Contributed Opinion

The gold sector has taken center stage this month, with prices soaring to unprecedented heights.

Despite the impressive rally, many investors remain skeptical, having been burned by false starts in the past. However, as central banks continue to accumulate gold and the U.S. dollar weakens, the precious metal's prospects are looking brighter than ever.

Gold's Breakout and Investor Sentiment

Gold's recent surge past the $2,080 resistance level has caught many investors off guard. Most have little to no exposure to the sector and are unfamiliar with the relevant tickers and valuations.

This lack of participation means that the gold rally may still have significant room to run as disbelief slowly fades and investors start to pile in, similar to the energy sector's recovery in late 2020/early 2021.

Despite the recent rally, many gold stocks are trading at historically attractive valuations based on price-to-net asset value (P/NAV) multiples, free cash flow yields, and cash flow multiples.

Even major players like Newmont Corp. (NEM:NYSE) have yet to show signs of froth, trading near their 5-year lows. These compelling fundamentals, combined with the fact that gold has never been this high, suggest that the sector may be poised for a sustained rally.

Other Commodities To Watch

While gold steals the spotlight, other commodities are also showing promise. Silver seems to be riding along with gold, though a lot of "silver bugs" think it may even outperform the yellow metal. 

Copper, a key player in the energy transition, is approaching the critical $4.00/pound level. A weaker U.S. dollar and healthy supply-demand fundamentals bode well for the red metal. Zinc is following copper.

Oil and natural gas stocks remain cheap relative to other sectors, while uranium's structural supply-demand picture remains bullish.

Lithium, on the other hand, faces challenges and may be vulnerable to tax-loss selling later this year, and Nickel is halted by new Indonesian supply.

Be Right and Sit Tight

As a seasoned commodities investor, I prefer to keep my approach straightforward. Examining the TSX Venture index's long-term chart reveals the immense potential for growth if we are indeed witnessing the beginning of a synchronized commodity upswing. Should the current momentum persist for a few more weeks, the Venture index may experience a "golden cross," where the 50-day moving average surpasses the 200-day moving average — a promising sign for the next significant advance in the commodity sector.

While I remain cautiously optimistic, the mere act of penning this article could suggest that the market may need to consolidate before continuing its ascent. It's important to note that prior to this emerging trend, commodity stocks have endured a prolonged period of lackluster performance. However, given the current circumstances, I believe that a comprehensive commodity rally could have staying power.

I must admit that my current level of optimism is unparalleled in recent times, and I can only hope that sharing these thoughts doesn't inadvertently hinder the market's progress. In the following analysis, I will provide insights on both familiar and new investment prospects while maintaining a patient and steadfast approach, adhering to the mantra of "be right and sit tight."

Energy and Copper Recommendations

Tenaz Energy Corp. (TNZ:TSX):

Tenaz is a favorite of mine. With a disciplined M&A strategy and a lean, experienced management team, Tenaz Energy is well-positioned to capitalize on the current market environment.

The company's small share count and market cap provide ample room for growth as it executes its acquisition plans.

TAG Oil Ltd. (TAO:TSX.V; TAOIF:OTCQX):

Tag Oil's successful drilling campaign in Egypt, targeting the Abu Roash F formation, has generated significant interest among investors.

With the potential for 60-80+ locations in the Badr concession area, the company is poised for substantial growth in the coming years. 

New Stratus Energy Inc. (NSE:TSX.V):

Led by the charismatic Jose Francisco Arata, New Stratus Energy is positioning itself as the next Latin American energy champion.

The company's current Venezuelan deal serves as a stepping stone for future expansion in the region, with plans to add projects in one or two additional jurisdictions. 

Condor Energies Inc. (CDR:TSX.V):

Condor Energies offers investors a unique opportunity to gain exposure to the energy markets in Central Asia.

The company's recently awarded gas field management contract in Uzbekistan and its LNG initiatives in Kazakhstan showcase its expertise in navigating niche markets. 

Valeura Energy Inc. (VLE:TSX; PNWRF:OTCMKTS):

Trading at a significant discount to its net present value, Valeura Energy presents a compelling value proposition for investors.

