Gold Has Tested The Same Trend Line For Three Years. It Is Testing It Again.
After peaking above $5,600 an ounce early this year, gold fell nearly 30% to a low of $3,960 by midsummer. A drawdown of that size has ended plenty of rallies. It did not end this one. The low landed on a rising trend line that has connected gold's major pullback lows since October 2023, when the precious metal was trading near $1,810. Buyers defended it from the $3,960 mark, driving prices back to $4,697 in August, and the pullback that followed has held over $4,000, which means gold is still sitting on its trend line.
To the upside, the first level to reclaim is roughly $4,467, where the chart's 150 day moving average sits, followed by the August high near $4,697. In general, the long-term moving averages, such as the 300, 400, and 500 DMAs that speak to the long-term nature of the chart, are all trending upward.
The Producers Are Testing Too
Mining shares tend to move with more leverage than the metal in both directions, and the larger producers have pulled back alongside bullion since August. That puts them at the same decision point, with operating results that give them something to build on if gold turns.
Barrick Mining Corporation (NYSE: B) (TSX: ABX) brings scale to that leverage. Gold production reached 796,000 ounces in the second quarter, beating the top end of guidance, and revenue climbed 44% to US$5.29 billion. The company returned US$1.50 billion to shareholders in the quarter, including US$1.2 billion in buybacks. Total returns rose 242% from a year earlier. Barrick's U.S. shares are trading around $41 each, well off their 52-week high of $53.80 (all data from Stockcharts), leaving room to potentially run if bullion resumes its advance.
Alamos Gold Inc. (NYSE: AGI) (TSX: AGI) pairs cash generation with a defined growth runway. Its Island Gold District produced a record 67,500 ounces in the second quarter on record underground mining and milling rates, and the company generated US$143.5 million of free cash flow while ending June with US$636.9 million in cash. Alamos expects significant free cash flow growth beginning in 2027 as its Phase 3+ Shaft Expansion is completed. Shares are currently around $33, below late-August levels above $39.
IAMGOLD Corporation (NYSE: IAG) (TSX: IMG) is moving through the back half of a ramp-up. The company produced 188,100 attributable ounces in the second quarter and generated US$507.3 million of adjusted EBITDA. At CôtéGold, a conveyor belt replacement and a second cone crusher allowed the plant to run near full capacity in June, and management expects production to rise and unit costs to fall through the rest of the year. IAG have slipped from a late-August high above $22, currently trading around $18.
The Smallest End of the Curve
Leverage to the gold price runs highest where production is newest. That brings the discussion to JZR Gold Inc. (TSX-Venture: JZR) (OTCPK: JZRIF)JZR last traded at C$0.25, above its 52-week low of C$0.20 and far below its 52-week high of C$0.84, for a market capitalization near C$20.8 million. At that price, the shares sit right at the C$0.25 at which investors committed fresh capital in the company's July private placement.
The operating record underneath that price has changed considerably since the spring. JZR assumed direct operatorship of Vila Nova on May 28. Contractor RR Bueno is now fully mobilized with its equipment and operators, moving material to the project's 800-tonne-per-day gravimetric mill. In August the plant went onto its first regular schedule of one eight-hour shift per weekday. The team worked through equipment failures during that initial period with repairs and component replacements, and the company says the operation has since stabilized. In mid-September, JZR reported that approximately 11 tonnes of concentrate had been shipped toward São Paulo. Management's stated priorities are increasing operating hours, improving plant reliability and raising the volume of material processed consistently.
The initial feed is tailings from earlier mining. Company estimates put that material at roughly nine million tonnes averaging 2.7 grams per tonne gold, potentially containing more than 700,000 ounces, though no mineral resource or reserve has been defined. JZR holds a 50% Net Profit Interest in the project, and its contributions toward the mill are to be repaid from revenue before the profit split applies.
Two Supports, One Question
For gold, the question is whether a three-year trend line holds for another test. For the producers, it is whether strong operating results carry their shares back toward their highs once it does. For JZR, the test is whether a stock trading near its placement price responds as operating hours rise and concentrate moves toward sale. Gold's trend line provides the market backdrop. The next operating updates will determine whether Vila Nova gives investors a reason to look past the share-price chart.
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