Several key factors such as geopolitical tensions, a declining US dollar and interest rate hikes from the US Federal Reserve have all impacted gold in the past year.
To learn more about what companies see coming in 2018, the Investing News Network reached out to executives and CEOs in the space.
Douglas MacQuarrie, president and CEO of Asante Gold (TSXV:ASE); Dave Beling, president and CEO at Bullfrog Gold (OTCMKTS:BFGC); Alex Klenman, chairman and COO of Nexus Gold (TSXV:NXS); Frank Basa, president and CEO at Granada Gold Mine (TSXV:GGM); and Alex Ball, executive vice president, finance and corporate development, at Algold Resources (TSXV:ALG), provided insight.
Gold trends 2017: Price up less than expected
This time last year, analysts and companies were predicting a strong year for gold. Despite the well-known volatility in the gold market, many market participants were expecting prices to climb above $1,300 per ounce and move in an upward trend.
At the beginning of 2017, Nexus’ Klenman expected a stronger showing in the price of gold in 2017. “The gold price was never really able to sustain a higher price, and traditional geopolitical catalysts seem to have much less effect than in the past,” he commented.
Asante’s MacQuarrie said he estimated that the gold price would reach $1,300 this year, with the market being stronger, but investors seemed to be more interested in speculation and not safety. He mentioned the DOW (INDEXDJX:.DJI), NASDAQ Composite (INDEXNASDAQ:.IXIC), bitcoin and cannabis as some of the investments that people turned to this year.
“When [these stocks] fail, which they must, volatility will come back to the market and gold will move up to its next level, which could be $1,450,” he added.
For his part, Bullfrog’s Beling said he also expected the gold price to remain above $1,300 and continue upward, something that didn’t quite happen this year. He also noted that “funding remains difficult for most gold projects.”
Similarly, Algold’s Ball said that the most challenging aspect of the resource sector in 2017 has been the lack of liquidity for junior miners, which “was sucked up by ETFs and blockchain.”
Gold forecast 2018: Price set for a strong year
Looking at what’s ahead for gold, Nexus’ Klenman believes 2018 could be “a very strong year for gold and subsequently for gold stocks.” Similarly, Granada Gold’s Basa expects an excellent market for precious metals. “The US will lose position in the world, [and] as this happens the value of gold will go up because it is a secure investment,” he said.
Algold’s Ball said gold is trading below any normal distribution, and the secular trend remains favorable. “The market needs liquidity, which comes with results, a discovery or mergers and acquisitions,” he noted, explaining that investors will react to a new world-class discovery and positive results.
Asante’s Macquarrie believes major markets are overvalued, while bitcoin and cannabis stocks are in a bubble. A correction, which will happen eventually, will drive investment to gold as a safe-haven asset.
“We feel investors should seek safety now and have at least a 20-percent weighting in gold bullion and gold equities, with one-quarter of that in the best junior explorers, which will be highly leveraged to good news in a rising gold price,” he added.
Meanwhile, Bullfrog’s Beling suggested investors who are new to the market to research investments for potential upsides and downsides. “[Investors should] give serious thought to those that are undervalued, not those that have peaked or are overvalued,” he added.
Gold forecast 2018: What’s ahead for companies
The execs also took the time to share their highlights from 2017 and outline what catalysts to look forward in the year ahead.
In 2017, Algold delivered a NI 43-101 compliant resource for its Tijirit project and received a 30-year mining lease. In addition, the company financed a drill program for high-grade targets.
Next year, Algold is expecting to deliver an updated high-grade resource and will drill at the Salma granite contact zone. It will also introduce a strategic player to derisk and further validate its asset.
The most significant development for Granada Gold in 2017 was the agreement between the company and Castle Silver Resources (TSXV:CSR) for the construction of a 600-tonne-per-day mill at the Castle property, which will process Granada Gold’s ore. In addition, the company met its 5-million-ounce target at the Granada property in 2017.
Looking ahead, the company has just obtained permits for exploration drilling at the former Aukeko mine site on its property, where a “treasure chest of gold” has been defined historically. “A bulk sample from Aukeko in 1938 averaged 7 ounces of gold per ton (equivalent to 239.9 g/t gold), so we’re very excited about being able to drill at that location,” Basa added.
For his part, Klenman said Nexus Gold had a discovery at one early stage project this year, with the company currently conducting its fifth drill program in the last 12 months. “We will continue to work our properties and provide investors with opportunity for returns,” he said.
In 2017, Bullfrog completed an independent NI 43-101 technical report for its Bullfrog Gold project. Next year, the company is looking to drill and acquire more land.
Lastly, Asante Gold continued exploration at its Keyhole project in Ghana. The company will continue to source funding for its Kubi gold development and is also looking for high-quality acquisitions.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Algold Resources, Asante Gold, Bullfrog Gold, Castle Silver Resources, Nexus Gold and Granada Gold Mine are clients of the Investing News Network. This article is not paid-for content.
The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.