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A Dovish Federal Reserve Creates Buy Point For Gold And Silver Mining Stocks – Mike Swanson (08/30/2021)

In July we saw a hard correction for mining stocks begin. The commodity complex as a whole lost momentum in June after putting on a huge rally for over six months. But, as I wrote last week, across the board various commodities have firmed up and are now turning up. In that post I mentioned XOM and WPM as two stocks in good buying positions and both have rallied.

In my view, now is the time to consider buying gold and silver mining stocks. On Friday, Jerome Powell gave a dovish speech at the Jackson Hole meeting in which he once again denied that inflation is going to be a problem. He also said that he plans on reducing the Fed’s massive QE bond buying program by the end of the year, but will do it so slowly that no one will notice it and he cannot predict when he will be able to raise interest rates. The reality is that half of the QE bond buying program probably will never go away, because it’s being used to finance the government deficit through the purchase of Treasury bonds, while the other half is not necessary at all, as its being used to buy mortgage securities. There is no need for this when real estate prices have been rocking up like its 2005 all over again.

Stocks rallied on this talk and so did the price of gold and silver. Many mining stocks have firmed up and look like they are positioned to follow gold back up. Take a look, for instance, at shares of gold miner Kirkland Lake.

Notice how the KL/GDX relative strength ratio has been trending up since April. This shows us that KL has been outperforming the GDX gold stock ETF during a time in which gold went into a correction. I have a position in KL and one could buy shares of it and put a stop loss under $38.00 for it and have a nice entry point right here. The best mining stocks to buy are ones in which this ratio has trended up or gone sideways in the past few months and KL is doing just that.

So are shares of Norseman Silver, which trades as NOC on the TSXV and NOCSF on the US OTC.

Norseman Silver has been my top small cap stock pick for August and it successfully weathered the storm of the final wave down this month in silver and gold and mining stocks in general by holding up like a rock. That’s why its relative strength ratio has also trended up.

Norseman is trading with a market cap of roughly $13 million USD. Most small cap mining stocks are now trading with market caps over $20 million USD and in past bull cycles just about all small caps gold and silver stocks get to market caps over $25 million.

In other words, this stock is cheaper than most stocks in its sector and is trading with great relative strength.

The company is also planning to launch an accelerated drill program, which should bring it positive news flow.

Norseman’s property portfolio includes the Cariboo, Silver Vista and Silver Switchback projects, all based in mining friendly British Columbia. In March the company also issued a LOI “with the Bussandri-McMillan partnership (the “Optionors”) to acquire a 100% interest in the Taquetren Silver Project (the “Project”), which is located in the Rio Negro province of Southern Argentina. The Optionors have agreed to work exclusively with Norseman.”

This project, Norseman explained in a press release, “covers approximately 285 square kilometers (110 square miles) and is located the within the Somun Cura Massif. The geologic setting of the Project is calc-alkaline, bimodal Jurassic Taquetren Formation volcanic rocks, within the Gastre fault zone. The Gastre fault system is a transcontinental shear zone, which extends from the Andean Cordillera to the Atlantic coast resulting in a series of half grabens and tectonic basins and associated faulting. Work to date has suggested favourable hydrothermal alteration. However, the Company wishes to note that the Project is an early-stage exploration property.”

Sean Hurd, President and CEO for Norseman, commented: “We are very excited to potentially enter one of the most under-explored mining districts in Argentina. The region contains significant discoveries, Patagonia Gold’s Calcatreau (Gold-Silver Deposit) and Pan American’s Navidad (one of the worlds largest undeveloped silver deposits) with a resource in excess of half a billion ounces of silver. Our team and our new partners have extensive experience in Argentina, and in the Rio Negro province in particular. Our entry into Argentina could be a significant move forward as we seek to expand Norseman’s commitment to becoming a premier silver exploration company.”

Last month Norseman announced a private placement raise of up to $1.5 million to augment its existing $1 million in cash on its balance sheet and to fund a drill program on its B.C. properties and advance its Argentina project, which being new for the company, has the potential to really get people’s notice.

“- Located in the Navidad-Calcatreau Mining District, Argentina”

  • – “An under explored district hosting one of the largest silver deposits in the world”
  • – “In the SW of Rio Negro Province ~30 km N of the border with Chubut Province”
  • – “Comprised by 3 cateos (Prospecting Licences) selected to cover key stratigraphic and structural elements associated with the newly-discovered Navidad-Calcatreau mining district.”

“- Argentinian team includes first-hand participation in the discovery of the Navidad Silver Deposit (M&I: 632M Oz Ag contained in 155.2 Mt @ 127 g/t Ag, 0.85% Pb, 0.05% Cu, 150 g/t AgEq)- Permits have been obtained to conduct initial geological, prospecting and geochemical sampling with work is commencing May 2021- Accessed by high quality and well maintained paved and gravel roads.”

You can find the full corporate presentation for Norseman here in PDF form.

Norseman also announced that it just completed surface drilling for its Switchback property and last week issued a press release announcing that its drill program for its Silver Vista property has begun: “The 1,500 m. drill program aims to define the strike length and down-dip extensions of the already-identified Silver-Copper mineralization at Silver Vista. The current drill layout will define at least 500 metres in length and approximately 250 metres of extent along dip of the mineralized targets. Mineralization is typically characterized by pervasive carbonate alteration with attendant Silver and Copper sulfide mineralization within a sandstone host rock. Mineralization trends remain open in all directions.”

So, Norseman is in an interesting key moment for the life cycle of a small cap mining stock. This could be the reason why its shares have been displaying powerful relative strength and are now in position.



Disclosure: Mike Swanson owns shares of Norseman Silver.  Because it is a small cap stock with a market cap of less than $100 million USD he has put himself in a trading blackout on Norseman Silver and will not buy or sell a share of its stock for at least 30-days from the date of this post (08/03/2021). Wallstreetwindow.com, is owned by Timingwallstreet, Inc., which is being compensated by a third party (Leadgopher LLC DBA Pinnacle Ad Network) to conduct an investor awareness advertising and marketing campaign for Norseman Silver. This third party paid Timingwallstreet Inc., $13,000 USD to produce and disseminate this and other similar articles and send traffic to them through paid advertising campaigns for 30-days from the date of this post (8/03/2021). This compensation should be viewed as a major conflict with our ability to be unbiased, more specifically: This communication is for entertainment purposes only. Never invest purely based on our communication. For more on trading risks read our policy statement by clicking here.