Weekly Watchlist - Precious Metal Sector

The stocks remain extremely cheap and many haven't moved or have pulled back from previous breakouts.

Both Gold and Silver have been on a tear, Gold had it’s all time high weekly close and Silver had it’s highest weekly close in over a decade. Both assets have been outperforming the S&P 500 since the beginning of April. In saying all of this the stocks haven’t really performed as one would expect, there has been some nice moves but that has been more of an exception than the norm.

The stock market has been in a sharp correction this week and technically looks like it is breaking down. I do think it’s possible we see a type of 2001 market, where after a massive melt up the general markets correct very sharply, while the commodities sector enters into a bull cycle.

There has been recent strength in many commodities, copper, tin, oil, precious metals, etc.. I don’t see the big capital flows going into the related stocks yet though. This could be the start of a big trend change that many have been predicting for a few years.

Ultimately for gold and silver stocks, if the metals can continue to trend higher and outperform other asset classes, the capital is going to start to flow into the stocks and when that begins, people will start to chase the trend higher as is always the case.

Here is a some stocks that remain on my watchlist that I think are still extremely undervalued and near cyclical bottoms.

Signal Gold - Market Cap $27 Million Canadian

Signal Gold went from $1.06 in 2021 all the way down to .07 cents where it recently bottomed. The stock recently had a breakout where massive volume came in and it doubled in a week. Since then it has had a pullback and is worth watching.

The company has the Goldboro Project in Nova Scotia and it is past the Feasibility Study already, it’s at a low point of the lassonde curve but when the sector starts moving I expect it to re-rate to a much higher level.

At $2200 Gold the company has an after-tax NPV 5% of over $442 million and an after-tax IRR of 31.7%, the Capex numbers look reasonable and I think it’s a really solid project with room for expansion and improved economics. The company will produce over 100k ounces annually for over a decade.

The company expects to receive key permits in 2024 and already has its environmental approval which is always a big hurdle. This is the type of a stock that can really reward investors during a 2020 type of gold bull market in the stocks.

Southern Silver - Market Cap $56 Million Canadian

I have highlighted this stock multiple times on my substack, and I have been adding shares over the last few months and have a very large position in the name. Southern Silver has been around for a couple cycles and has a proven history of running very fast when the precious metal sector breaks out.

Last time Silver was this price, Southern Silver was 3 times the price of the current level of .195 cents. This was in 2021. The stock actually recently broke out on the weekly chart but has pulled back to the breakout level for now. Southern Silver has one of the largest resources out there at a very good grade.

The companies economics at $28 silver are really compelling and I think it’s likely silver trades much higher this cycle as we are in the very early innings right now. The company is in the process of updating it’s PEA which should be out anytime now. But at $25 Silver we are looking at an After-tax NPV5% of $728 Million Canadian. The stock is trading at a massive discount right now.

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