Ecuador's Upcoming Gold Rush

|
Includes: ADVZF, AGPPY, AUIAF, BHP, DDEJF, FSUMF, FTMNF, ILNLF, LKMNF, LUMIF, NCMGF, NGLOY, SLGGF
by: Roland Rick Perry
Summary

Asset Rich OPEC Nation Ecuador Opens to Mining.

Recently Elected President Lenin Morena Establishes Mining Ministry and Repeals 70% Windfall Tax.

Seeks to Establish Goal to Attract $3.7 Billion in Mining Investments and Add $826 Million to Tax Coffers in Next Two Years.

Ecuador is the World's Last Unexploited Location to Find Tier 1 Discovery.

Could Make the California Gold Rush (1848) Look Like Child's Play.

Bonafide Gold Rush in Ecuador as the World’s Biggest Miners Race to Stake Claims in the Largest Land Grab in Gold Mining History.

Lundin Gold

The next big “Gold Rush” could actually be coming from, get this - Gold!

Investors in the past five years enjoyed gold rushes in both Bitcoin ($1,000 to $20,000) and in Cannabis stocks with dozens of companies gaining 10-fold, and now sporting billion-dollar valuations with a surprising lack of revenues to support future valuations.

In addition, the rise in price of publicly traded Canadian Cannabis stocks has created something of a vortex in the price of Canadian gold shares – which we believe is nearing an end – meaning the shares of many publicly traded miners can be scooped today up at true bargain prices.

Is Gold Next?

While being ‘bargain priced’ isn’t itself a good enough reason to invest while an entire sector is meandering, we see changes in the sector, big changes that are afoot. Changes in the current price trend of Gold (our technical analyst are targeting $3,000 Gold in three years and $10,000 Gold in ten years) and in changes in how the Ecuadorian government has now opened its arms to the gold mining industry.

If you missed the Bitcoin craze and missed the Tilray (TLRY:US) craze from $1.40 to $50, don’t feel bad, so did a lot of other investors. But don’t make the same mistake of missing the upcoming gold rush, into both gold and Ecuadorian gold. Which begs the question, are we certain Gold will enter the ‘rush-mode?’ Of course not.

We are however recommending an ‘all-in’ (20% of a diversified portfolio) stake just in case. With trade wars sitting in the back seat of our car, a $1.6 trillion student debt driving and a $21 trillion national debt in the passenger seat telling the student how to drive – it only makes sense. We are traveling with a dangerous crew these days! We all know that. If you wouldn’t let your daughter in that car like that, why would you subject yourself to that kind of risk?

Investing in this bargain-priced sector is in our opinion a common-sense decision. A decision bolstered by the fact that a rush into gold itself has already begun this year, and this time with four well-known billionaires in for the ride (see below). In addition, with an unprecedented change in government mining regulations in Ecuador, investors can potentially take advantage of a double gold rush.

A close up of a map Description automatically generated

A Double Gold Rush. Why Gold and Why Ecuador?

The Chicago-based technical experts we’ve worked with for years (covering all instruments), predict if Gold crosses above upward resistance at $1,400 - everyone will be talking about Gold taking out its all-time high of $1,800, signaling a new bull market.

And these experts are especially good at sector and long-term secular calls.

They point out the last two times Gold broke out over an all-time high, it later gained nearly seven-fold. That is the causation where one of technical analyst we speak to, came up with the Gold $10,000 price. Six times the old high of $1,800 equals $10,800.

Does the target make fundamental sense? No more than Bitcoin going to $20,000, other than history shows things in motion tend to stay in motion – which brings new money into markets by investors who fear missing out. Otherwise known as FOMO – which is one of any bull markets most powerful driving forces.

A close up of a map Description automatically generated

Being just $50 from major resistance of $1,400 and $400 from the old high of $1,800 means you probably shouldn’t be watching from the sidelines. We are just too close. And again, it’s been 5 years of sideways trading.

BILLIONAIRES QUIETLY ARRIVE.

In a recent article called “Here Comes the Smart Money” in the Internet Stock Review (sister publication since 1998), we noted analyst James Cordelaine spotted the 4th billionaire (billions made by investing) George Soros, joining the new gold rush play.

