(Kitco News) - The gold price rally has only just begun to impact the valuations of the miners, and the juniors have enormous upside potential, according to Michael Gentile, co-founder of Bastion Asset Management.
Gentile sat down with Kitco Mining at Xplor 2024 in Montreal. He said that after the precious metal’s massive price gains, the next stage of the rally will be the mining equities.
“We've seen a powerful movement in terms of the gold price, going up $1,000 an ounce,” Gentile said. “But the sentiment for juniors remains pretty subdued still, which to me is an amazing opportunity. We're starting to see all the right signs that would indicate that this rally is going to broaden out.”
“The seniors are starting to rally, the mid-cap producers are starting to rally, the single-asset producers are starting to rally,” he added. “And most importantly for the junior sector is the development assets, like the Skeena Resources of the world, are starting to rally as well. So the last stage of the rally is that broader retail participation and the participation from the juniors.”
Gentile said the junior miners are still trading at very depressed levels.
“I don't get the sense, having followed the commodities for 25 years, that we're in the euphoria stage,” he said. “I've never seen a commodity making new all-time highs like gold is now and the level of apathy is still very high among institutional investors. Many of these stocks are still below their old highs from COVID. Generalist interest is very low. Financings are still very subdued. So we're not at that stage where it's party time and everyone's talking about it, [which is] typically the end of the cycle.”
Gentile marveled that the valuations of gold stocks versus the S&P 500, which are near 70-year lows. “If you look at gold on an absolute basis, equities, what they're pricing in, and relative to the market, we're still starting from extremely low levels.”
“Last year I was really bullish on gold,” he added. “This year, I'm really bullish on the equities starting to outperform gold for the first time in many years. I think there's a real opportunity for the equities to start leading versus the gold price.”
Coverage of Xplor 2024 was sponsored by Radisson Mining Resources.
Subscribe on Apple Podcasts, Amazon Music and Spotify. You can also add the RSS link to your favorite podcast player: LINK
