Junior Miners Are Heating Up—Join the Rally

Gold is one of the best-performing assets so far this year.

The metal’s price crossed the psychologically important $3,000 level, signaling strong demand for this safe-haven asset.

In December 2024, before Donald Trump was sworn in, we wrote:

“That’s why we’ve seen gold, as an ultimate inflation hedge, quickly recover after its post-election drop. The metal’s price remains strong and is unlikely to decline while Trump holds the presidential seat. We still see gold as a must-have protective asset in the portfolio.”

The new administration’s trade wars and internal changes within the US government in general spread fear among investors. As a result, they rushed into gold.

Hopefully, you have had enough time to protect your portfolio from the recent market swings with safe-haven assets, including the yellow metal.

After all, major stock indices are down year-to-date, while gold posted solid gains.

Now, it’s time for gold stocks to follow the metal.

Let’s see which stocks are positioned for the most upside in this gold bull market.

First Movers

Historical data show that gold stocks tend to follow the price of gold and, in a bull market, outperform the metal itself.

That’s easy to explain. For example:

• For gold itself, a 10% gain from $2,800 to $3,080 per ounce is a big move. However, it’s only a 10% price increase.
• For a gold producer with the cost of producing an ounce of gold at $1,500, a 10% gain in the price of gold will translate into a 22% gain in the margin. (As the margin will grow from $1,300 to $1,580 per ounce.)

As a result, a mining company could outperform gold by more than 2x due to its economics.

We’ve seen major gold stocks respond well to the metal’s rally and trade at their 52-week highs. The most successful of them, in fact, are trading at all-time highs.

However, not all gold stocks have responded to the rally yet.

It will take some time for investors to recognize the potential of junior gold mining stocks. These often carry a higher risk but also could also offer a higher reward potential.

And by following these simple rules, investors can improve the odds of finding their next winner in the gold space.

Investing in Junior Gold Stocks 101

1. Make sure that your candidate’s management has a proven track record in the mining industry. The people who delivered value to their shareholders in the past deserve special attention.

2. It’s easier to find a new gold deposit in the shadow of a known mine. The geology can be similar near an existing gold project. The odds of discovering an economically viable deposit in a known gold trend are higher than testing new, previously unknown areas. Additionally, a large land package can be beneficial for testing multiple geological targets.

3. Capital is crucial. The company should have enough funds for its current exploration program. If not, investors will likely face stock dilution in the future as the company will need to raise funds by issuing new shares.

4. Political risk. Consider the country where the company operates and ensure it's safe and has a strong rule of law. The US and Canada are some of the top destinations for mining investors these days.

These simple rules will help avoid companies with little potential to deliver value to their investors.

To get help finding a company with assets in pro-mining areas, consider services like Mining Hub. You can search for mining belts in safe jurisdictions.

Here is an example of the Tombstone Gold Belt, which stretches from Alaska to the Yukon. The belt hosts several multi-million-ounce gold mines. We believe a large land package within the belt would be an asset.

The service can show which company holds each claim and who is acquiring new land in the area.

Quite a few junior mining companies are working in the belt:

1. Snowline Gold (TSX-C:SGD). The Valley discovery already has 4.05 million ounces of gold at 1.66 g/t in the Indicated resource category and 3.26 million ounces of gold at 1.25 g/t in the Inferred category. It’s a development story with quite a few catalysts working in its favor.

2. Banyan Gold (TSX-V:BYN). The AurMac project contains 7 million ounces of gold at 0.63 g/t in its Inferred resource category. It’s also a post-discovery story with a focus on permitting and development.

3. Sitka Gold (TSX-V:SIG). The RC Gold project has 1.3 million ounces at 1.01 g/t gold in the Indicated resource category and 1.4 million ounces at 0.94 g/t gold in the Inferred category. It’s a project of decent size with the potential to become a mine, in our view.

4. Rackla Metals (TSX-V:RAK). Rackla has no established mineral resources, but it has a massive 63,000-hectare land package within the Tombstone Gold Belt. A trench from the BiTe zone returned 38 meters of 1.8 g/t gold, which is a good indicator of a potential gold system at the project. The company is planning a drill program this year. Rackla is also worth being added to investors’ watchlists.

Rackla’s market capitalization is below US$19 million. Other companies on the list are more advanced. They are valued between US$60–US$900 million as we write.

In case its exploration campaign delivers more positive results, Rackla has the potential to catch up with its peers in the Tombstone Gold Belt. That’s a high-risk and high-reward scenario in the gold sector mentioned above.

(Please do your own due diligence and research before investing in any stock.)

You can find more about Rackla Metals (TSX-V:RAK) here:

An Established Exploration Company to Play Gold’s Ongoing BULL Market

Sign up to receive our future articles and updates.