Hunting for Gold in 'Elephant Country'

On Friday, the market got shellacked. But you know what went up? Gold miners, explorers and developers. And I think we’re approaching blast-off for the next big rally.

Fundamentally, you can see why miners rallied. This sector has been fed through the woodchipper. The better names in gold and silver had all the stuffing shredded out of them, along with the also-rans. There are great stocks that are value plays now. They just need the price of gold itself to start shining. 

And that brings us to the second reason for the rally. Psychology. Psychology on the broader stock market — and the U.S. dollar — seems to be turning negative. At least in the shorter term. And when investors are nervous, they flee for safety. Gold is historically a safe harbor.

I’m not saying we’re at a sustained rally in gold and miners yet. We’ll only see the bottom in the rearview mirror. But this is the time, right now, to start making your shopping list for bottom fishing.

And if you’re looking at explorers, you might consider NuLegacy Gold (TSX-V: NUG) (OTCQX: NULGF).

NuLegacy is tiny. It has a market cap of just US$38.7 million. It’s an early-stage explorer that’s busy at work in the Battle-Mountain Eureka Trend, a geological smorgasbord of gold deposits in Nevada.

This part of Nevada is called “elephant country,” because it’s where you find big deposits. NuLegacy’s neighbors include the Cortez Hills Mine, the Pipeline Mine and the Goldrush project, which is about to start production.

Related story: Nevada’s New Gold Rush

These are big, multimillion-ounce projects. Could NuLegacy do the same kind of thing? Well …

  • It is in the right neighborhood. And it is finding gold.
  • Former Barrick Gold executives have joined its board.
  • Two larger gold companies have taken positions in NuLegacy. OceanaGold (OTCF Pink: OCANF) own 16.2% of the company. Barrick Gold (NYSE: ABX) owns 10.9% of the company.

There’s nothing certain about this exploration program. But I think NuLegacy’s odds are higher than average.

I went to the BMO Mining Conference in Hollywood, Fla., recently. There, I interviewed NuLegacy’s CEO, James Anderson. You can watch that video here:

Direct link:

Watch the video. I have some maps in there that might catch your attention. And do your own homework. See what you think. Note: I don’t own this stock now, but I may trade NuLegacy in my own portfolio.

The company is doing 40,000 feet (12,000 meters) of drilling this summer. Previous drilling expanded and connected existing gold-bearing zones, and found new zones.

Good results could light a fire under the share price. Especially if gold is heading higher.

I think this summer’s drill results could be very interesting. And that could make this little-known gold explorer shine.

All the best,
Sean Brodrick

About the Editor

Supercycles aren't daily occurrences. They happen in stages and can last for years. Sean Brodrick identifies them early and mines for the most financially sound stocks within them. And he taps into the powerful Weiss Ratings to help him do it.

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