Here we are in 2021 getting closer to the gold cliff coming in a few short years where the world virtually runs out of proven and probable gold reserves. This means future gold production will, for the first time in centuries, be on unstable ground.
Gone are the days of easy gold where a pick and a bucket were all you needed. We are in the area of modern mining techniques of water flotation, heap leach, and other advanced techniques used to separate the shiny metals from the earth. These projects take millions in financing to get off the ground, and even more, millions to process the vast tonnage of earth that results in precious few flakes of metal in our hands.
We simply cannot take for granted that gold will be readily available at our local shops and favorite online stores any more. In an age of massive trillions in world debt and rising black swan bank failures, all the above-ground gold is being hoarded by large banking entities and wealthy families in preparation for the next economic swoon. Indeed, gold markets are moving around, mostly from West to East, as emerging markets prepare to stabilize their growing economies and weather any banking storms looming on the horizon.
But there is still gold in the ground! It simply has to be explored and added to the doles of the mining companies resource sheets. Why haven’t we been doing this over the past decade? Well, the reality is that the resource sector, long seen as a haven for value investors, has fallen on hard times. Today’s investor chases momentum plays in Bitcoin, the tech companies, and biomedical science. Gone are the days when investors would poor into safe investments in telecom, resources, and staples to maintain balance in their portfolio. So, investment into the resource space has not recovered from its 2011 high when gold reached $1900 per ounce.
While seemingly dire, the situation is not as bad as it looks. The reality is that the lack of resources is not limited to gold, it has spread to base and rare earth metals as well. Look at the recent highs in zinc and copper as examples of demand exceeding supply and driving up prices to 10-year highs. The world still demands resources, even if investors are not putting money into them. What is coming, as a result, is a commodity boom that will reverberate like a shockwave around the world. And this will benefit gold and silver investors as commodity booms are typically led by precious metals, especially as they related to money flows in the mining space.
This is where O2 Gold gets interesting. The company has what it believes is a historic project in Colombia. The management team has proven experience; and better yet, their association with Robert Allen, founder Grupo de Bullet, has provided comfort as he has been involved with every major gold find in the country in the last two decades. One simply does not find gold in Colombia without this gentleman involved.
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O2 is in the midst of defining its resource on land for which a rich history of precious metals mining has occurred. This is not a virgin ground for metals investors; the land package is in a rich zone that has provided millions of ounces of metals in the past. It is surrounded by success after success. And therefore this project has a much better chance of success than any greenfield investment.
This type of project is the one we are scouring the world to bring to you. We want companies exploring in known districts, with good management teams and high chances of success. O2 Gold falls squarely in this category. The only thing we feel the company needs is more time, as exploring and developing resources takes plenty of that.
For the early-stage investor, this project has the potential for a handsome return on investment. Though those day trading momentum stocks need not apply; this is not how resource investing works. While many live on the thrill of 85% daily moves in Bitcoin price, the vast majority of investors, in my experience, actually want projects that grow over time. They want portfolio growth without the risk of a massive beta collapse.
This is where gold exploration comes in. Identify good projects early, invest for the medium term (2-4 years), and watch your money grow. In fact, the early-stage investor has a much higher upside than those piling in at the last second before the first gold pour.
Yes, there is risk that projects will fail; it happens all the time. But looking at those failures provides an interesting conclusion. First, failures often occur during commodity down cycles where investors flee to high-yielding, risky assets. We are now in the beginning of a commodities boom, where at the same time we have reached an inflection point in general equities markets where they must fall. They are historically overvalued, and history shows those markets will regress back to the mean and destroying investor gains.
Add to that the paucity of new gold and silver resources on the books, and it brings any decent precious metals deposit into full view for the wise and patient investor. We preach cycle investing here at Gold Silver Pros, where over the last 20 years gold and silver have outgained the major US stock indexes by almost a factor of two.
And now is the time for the precious metals stocks – a boom is coming in a world of scarce resources, precious metals having been already gobbled up by the banking system and wealthy elite in anticipation of coming market volatility, and in dire need of restocking for the rest of the world population that will follow in panic as the equities and bond markets reach their bottoms.
Companies like O2 gold will profit handsomely, as will investors that bought in early and stayed the course. Only time is needed now. Cheers!