Muzhu Mining Ltd. (CSE: MUZU)
Creating lasting wealth by developing gold and silver properties with near-term mining potential
Junior mining companies and their stocks are on track for a recovery in 2024 after seeing setbacks in 2023, said Willem Middelkoop, founder of the Commodity Discovery Fund, on the sidelines of the Vancouver Resource Investment Conference (VRIC).
He noted that there is now a huge disconnect between gold-related stocks and the price of gold, with stocks undervalued to an unprecedented degree, which is typical at the end of a bear market.
The Commodity Discovery Fund focuses on junior companies discovering potentially great value, and Middelkoop says that in a tough market environment, companies that are focusing on the top 100 resource discoveries globally have a very good chance of being acquired by a major company. This is the best exit strategy for junior mining companies.
He emphasised that the price of gold is now near all-time highs, but the stock prices of many miners are still at multi-year lows. On the TSX Venture Exchange, there are companies whose stock prices jump or even double in a week, sometimes driven by exploration and drilling results, sometimes for no reason.
Middelkoop says he’s not surprised by this, because once the market understands that gold is in a new bull market, junior mining stocks will rally very strongly. He thinks the price of gold will definitely hit $2,100 an ounce at some point this year.
He points out that central banks around the world are struggling to cope with unprecedented losses on their bond holdings, accumulated during the period of quantitative easing following the 2008 financial crisis, totalling hundreds of billions of dollars and stretching banks’ balance sheets.
The trend for central banks to accumulate gold continues unabated in momentum into 2024. China and Russia have sharply reduced their holdings of U.S. Treasuries, highlighting gold as a safer reserve asset under Western sanctions. At the same time, emerging economies such as Brazil, India and South Africa have also seen this hoarding of gold. Gold’s role in the global financial landscape should be further consolidated.
Not just gold, Middelkoop is also bullish on battery metals such as silver, uranium and lithium.
