Major Accumulation In Junior Miners In 2014 [Market Vectors Junior Gold Miners ETF, SPDR Gold Trust (ETF)]

1)Increased M&A in the gold mining space and equity investments in junior miners should tell you where the smart money is headed.  Take a look at the recent Osisko deal where Yamana outbid Goldcorp for their Quebec mine as a recent example and a straw in the wind.  Look at Gold Resource Corp (GORO) and Hecla’s (HL) increased investments in the junior space.

2)Gold and silver are trading way below their three year trailing averages which indicates that the price is way oversold and a major bounce is likely.  Furthermore, gold is priced below production putting strain on future supply as miners mothball marginal projects.

3)The equity markets are too high reaching extreme overbought and speculative levels similar to 2007 before the crash.  A correction in equities sparked by fears of deflation could spark the return to gold and silver as a safe haven as Central Banks may continue to push negative interest rate policies similar to what the ECB recently announced.

4)Gold and silver have been basing for three+ years and the junior miners have been in arguably a seven year bear market reaching historic oversold levels.

5)Watch geopolitics especially the Ukrainian-Russian and the Middle East situation in Iraq, Libya, Syria, Iran and Turkey. If tensions escalate it could send metals, commodity and oil prices soaring.  Do not be surprised to see further chaos and increased violence as the U.S. pulls its troops out of the region.

One of our long term junior gold mining favorites since 2011, Corvus Gold (KOR.TO) came out with very positive news that they extended the high grade veins at their Yellowjacket Deposit at North Bullfrog and actually may have a new vein discovery.  The drilling may be suggesting that their are additional veins around Yellowjacket.  The first 5,000 meter program will focus on Yellowjacket and then the second 15,000 meter program will explore district wide for additional vein systems.  In addition, Corvus announced positive results of metallurgical studies using gravity which could increase recovery and reduce processing costs.

Figure 1: Corvus land position at North Bullfrog with estimated resource areas shown.

Corvus owns 100% of North Bullfrog which covers 68 square km in Southern Nevada, approximately 90 minutes from Las Vegas.  It is a huge property and there is the potential for additional discoveries.

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