Ron Struthers Ron Struthers of Struthers' Resource Stock Report discusses the gold bull market and one company that he believes investors should take a look at.

Bear and Bull

The World Gold Council issued its mid-year outlook last week and trends are very bullish. It states the central banks across the globe have signaled a more accommodating stance, bringing bond yields to multi-year lows—and in some countries all time lows. Central banks continue as big buyers in the market, accumulating approximately 247 tonnes though May. Gold-backed ETFs captured US$5 billion or 108 tonnes year to date, led by European funds.

Global monetary policy has shifted 180 degrees and will continue to be a driving force toward higher gold prices and gold equities. Gold and gold stocks have technically been in a bull market since the bottom in late 2015. From the $1050 bottom in gold, late 2015, prices ran up to $1360 in about 6 months to July 2016.

That is a 30% rise, easily qualifying as a bull market, which is defined as a 20% rise. At the recent high of $1441, the price is up 37% from that low and up 22% from the $1180 low in 2018. No matter how you slice and dice it, gold has started a new bull market.

All bull markets start with skepticism and disbelief. Many use the GDXJ (VanEck Vectors Junior Gold Miners ETF) to gold price ratio as a measurement and I believe it is an accurate indicator of sentiment with gold stocks. Today's reading at 0.27 is not much above the 0.20 bottom in 2015 and has not responded much at all to the recent rally in gold.

The HUI (NYSE ARCA Gold Bugs Index) around 200 has just made fresh highs in this rally. It is up 34% since the 150 low in May and up 87% from the 2015 low. However, as sentiment above shows, there is little belief in this rally so far.

The HUI consists of more senior gold producers and this index leads the junior explorers. The index has cleared the first resistance and a little further and it will breach the second resistance level. This is about the level that sentiment will start to improve and the junior explorers start moving. The juniors can move several 100% in just a small move on the HUI, as we witnessed in 2016. This is setting up to happen again. Now is perfect timing to buy quality junior explorers, the ones that will appreciate the most.

I have come across another exceptional junior explorer and now is perfect timing to get a position in this stock. It has an excellent property in Nevada that has not seen a targeted drill program since 2002, despite multiple high-grade intercepts. Back then, we were at the depths of the gold bear market when gold had dropped under $300 per ounce. Initial drilling by Placer Dome, a senior company since bought out by Barrick and Teck Cominco, hit some high grade intersects.

Old subscribers will remember the fortunes we made with Franco Nevada and Euro Nevada back in the 1990s as penny stocks. I mean buying at $1 to $3, which was considered a gold penny stock in those days.

What first drove the early success of Franco Nevada was the famous Ken Snyder Mine that is still in production today as the Midas Mine. Blackrock Gold Corp.'s (BRC:TSX.V) property is near Midas with the same kind of structures, but has seen little exploration since 2002. It has the potential to be a company maker just like the Midas.

Blackrock Gold TSXV:BRC OTC:BKRRF Recent Price - $0.12

52 week trading range $0.03 to $0.125

Shares outstanding 49 million approx. Fully diluted 66.1 million

Highlights

new management recently took control of company

strong insider buying

low-sulphidation epithermal gold & silver property on prolific Nevada gold belt

little exploration since 2002

no follow up work despite high grade drill intercepts (157 g/t over 1.5m)

financing completed and exploration programs underway

first targeted drill program to commence by Fall to follow up high grade intercepts by Teck and Placer

Financial

Last financials at end of April reveal little cash of $17,880 and no long-term debt. Since then a $600,000 private placement was completed at 10 cents per unit which included 1/2 warrant, priced at 16 cents, good until June 17, 2022. CEO Andrew Pollard participated for 1 million units.

This funding will be ample for BRC's current exploration program and some shallow drill holes. I suspect BRC will complete another financing at higher prices before or during the start of a drill program. This would enable it to continue drilling upon a discovery. I do not expect that BRC will have any trouble raising more funds with this strong management group and property.

Summary

The new management group that took control of Blackrock is quite impressive. One of the first things it did was cancel a 5 cent financing to do it at a higher price of 10 cents. Very rare to see this, especially in recent markets. Insiders could have lined their pockets at 5 cents but instead bought shares in the market.

Management and insiders have been gobbling up stock since mid-May up to current prices, as you can see with insider trading filings here. They are walking their talk.

The Silver Cloud property is in a prestige location. It is quite amazing that it has seen little exploration in almost 20 years given its location and very excellent early results by majors Placer Dome and Teck. This makes it a unique opportunity we can take advantage of.

BRC's recent ground geochemical and geophysical work confirms east/west vein trends. Both Placer and Tech were drilling based on north/south. Bill Howald did the work for Placer and he is now convinced the structures are east-west and they drilled the wrong way. If this is correct, a big discovery can be made. Regardless, I think the stock will run on the speculation.

A comment by executive chairman Bill Howald in a recent news release provides a nice summary of the project potential. Bold highlighting is my doing. "The newly identified vein gives the company a third meaningful target to explore. The three targets include the Silver Cloud mercury mine, the Jackson and Surprise mercury occurrence, and the newly discovered banded vein. In all these areas, the target is a high-grade gold and silver vein system with widths similar to the Midas mine (one metre to 2.7 metres width) and gold grades comparable to the nearby Hollister mine (plus 15 g/t gold and plus 80 g/t silver). The company is preparing the east-west-trending Silver Cloud mine/Northwest Canyon vein system for a drill campaign and has started the permitting process. The addition of the West Silver Cloud property provides additional strike potential to the west of Northwest Canyon. As I have stated before, the Silver Cloud project is an excellent under explored asset located in an extraordinarily productive part of north-central Nevada along the Northern Nevada rift."

On the chart below we can see that a new uptrend has begun. The stock has crossed the 200 day MA and that average has turned up. A golden cross has just occurred where the 100 day MA crossed above the 200 day MA. A very bullish and reliable indicator. The volume of the last three months is the highest in the stock's history and the OBV (on balance volume) indicator confirms heavy accumulation in the stock. The first break away gap higher ended at 12.5 cents and the recent consolidation since that high provides an excellent buying level ahead of the next move higher. The 9 to 10 cent level is the new support level.

Ron Struthers founded Struthers' Resource Stock Report 23 years ago. The report covers senior and junior companies with ample trading liquidity. He started his Millennium Index of dividend stocks in 2003 - $1,000 invested then was worth over $4,000 end of 2014 and the index returned 26.8% in 2016. He retired from IBM after 30 years in customer service, systems and business analyst, also developing his own charting software. He has expertise in junior start-ups and was a co-founder of Paramount Gold and Silver.