Weekly Watchlist - Gold stocks set up for success

As far as commodity related stocks, no sector looks better right now than the precious metals. The general sector hasn't broken out yet but certain stocks are performing right now.

There has been alot of frustration amongst precious metals investors about the lack of performance in the mining stocks, as the price of the gold launches to new all time highs. One reason why the big sector breakout hasn’t occurred up to this point, is the fact that the gold itself is still underperforming the general stock market. I track gold versus the S&P 500 and it’s actually been breaking down further even though gold has been rising due to the strength in stocks.

During the last previous bull markets in the mining stocks, gold broke out against the general market. This happened in 2020, 2018, 2016, 2011 etc.. There’s many ways this can occur, but this is what needs to happen for the big sector breakout to occur that lifts all names.

There still has been certain stocks within the sector that have started to outperform though, and the best have begun to rose. I want to share a couple stocks that are set up for breakouts that are on my watchlist.

Rio2 Gold - $97 Million Canadian

As you can see Rio was trading around .70-.80 cents in 2022, then it fell off a cliff. This was caused by the Environmental Assessment of the project getting rejected. The company worked through this and at the end of 2023 they finally received approvals. Yet the company is still trading at a large discount to the 2022 level.

The price action has been really bullish over the last few months as it tightly consolidates. I believe alot of people are on the sidelines right now and will jump in when the company finalizes financing to build the mine. Once this occurs I believe the stock will breakout very quickly.

They want to be in production by late 2025, and the company is due for a big producer re-rate as it goes through mine construction phase of the lassonde curve and leaves the orphan period shown below.

Golconda Gold - $20 Million Canadian

The company was over $1.70 in 2021 and is finally showing some signs of life as it breaks out of a long base. Golconda is currently a tiny producer based out of South Africa that is currently on the upswing and attempting to grow production. The company has already upgraded their mill from 15,000tpm up to 50,000tpm.

The company recently raised some money through the sale of a royalty, they will use this cash to expand production to around 3k ounces per month, this is over double from the current production levels. Ultimately they want to produce around 5k ounces per month. They also believe they can expand the resource to over 4 million ounces.

Q4 earnings are set to be released in a few weeks, it will be interesting to get another update from the company. With the current market cap, this is a very interesting story to watch.

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