The company's recent reserves report demonstrates the success of its field-life extension strategy, while its strong balance sheet and cash position provide a solid foundation for future growth. 

Hercules Silver (BADEF:OTCMKTS;BIG:TSXV): Backed by a substantial investment from Barrick, Hercules Silver is an exciting copper exploration story. With a large mineralizing system already identified, the company is now focusing on drilling for grade.

Positive drill results could quickly put Hercules Silver on the radar of investors seeking exposure to the copper market. 

Critical Elements Corp. (CRE:TSX.V): Despite the frustrating delays in permitting and securing an off-take agreement, Critical Elements' lithium project remains promising.

While the stock has been a disappointment thus far, the underlying fundamentals suggest that the company could still deliver value to patient investors. 

Libero Copper and Gold Corp. (LBC:TSX.V; LBCMF:OTCQB): The involvement of mining magnate Frank Giustra has brought Libero Copper into the spotlight.

With a massive porphyry deposit already identified at its Mocoa project in Colombia and the potential for further growth, Libero Copper could be a multi-bagger for investors willing to tolerate some political risk. 

Sun Peak Metals Corp. (SUNPF:OTCMKTS): 

For investors with a higher risk tolerance, frontier markets offer the potential for outsized returns. Sun Peak Metals, with its Shire project in Ethiopia, is one such opportunity.

The company's targets bear a striking resemblance to the Bisha VMS deposit, which was successfully developed by Nevsun Resources and later sold to Zijin Mining for $1.86 billion.

Atex Resources Inc. (ECRTF:OTCMKTS):

The company is exploring a large-scale copper porphyry project in Chile. Backed by Pierre Lassonde, Atex has already identified a significant resource and is now focusing on expanding the high-grade core of the deposit.

If successful, Atex could quickly become a prime target for major copper producers.

Gold Recommendations

Since I think I have said enough on gold, I won't take up too much time giving details of these recommendations. Here is a list, in no particular order, of gold companies I like due to them being either cheap or intriguing, some both.

1. Kinross Gold Corp. (K:TSX; KGC:NYSE)
2. Falco Resources Ltd. (FPC:TSX.V)
3. OceanaGold Corp. (OGC:TSX; OGC:ASX)
4. New Gold Inc. (NGD:TSX; NGD:NYSE.MKT)
5. Aya Gold and Silver Inc. (AYA:TSX; MYAGF:OTCMKTS)
6. Goliath Resources Ltd. (GOT:TSX.V; GOTRF:OTCQB; B4IF;FSE)
7. Ascot Resources Ltd. (AOT:TSX.V)
8. Karora Resources (KRRGF:OTCMKTS)
9. Osisko Mining Inc. (OSK:TSX)
10. Rupert Resources Ltd. (RUP:TSX; RUPRF:OTCQX)
11. Red Pine Exploration Inc. (RPX:TSX.V; RDEXF:OTCMKTS)
12. Canadian Gold Corp. (STRRF:OTCMKTS;CGC:TSXV)
13. Radius Gold Inc. (RDU:TSX.V)

One Uranium Recommendation

While I don't have a lot to add when it comes to uranium, there is one stock that has caught my attention: CanAlaska Uranium Ltd. (CVV:TSX.V; CVVUF:OTCBB; DH7:FSE)

CanAlaska recently announced a remarkable drill hole intercept at its West McArthur joint venture project with Cameco, where CVV holds an 83.35% stake. The drill hole encountered an impressive 16.8 meters of mineralization grading 13.75% eU3O8, a result that firmly places CVV on the radar of junior uranium exploration companies with noteworthy deposits.

Although the reported grades are based on gamma probe readings (hence the "e" prefix before U3O8), the company expects to receive chemical assay results within the next six to eight weeks.

In the interim, CVV is likely to conduct additional drilling around this high-grade intercept, so investors should keep a close eye on further developments. Such exceptional grades typically indicate a long-lived mineralizing system, which often suggests the potential for significant scale. This discovery has undoubtedly piqued the interest of the mining industry and investors alike.

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