It’s easy to make a case to be bullish on gold. Newly minted U.S. President Joe Biden has made it crystal clear he wants to keep printing money for monetary stimulus for Americans, which will keep pressure on the greenback. The Federal Reserve has continuously reiterated its commitment to quantitative easing and low interest rates, a practice that has been going on for so long it seems like the norm. With Biden taking office on Wednesday, a whole new level of contention has cropped up in Washington, with Republicans arguing against a spate of executive orders and usage of another $1.9 trillion in proposed stimulus.
Market participants don’t like uncertainty and if any part of the goldilocks scenarios go awry, there could be a flocking to safe haven assets like gold. The strongest gold influences are supply, inflation and stock market fear/uncertainty. It’s a finite resource, so when investors look to hedge inflation and panic away from stocks, supply soars. That is exactly the landscape gold bugs are facing today.
Given the fact that none of the aforementioned is going to change any time soon, it shouldn’t be a big surprise that Moody’s Investor Service just raised its price sensitivity range for gold to $1,200-$1,500 per ounce from $1,100-$1,400. Moody’s uses this range in evaluating credit quality and risk for producers.
The market bullishness is translating to the stock of Monterey Minerals Inc. (CSE:MREY), which has climbed from a low of 2.5 cents to a two-month high at four cents in the last two weeks. Investors are looking forward to complete drill results from a recently completed 10-hole, 2,074-metre diamond drill program at Monterey’s 100%-owned Alicia high-grade gold and base metal project in the Philippines.
Exploration to date indicates that Alicia is a large epithermal vein system with juxtaposing copper porphyry mineralization, a phenomenon in geology circles known as "telescoping." High-grade gold abounds the property, including samples of up to 1299 g/t gold (41 oz/ton) with 332 g/t silver (10 oz/ton). So far, 11 veins have been discovered, with all remaining open along strike and depth.
The 11th vein (dubbed "Toto") was discovered during the recent drill program, a fortuitous event that speaks to the opportunity at Alicia. Overseeing the exploration work is Bill Phillips, Monterey’s in-country technical advisor. Phillips has a sixth sense for finding gold, previously heading operations at Medusa Mining (ASX:MML) and developing a whopping 17 mines over the course of his 35-year career.
The drill program centered on three veins and, at first blush, it looks like the program was a great success. Preliminary geological interpretations of the drilling results confirmed the targeted epithermal style vein structures were intersected in all 10 holes.
MREY management is culling data from previously completed magnetic surveys at Alicia and intends to examine historic and recent cores to better understand the full scope of the deposit and all its near-surface veins. Upcoming work will include more drilling and potentially IP surveys.
With gold prices expected to moderate in the area of $1,800 per ounce, or even swell to $3,000 an ounce according to Bank of America, the timing is perfect for Monterey to be proving the resources at Alicia, as Phillips looks to be potentially adding yet another success story to his resume.