As articles like these get passed around, we believe investors will come to their senses. And there’s not a lot of Gold to go around – which is another reason that Gold $10,000 may be more of a reality than many would think. There are many more speculative investors chasing momentum these days (armed with real-time quotes and charts) than there was in 1980, back when they used to get their price quotes from the local newspaper - before gold ran from $100 to $700.

When the momentum crowd arrives these days, things can move fast and move large.

In the big picture what’s most important to know isn’t what is making Gold go up in value (trade deficits, geopolitical uncertainty, spiraling deficits) but instead knowing if more and more people believe Gold is going up – and that they believe we are nearing an inflection point, where they ‘don’t want to be left behind.’

One reliable way to track that belief is by following cash inflows into ETF’s (which is the easiest way to invest in Gold) to monitor what investors are currently ‘believing.’

The World Gold Council is a good source of Gold Demand via these ETF’s and they reported after a lackluster 2018 – gold-backed ETF’s saw net inflows of $3 billion per month in both December and January when the stock market dropped 3,000 points.

Let’s also look at the belief of billionaires, who have a hard time covering their tracks and/or at times don’t want to cover their tracks.

A close up of a map Description automatically generated

Hedge Fund billionaires, Stanley Druckenmiller, David Einhorn, Paul Singer and George Soros have all jumped into the ring during the last few years. Some have invested as a hedge against a possible drop (plunge) in the stock market.

Cordelaine stated, “What started as a defiant gold-investing trio has morphed into an elite hedge-fund fraternity of gold bugs.” The analyst reported that Stanley Druckenmiller (worth $5 billion), founder of the high-performing Duquesne Capital Hedge fund looked at an audience of professional investors dead in the eye and told them to sell their stocks and buy gold (knowing full well most can’t, so maybe a taunt).

In early June (2019) Druckenmiller told Bloomberg that he went from fully invested to net-flat (short offset) moving to Treasuries as ‘the best game in town’ with Gold following a close second.

Cordelaine also reported that audacious short-trader David Einhorn gave an interview to Bloomberg in which he bluntly stated that central banks “Increasingly aggressive and counterproductive monetary policies are bullish for gold.”

You have to wonder (in defiance, if you’re not long gold) why Soros has traded in and out of Barrick Gold – the largest gold bullion producer in the world.

Do we want to listen to billionaires blindly (who can change at a drop of a dime, like Soros)? Of course not. Institutional Gold Research Group is not a trading firm, recommending quick moves in and out of Gold. We look for long-term large secular moves and our opinion over the next decade Gold can be expected to perform consistently well (with ups and downs). It can also be viewed at a safe harbor (hedge) over the stock markets’ large secular move, which has risen from 6,000 to near 26,000 in a decade.

So, whether Gold is at $1,000 or $2,000 matters little to us. We are looking out long term. As in what will the price of Gold be in 2024?

WHY ECUADOR?

Ecuador an OPEC nation, which is located at the ‘hinge’ of the Andes Mountains between mineral-rich Peru and Colombia and has very favorable geological characteristics. The country possesses the second-highest concentration of volcanoes aside from Iceland. Precious metals are often found in volcanoes.

Despite these advantages, Ecuador has been barely touched by modern exploration techniques until President Lenin Moreno began to implement decidedly mining-friendly policies over the past three years.

The government in 2015 created the mining ministry and announced plans to promote 36 projects to produce gold, copper and molybdenum estimated to be worth $200 billion.

A person wearing a suit and tie Description automatically generated

This is a genuine and bonafide gold rush like no one has ever seen before.

Of course, if something happens to Moreno (he’s paralyzed after being shot at close range), all bets might be off – depending on his replacement and/or how addicted Ecuador gets to the new tax revenues.

And jobs. 5,000 jobs have already been directly created and it is calculated that the strategic projects (San Carlos Panantza, Rio Blanco, Loma Larga, Mirador and Fruta del Norte, all towards the south of the country) will generate roughly 25,000 jobs directly and indirectly through to 2021

Ecuador plans to attract $3.7 billion in mining investments in the next two years, up from $270 million in 2018 and add $826 million to its tax coffers between 2019 and 2021.

ECUADORIAN PRECIOUS METALS MAP

Think of it as a tax-fueled gold rush. Like permitting sky-rises to be built on Miami’s ocean-front coast, when there was none before 1920.

