Now is the time to find value in the junior mining sector - Radisson Mining director Michael Gentile
(Kitco News) - Weaker gold prices and significant bearish sentiment has weighed heavily on the mining sector; however, according to one market analyst, there has never been a better time for investors to find long-term value.
On the sideline of the Xplor mining conference in Montreal, Quebec, Michael Gentile, director and strategic advisor for Radisson Mining Resources, said that sentiment in the junior mining resource sector is worse than in 2015, when valuations fell to historic lows. However, he added that this is when investors want to jump into the market.
Although gold and silver prices can still move lower, looking at the macro landscape, Gentile said he is confident that the precious metal market is carving out a bottom. He added that the gold market is positioning itself to see significant gains in the next three to five years.
He noted that rising U.S. interest rates, which have driven the U.S. dollar to a 20-year high, are starting to push the global economy to the breaking point as major economies are forced to interview in their domestic currency and bond markets.
"I think the U.K. 's intervention was a major signal to the market," he said. "If we are not close to the end of the Fed 's rate hike cycle, then we can see the end of the tunnel and that is positive for gold and we are starting to see that in the price."
As to what investors should be looking for in the mining sector, Gentile said that he is looking for companies that are well-financed with projects that have the potential to become a mine.
"If you find a company with these attributes, you are positioning yourself to make explosive returns," he said. "When this sector turns, you are not talking about 10% or 20%. You are talking about 400% or 500% moves with some of these companies.
He added that Radisson remains an attractive investment as the company continues to develop its O 'Brien project.
Located in northwestern Quebec 's Abitibi region, the O 'Brien mine produced 1.2 tonnes of gold between 1926 and 1957 and had one of the highest-grade deposits in the prolific jurisdiction.
The company 's goal is to build the resource to one million ounces.
"The combination of scale, high grade and quality infrastructure makes this a very desirable project," he said. "The company is also well financed."