Barrick Gold, Desert Gold Ventures, Newmont - When will the next surge follow?

Why is the price of gold rising?

The rally in the price of gold raises unanswered questions among experts. In its latest precious metals report, Gold trader Heraeus noted that the rise is not driven by the usual factors such as a falling USD, falling interest rates or increased ETF purchases. UBS analyst Giovanni Staunovo told Handelsblatt that there is no apparent trigger this time, an opinion shared by most experts.

The latest rise is likely to be a mixture of different elements. Geopolitical tensions, speculation on the futures market and an increase in physical demand, particularly from China and India as well as from central banks, all contribute to the latest upward movement. The influence of China and purchases by central banks is particularly noteworthy. The growth in physical demand, driven by high imports from China and record purchases by central banks in recent years, points to a significant change in the pricing of gold.

The central banks of emerging markets countries, which hold only a small proportion of gold reserves compared to the G7 countries, could continue this trend for decades. They would aim to use gold to hedge against potential sanctions by the G7 countries and diversify their reserves.

Barrick Gold - Gold producer with enormous upside potential

While the underlying asset has reached a new high, even the largest gold producers, such as Barrick Gold, are lagging miles behind. The Barrick share would still have to gain around 185% to reach its September 2011 high of USD 44.68. The world's largest gold producer, Newmont, is also far from its all-time high of USD 79.68 from April 2022, with a gap of over 56%.

From a technical perspective, Barrick was able to bid farewell to its lows with a double bottom at USD 13.67, but an impulsive upward movement looks different. Barrick shares are currently trading at USD 15.82. There is a striking vertical resistance at around USD 16, which, if broken through, could generate a buy signal up to the downtrend at USD 17.85 that has been in place since May 2023.

By contrast, Barrick Gold is fully on track with the Loulo-Gounkoto complex in Mali, one of the largest gold deposits in the world. Over the past 12 months, gold production has contributed more than USD 1 billion to the Malian economy. According to CEO Mark Bristow, the complex is on track to meet its production guidance for the current quarter and the full year. Due to its longstanding positive experiences and having been based in Mali for almost 30 years, Barrick Gold is actively seeking acquisition targets in the Loulo region. This includes utilizing high-resolution airborne magnetic geophysical surveys to identify the next generation of high-grade targets.

Desert Gold Ventures - Among the giants

The situation for the gold exploration company Desert Gold could hardly be better, quite literally. To the north of Loulo is the Canadians' 440 sq km SMSZ property. The producing mines of Allied Gold, Endeavour Mining, and B2Gold are also located in the immediate vicinity.

SMSZ has proven mineral resources totalling around 1.1 million ounces. Over 23 gold deposits have been identified across the region to date, which will be explored and assessed for economic viability. Further plans include an extensive drilling program of around 30,000 m, after which an updated resource estimate is planned. The current proven estimate consists of 769,200 ounces of gold inferred and 310,300 ounces proven.

It has recently been reported on the stock tickers that Desert Gold has increased its non-brokered private placement to CAD 1,119,220. The funds will be used, among other things, to complete a preliminary economic assessment that will focus on heap leach extraction of gold from open pit constrained oxide and transition mineral resources at the Barani East and Gourbassi West gold deposits. In addition, exploration core drilling will be initiated at Mogoyafara South. Open pit mineral resources of 412,800 ounces of gold at a grade of 1.05 grams per tonne gold are estimated here, making it the largest known gold deposit on the SMSZ project to date.

Desert Gold currently has a market value of CAD 12.71 million. With further drilling successes, the Company is likely to increasingly attract the acquisition interests of its producing neighbours.

The gold price is rushing from one record to the next, while gold producers and exploration companies are still strongly underperforming. Barrick Gold is actively seeking acquisition targets in Mali, not far from Desert Gold Ventures' SMSZ project.