Enough said on that. In our next report, we will go into greater detail on Lucky and the others, including where they have their stakes and what may lie below their feet.

You can sign up for our newsletter at Institutional Gold Research

Here are the players we are currently following.

ECUADOR

Capital City – Quito. Population – 16.5 million. Currency – U.S. Dollar. 2017 GDP – $70.955 billion USD. 2017 Unemployment Rate – 4.34%. Main Industries – Petroleum (more than 40% of exports), food processing, textiles, wood products and chemicals. Main Export Partners – United States, Chile, Peru, Colombia, Japan and Russia (*All Figures taken from IMF website)

Given Ecuador’s geographical location, we believe it’s safe to say that Ecuador may be one of the world’s last remaining jurisdictions with tier 1 deposit type discovery upside potential and will provide a decade of interesting discoveries of some of the World’s largest mining finds.

Note in August 2018, the government abolished the punitive windfall mining tax of 70% on “excess profits.” The tax had depressed interest in mining investments in the country for many years.

We are investing in Ecuador and believe it is just a matter of time before the rest of Wall Street and our friends from Chicago’s trading pits recognize the changes that have been made.

Gold Miner plays in Ecuador regardless of the price of Gold, could see all their share prices rise - as the rising tides floats all ships. We are here to stay and here for the long run. If gold continues its rally, we predict a double barrel effect, May the force be with us.

ECUADOR GOLD PLAYS:

Adventus Zinc Corp. (ADZN:TSXV, US:ADVZF), Anglo American (US:NGLOY), Auriana (TSX:ARU, US:AUIAF), BHP (NYSE:BHP), Codelco Cooper (Private), Dundee Precious Metals (TSX: DPM, US:DDEJF), INV Metals (TSX:INV. US:ILNLF), Fortescue (ASX:FMX, US: $FSUMF) Lucky Minerals (TSX:LKY, US:LKMNF), Luminex Resources (TSXV:LR, US:LUMIF) Lundin Gold (TSX:LUG, US:FTMNF), Newcrest Mining (ASX:NCM, US:NCMGF), SolGold (TSX:SOLG, US:SLGGF).

Name

Symbol - US

Price

Market Cap

Adventus Zinc

ADVZF

$0.77

$70 Million

Anglo American

Aurania Resources

NGLOY

AUIAF

$12.76

$2.42

$35 Billion

$84 Million

BHP

BHP

$52

$135 Billion

Dundee PM

DDEJF

$0.74

$74 Million

INV Metals

INLNF

$0.27

$26 Million

Fort

escue

FSUMF

$5.50

$17 Billion

Lucky Minerals

LKMNF

$0.05

$6 Million

Luminex

LUMIF

$0.05

$2 Million

Lundin Gold

FTMNF

$4.15

$923 Million

Newcrest Mining

NCMGF

$19.82

$15 Billion

SolGold

SLGGF

$0.35

$690 Million

Chinese Companies Excluded

Adventus Zinc (TSX: $ADVZF) $1.02, Adventus Zinc Corp is a mineral exploration and development company that is focused on the identification and acquisition of mineral properties and the exploration and development of its mineral properties. It is focused on funding exploration and development expenditures in the Curipamba property in Ecuador as well as in other exploration properties in Ecuador. The company has operations in three geographic locations, namely, Ecuador, Ireland and Canada.

Anglo American (OTCQX:NGLOY), $12.76, Anglo American's mining portfolio spans many commodities and continents. Like fellow large diversified miners, Anglo has significant exposure to copper, coal, and iron ore, but it is unique in its significant platinum output. The company accounts for about one third of the world's platinum supply and just over 20% of palladium supply. Anglo also owns 85% of De Beers, in most years the world's largest supplier and marketer of rough gem diamonds.

Auriana Resources (OTCQB:AUIAF) $12.76 Aurania is a junior mineral exploration company engaged in the identification, evaluation, acquisition and exploration of mineral property interests, with a focus on precious metals and copper. Its flagship asset, The Lost Cities - Cutucu Project, is located in the Jurassic Metallogenic Belt in the eastern foothills of the Andes mountain range of southeastern Ecuador.

