Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24
RECESSION When Yield Curve Uninverts - 8th Sep 24
Sentiment Speaks: Silver Is Set Up To Shine - 8th Sep 24
Precious Metals Shine in August: Gold and Silver Surge Ahead - 8th Sep 24
Gold’s Demand Comeback - 8th Sep 24
Gold’s Quick Reversal and Copper’s Major Indications - 8th Sep 24
GLOBAL WARMING Housing Market Consequences Right Now - 6th Sep 24
Crude Oil’s Sign for Gold Investors - 6th Sep 24
Stocks Face Uncertainty Following Sell-Off- 6th Sep 24
GOLD WILL CONTINUE TO OUTPERFORM MINING SHARES - 6th Sep 24
AI Stocks Portfolio and Bitcoin September 2024 - 3rd Sep 24
2024 = 1984 - AI Equals Loss of Agency - 30th Aug 24
UBI - Universal Billionaire Income - 30th Aug 24
US COUNTING DOWN TO CRISIS, CATASTROPHE AND COLLAPSE - 30th Aug 24
GBP/USD Uptrend: What’s Next for the Pair? - 30th Aug 24
The Post-2020 History of the 10-2 US Treasury Yield Curve - 30th Aug 24
Stocks Likely to Extend Consolidation: Topping Pattern Forming? - 30th Aug 24
Why Stock-Market Success Is Usually Only Temporary - 30th Aug 24
The Consequences of AI - 24th Aug 24
Can Greedy Politicians Really Stop Price Inflation With a "Price Gouging" Ban? - 24th Aug 24
Why Alien Intelligence Cannot Predict the Future - 23rd Aug 24
Stock Market Surefire Way to Go Broke - 23rd Aug 24
RIP Google Search - 23rd Aug 24
What happened to the Fed’s Gold? - 23rd Aug 24
US Dollar Reserves Have Dropped By 14 Percent Since 2002 - 23rd Aug 24
Will Electric Vehicles Be the Killer App for Silver? - 23rd Aug 24
EUR/USD Update: Strong Uptrend and Key Levels to Watch - 23rd Aug 24
Gold Mid-Tier Mining Stocks Fundamentals - 23rd Aug 24
My GCSE Exam Results Day Shock! 2024 - 23rd Aug 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

President Trump? President Clinton? Gold Up in Both Scenarios

Commodities / Gold and Silver 2016 Apr 22, 2016 - 10:49 AM GMT

By: The_Gold_Report

Commodities

Donald Trump and Hillary Clinton may have very little in common, but Barry Allan, vice chair of mining for Mackie Research Capital, says if either moves into the White House, the U.S. dollar will fall and gold will rise. A higher gold price bodes well for gold equities, and in this interview with The Gold Report, Allan and his colleague Ryan Hanley share the names of some of their top picks for this environment.


The Gold Report: Barry and Ryan, welcome back to Streetwise Reports. I'm excited to get your thoughts on the market and a few stocks. We've had the first wave of a possible uplift in the precious metals markets. The presidential election is coming up in the U.S. in November. What do you think a Donald Trump or a Hillary Clinton win would mean for gold, gold equities and the Canadian dollar?

Barry Allan: Looking at the election from north of the border and as it pertains particularly to gold bullion, we have taken the view that either a Clinton outcome or a Trump outcome would probably lead to a weaker dollar and, hence, a stronger gold price environment. From where we sit, either of those outcomes, whether it would be Trump, which seems to be controversial to say the least, or Clinton, which would result in a much more Canada-like budget, would probably not play well for the U.S. dollar. We see either outcome as being supportive of the gold price.

We also would layer in there oil prices, which we think are probably going to go higher. That will strengthen the Canadian dollar, but it will hurt the U.S. dollar as well. We see all those things conspiring to put us in a reasonably good gold price future.

TGR: Would that bode well for U.S. investors buying Canadian mining stocks?

BA: Yes, it would. Also, silver has really lagged the gold price and is now finally starting to show a bit of catch-up. There might be a little bit more bias toward silver over the next year because it has trailed gold so badly.

TGR: Barry, you were selected to be on Zacks Investment Research's Top 10 5-Star Analyst rankings for 2015, and you were ranked No. 1 in North America and Canada for precious metals and No. 3 across every sector in North America. Kudos to you and the firm.

BA: Thanks. It is nice to get the recognition, but I think our success in making that list was in our timing. We turned fairly positive on the major gold stocks at about August of last year, so it allowed us to show some very good relative performance in a market that was not really embracing gold overall.

TGR: Would you give us four or five ideas that are currently on your Buy list?

BA: Starting with the smaller market-cap side of the table, we've been supportive of Balmoral Resources Ltd. (BAR:TSX; BALMF:OTCQX). We had a real dearth of good quality exploration plays, and we wanted to have at least one exploration play in our portfolio. So we wanted to find a company where the people were of very good quality. Good quality people will generally get you good quality properties. Then, from our perspective, being in capital markets, we'll help the company out with the rest of it.

"Balmoral Resources Ltd. is definitely one of our favorites on the exploration side."

The gentleman behind Balmoral is Darin Wagner. He has a very good exploration track record and is a very good explorationist—and certainly one of the better ones north of the border. It's a Speculative Buy for us, but it's only speculative in that the properties we're dealing with are reasonably early stage; we are backing the horses here. Balmoral is definitely one of them because not only has it made two legitimate, significant discoveries already, but it also has just good quality people. It is definitely one of our favorites on the exploration side.

TGR: What company would you like to talk about next?

