With the markets attempting to stabilize after the expected Fed rate hike, many are wondering what is next for gold, silver, and the mining shares?
June 15 (King World News) – With the price of gold hovering around $1,250 and silver near $17, many are wondering what is next? Well, as it turns out, the surprise move to rebalance the GDXJ ends this week and it has created an unbelievable opportunity for investors. When asked about the GDXJ rebalancing, Patrick Donnelly, CEO of First Mining Finance, said, “Eric, the bottom line is that the GDXJ rebalancing has created some distortions in the mining sector that favor the opportunistic investor.”…
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The share prices of many high-quality companies have been negatively impacted as a result of the changes in GDXJ, creating opportunity. Donnelly agreed, stating, “If you look at First Mining finance, for example, we are progressing very nicely in terms of unlocking value for our investors through our drill programs and an economic study (that will be a big catalyst) that will soon be released, and we also expect to continue to deliver positive news flow in coming months. And yet the share price of First Mining Finance is trading at nearly a 20% discount to where we did our financing last year. This is an unprecedented opportunity for investors.”
When asked about the GDXJ rebalancing, Ari Sussman, CEO of Continental Gold, said, “It is incorrect to use the word rebalance when referencing the GDXJ plan to reduce their share holding in Continental Gold as well as many other companies. A more appropriate word would be imbalance, as the sheer size of the planned selling has overwhelmed potential buyers in the short-term.” Sussman also stated, “In the wake of the GDXJ rebalancing announcement, Newmont Mining invested $109 million in Continental Gold at C$4.00 per share, yet our shares today trade at a 16% discount to Newmont’s entry price. If one of the best senior mining companies in the world took advantage of the GDXJ related opportunity, I would hope that others would follow suit.”
Brendan Cahill, CEO of Excellon Resources, agreed with Donnelly and Sussman, saying, “The GDXJ rebalancing is an incredibly bullish event for the mid- to long- term. It has created an artificial, short-term bearish market that is set to end this week. These past two months have been a unique opportunity to acquire exceptional names at bargain prices.”
The bottom line is that the consensus view among many leaders in the industry is that the GDXJ rebalancing has created a huge opportunity for savvy investors because they can pick up extremely high-quality companies at fire-sale prices. One thing they all agree on is that the sale will not last, especially since the rebalance is set to end at the close of trading on Friday of this week.
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