, grade and production – but not for long. Any downturn in the price of gold turns into a major “mask-off” liability that can crush the stock price.
A competent team with a high grade mine can turn a massive profit at gold much below the current gold price of $4,300/oz. They build their mine expecting $2,000 or $2,500 gold – hoping but not relying on higher prices, and they can outperform even during bear markets in gold.
Take one of my all time best performing stocks: Silvercrest Mining.
I recommended it back in 2015 and sold it in early 2024… deep in the doldrums when silver’s price was bouncing between $14 and $25…
Silvercrest had everything I look for in a “stars align” situation when I recommended it in 2015. Its world class Las Chispas property was not yet in production, and wouldn’t start producing silver until 2022.
Today, one company in my Golden Portfolio IV service is just days away from producing its first ounces of gold from a world class, high grade mine with over 5 million ounces.
The management team has done this all before, shepherding a nearly-identical mine into production and a $1.2 (Canadian) payday back in 2015. The difference, this mine is potentially bigger and gold prices are nearly 4X higher.
And yet, this company is still trading for just $1 billion market cap.
When it goes into production, I believe it will jump at least 3X just on a valuation basis. It could obviously move much higher, as Silvercrest did.
I’ve put together a full-writeup on how to buy this company now.
But keep in mind: production begins just days from now. If you want to get on board before the biggest gains, you literally have just days left to act.
Happy New Year’s Eve,
Garrett Goggin, CFA, CMT
Lead Analyst and Founder, Golden Portfolio