BA: As we move up the market-cap table, we take a look at Kaminak Gold Corp. (KAM:TSX.V), which is a development property in the Yukon. Its project economics have a very high rate of return. It also has very good quality people. Eira Thomas, who is reasonably well known in mining, is president and CEO. Kaminak has completed a very robust feasibility study, and now it's really a matter of actually building the mine. We always felt that this company was somewhat overlooked. It's become one of our better performing equities over the last short while, so it has started to gain attention in the marketplace. But we still think that there's probably more in it as it continues to derisk that project and actually get it built over the next three years. Kaminak is still one where we can argue that there is value in a market that surprisingly has bid up a lot of these stocks already.

We also have in our portfolio a number of junior mining companies. These would be companies where there are one or two operating mines and where they are generating cash flow already, but the next stage is to make their next leap of growth. One of them is Argonaut Gold Inc. (AR:TSX). Ryan is a bit closer to the Argonaut name than I am. Ryan, would you walk through the Argonaut story?

Ryan Hanley: Argonaut is a name that we've covered for quite a while. Because we've had such a strong gold price performance over the last few months, on a relative basis it's outperformed quite a few of the other junior companies that we have under coverage.

Argonaut has about $46 million in cash, which should be enough to get it through the construction phase of a little project called San Agustin in Mexico. San Agustin is right next to its main asset, El Castillo, so we see that as working out well. There are synergies in there given the proximity of the two mines.

One other company I'd like to mention is Richmont Mines Inc. (RIC:NYSE.MKT; RIC:TSX); we have been following it for a while. We started looking more closely at Richmont following a management shake-up, when Renaud Adams come in as president and CEO. We knew him from Primero Mining Corp. (P:TSX; PPP:NYSE), where he was president and COO. He also brought along a few other people—René Marion, who sits as the chairman of the board, and Christian Bourcier, who used to be the VP and general manager at Casa Berardi. It's a little bit of a more complicated asset to mine. Given that Richmont has an experienced and credible mining team, it was one story that we started to dig into a little bit deeper. We feel it's been one of those kind of turnaround stories. It essentially found the mine by increasing exploration at depth, where results showed that both widths and grades increased substantially below the 450 meter level.

BA: One company that we might be just a little bit opportunistic in and I guess more controversial—you may have seen in the marketplace today [April 18] that Primero Mining is getting punished again. It's off something like 20% on the day and setting a new all-time low. We think the market is over-reacting here.

The primary factor that seems to be preoccupying the market is that the Mexican tax authority wants to vacate a tax agreement it negotiated in 2012. That agreement basically said that Primero would be charged tax based upon its realized silver price as sold to Silver Wheaton Corp. (SLW:TSX; SLW:NYSE) at a $4/oz sale price versus the spot price of silver. That has fairly serious implications for not only back taxes for the period that the Mexican government is now contesting, but it may also actually have the potential to affect the forward tax rate that Primero might pay in Mexico.

The market has stripped out of the value of the stock pretty well all the tax liabilities, which include back taxes and future taxes, that Primero may possibly under worst-case scenario be liable for. We think that's just unreasonable and overdone. We put out a little piece saying, yes, the quarter wasn't quite what we thought it was, but this asset is not broken by any stretch of the imagination, and we have difficulty believing the Mexican tax authorities, after reaching the tax agreement in 2012, will vacate that agreement in its entirety, forcing Primero to pay huge back taxes and a higher future tax rate.

TGR: Barry and Ryan, thank you for your insights.

Barry Allan is vice chair, mining group and senior mining analyst at Mackie Research Capital, and has been with the firm since 1997. He was named to Zack's Investment Research's Top 10 5-Star Analyst list in 2015, ranking No. 1 in North America for precious metals and No. 3 across every sector in North America. Allan has worked in the mining sector for over 30 years, serving as an exploration geologist before becoming a gold and precious metals mining analyst with CIBC, Gordon Capital, BZW and Prudential Bache. He holds Bachelor of Science degree in geology and a Master of Business Administration from Dalhousie University.

Ryan Hanley is a research analyst with Mackie Research Capital, covering the precious metals space, with a focus on junior and intermediate producers, and the mining services space, with a focus on mineral drillers. Hanley joined Mackie in 2010 and prior to becoming a research analyst in March 2012, he spent two years working as a research associate covering the precious metals sector. Hanley holds a Bachelor of Art from McMaster University in Hamilton, Ontario.

Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Gordon Holmes, founder of Streetwise Reports, conducted this interview. He owns, or his family owns, shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of Streetwise Reports: Balmoral Resources Ltd. The companies mentioned in this interview were not involved in any aspect of the interview preparation or post-interview editing so the expert could speak independently about the sector. Streetwise Reports does not accept stock in exchange for its services. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Barry Allan: I own, or my family owns, shares of the following companies mentioned in this interview: None. I personally am, or my family is, paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I determined and had final say over which companies would be included in the interview based on my research, understanding of the sector and interview theme. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
3) Ryan Hanley: I own, or my family owns, shares of the following companies mentioned in this interview: None. I personally am, or my family is, paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I determined and had final say over which companies would be included in the interview based on my research, understanding of the sector and interview theme. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts' statements without their consent.
5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer.
6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.

Streetwise - The Gold Report is Copyright © 2016 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.

Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.

Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.

Participating companies provide the logos used in The Gold Report. These logos are trademarks and are the property of the individual companies.

101 Second St., Suite 110
Petaluma, CA 94952

Tel.: (707) 981-8999
Fax: (707) 773-5020


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in