BHP (US:BHP) $53, is a leading global diversified miner supplying iron ore, copper, oil, gas, and coal. A 2001 dual-listed merger of BHP Limited (now BHP Ltd.) and Billiton PLC (now BHP PLC) created the present-day BHP. Shareholders in each company have equivalent economic and voting rights in BHP as a whole. Major assets include Pilbara iron ore, Queensland coking coal, Escondida copper, and conventional petroleum assets, principally in Australia and the Gulf of Mexico. Stake in SolGold.

Dundee Corporation (US: $DDEJF) $0.74, is a public Canadian independent holding company, listed on the Toronto Stock Exchange. Through its operating subsidiaries, Dundee Corporation is engaged in diverse business activities in the areas of investment advisory, corporate finance, energy, resources, agriculture, real estate and infrastructure. Dundee Corporation also holds, directly and indirectly, a portfolio of investments mostly in these key areas, as well as other select investments in both publicly listed and private enterprises. Dundee said it will begin investing in Ecuador through junior miners already operating in the country

INV Metals Inc (US: $INLLF) $0.27. INV Metals is an international mineral resource company focused on the acquisition, exploration and development of precious and base metal projects in Ecuador. Currently, INV Metals’ primary assets are: (1) its 100% interest in the Loma Larga gold exploration and development property in Ecuador, and (2) its 100% interests in exploration concessions in Ecuador, including the Las Peñas, Tierras Coloradas, La Rebuscada and Carolina exploration projects. The firm generates most of its revenues from the Ecuador region.

Fortescue Metals Group (US: $FSUMF) $5.50 Fortescue Metals Group is an Australia-based iron ore miner. It has grown from obscurity at the start of 2008 to become the world's fourth-largest producer. Growth was fuelled by debt, most of which has been repaid. Expansion from 55 million tonnes in fiscal 2012 to 170 million tonnes in 2017 means Fortescue supplies nearly 10% of global seaborne iron ore.

Lucky Minerals (US: $LKMNF) $0.05 holds a 100% interest in Fortuna, a 550 km2 property in the heart of a proven and highly mineralized mineral district in Ecuador but which has seen only limited exploration and has never been drilled. Evidence of significant hydrothermal alteration, stockwork, breccias, geochemical anomalies and placer mining supports potential for Cu/Au porphyry systems and epithermal Au deposits similar to numerous multi-million-ounce Au and bulk tonnage Cu deposits ~40km away.

Luminex Resources Corp. (TSXV: $LR) $0.05 is a Vancouver, Canada based precious and base metals exploration and development company focused on gold and copper projects in Ecuador. Luminex’s inferred and indicated mineral resources are located at the Condor Gold-Copper project in Zamora-Chinchipe Province, southeast Ecuador. Luminex also holds a large and highly prospective land package in Ecuador consisting of approximately 100 thousand hectares, including the Tarqui, Orquideas, Cascas and Pegasus projects, which are being co-developed with BHP Group plc (subject to entry into a definitive agreement), First Quantum Minerals Ltd. and Anglo American plc respectively.

Lundin Gold (US: $FTNMF) $4.15. Lundin Gold, headquartered in Vancouver, Canada, is developing its wholly-owned Fruta del Norte gold project in southeast Ecuador. Fruta del Norte is one of the world's largest, highest-grade gold projects currently under construction. The Company's board and management team have extensive expertise in mine construction and operations, and are dedicated to advancing this project through to first gold production in the fourth quarter of this year.

Newcrest Mining (US: $NCMGF) $19.82. Newcrest is an Australia-based gold and, to a lesser extent, copper miner. Operations are predominantly in Australia and Papua New Guinea, with a smaller mine in Indonesia. Cash costs are below the industry average, underpinned by improvements at Lihir and the ramp-up of Cadia. Newcrest is one of the larger global gold producers but accounts for less than 3% of total supply. Gold mining is relatively fragmented. The largest producer, Barrick, accounts for less than 5% of global supply. Stake in SolGold with BHP.

SolGold (US: $SLGGF) $0.35. SolGold PLC is an Australian-based company that engages in the exploration and discovery of minerals. The company primarily focuses on copper and gold, as it believes there are high growth potential and increasing global demand for both metals. The group has operations in Ecuador, the Solomon Islands, and Australia. It also has a strong commitment to being socially responsible and supporting the local communities.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.