The traditional safe havens gold and silver continue their bullish run. Gold is up almost 30%, while silver is up more than 50% from the start of 2020. With global economic growth expected to remain subdued ahead of the second wave of COVID-19 infections, precious metals could continue to trade strong for the next few quarters.
This week saw a correction in gold prices as the US Dollar recovered some of its losses. Some analysts view this as an indication for a period of consolidation within a mega bull trend. Gold prices have retraced 8.5% from their all-time-high seen in early August, after rising more than 40% from their March lows. The macro-environment (ultra-low interest rates and QE) remains accommodative to precious metal prices, albeit a short-term pullback is underway.
Silver prices, on the other hand, fell a third day as the 20-Day SMA crossed below the 50-Day SMA. Although silver prices have retraced 24% from recent peak (US$ 29.8), it still appears to be a reasonable pullback after gaining more than 160% from the March low.
With both gold and silver prices continuing to hover near all-time highs, Canadian junior gold mining companies are finding more opportunities for funding than before. Junior miners raised a total of $1.48 billion in August according to BMO Capital Markets, making August 2020 the biggest month for gold and silver mining funding in more than six years.
Naturally, investors are looking to capitalize on the ongoing run by throwing money at gold explorers and silver producers with prime mining assets that are set up for big returns. This past month was packed with examples of junior and intermediate receiving non-brokered private placements and bought-deal financings. Blackrock Gold Corp. (TSX-V: BRC) (OTCQB: BKRRF), PureGold Mining Inc. (TSX-V: PGM), Orefinders Resources Inc, (TSX-V: ORX), StrikePoint Gold Inc. (TSX-V: SKP), and First Mining Gold Corp. (TSX: FF) all saw major investments heading their way.
In August, junior mining company PureGold Mining Inc. (TSXV:PGM) announced that major mining company AngloGold Ashanti had increased its shareholding in Puregold to 16%. AngloGold Ashanti exercised 5,036,250 share purchase warrants at a strike price of $0.85 per share for a total investment of C$5.0 million.
Orefinders Resources Inc. (TSXV:ORX) entered into a private placement agreement with Echelon Wealth Partners Inc. Under the agreement, Echelon Wealth Partners will receive C$2,000,000 worth of gold shares in Orefinders. Echelon has also received an option to purchase up to an additional 15% of units and flow-through units.
StrikePoint Gold Inc. (TSXV:SKP) (OTCQB:STKXF) announced this month that it has increased the size of its previously announced non-brokered private placement to C$3,000,000 through the sale of 20,000,000 Units at a price of $0.15 per unit. The offering includes a lead order by Crescat Capital.
As other markets are struggling amid economic uncertainty, gold and silver stocks of junior miners are showing signs of recovery and even growth. This is generating new funding opportunity for companies with prime precious metals assets.