The gold price may be lower than it was last summer, but with levels still historically high many investors remain interested in companies focused on the yellow metal.
Junior exploration stocks typically offer the biggest potential rewards (and risk), but experts are increasingly pointing to gold miners as a profitable option.
Speaking to the Investing News Network, Brian Leni, founder and editor of Junior Stock Review, said looking at gold producers could make sense for some investors.
“What I would say is that the producers and the royalty and streaming companies are that low-risk exposure to the gold market. And for a lot of investors, especially (those who are) new to the sector, I think that’s probably where you should start,” he said in the interview.
One common criticism of gold producers is that they’ve neglected exploration in recent years, leaving their reserves depleted. Leni believes this is an issue that will become a major theme moving forward.
“Companies (will have) to go out there and find new gold deposits, silver , copper , nickel — across the spectrum we need more discoveries to replenish supply lines,” he said.
“I would say senior companies have started making headway back into the exploration realm by taking strategic investments in a few companies, but … we’ve just nicked the surface of what needs to be done and what will be done. I think you’re going to see a lot more M&A in the future (and) consolidation amongst the big guys — the senior companies buying more of the mid-tier producers, and the trickle-down effect where the best of the best undeveloped deposits get bought,” Leni continued.
Looking more specifically at where he sees opportunity, he spoke about two areas he thinks are hot right now. The first is Newfoundland, where he’s seen success with Canstar Resources (TSXV:ROX,OTC Pink:CSRNF) ; Leni believes the company still has room to move even after its gains this year.
The second is an underexplored area of Ontario. “I think the next hot area play is going to be in Northern Ontario, specifically the Birch-Uchi sub-province, which is up (around) Red Lake and the surrounding areas,” said Leni, explaining that it’s seen less attention than other parts of Ontario and Quebec.
Watch the interview above for more from Leni on gold, his investments and the overall resource sector.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Canstar Resources is a client of the Investing News Network. This article is not paid-for content.
The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.