Gold rips as Genesis’ growing reserves point to early arrival at 400,000 oz milestone

President Trump’s helter-skelter approach to tariff negotiations has been a good thing for the gold price.

It is back in record territory (the all-time high was $US3,168 in late March), not because of the normal drivers of inflation expectations, US dollar moves or recession fears, but because no one knows what Trump will do next.

While it’s a nervous wait for his next tweet, it can be said that gold is also benefitting from the 90-day reprieve coming with a massive sting in the tail in that fellow super power China was hit with higher tariffs still.

That probably more anything has been driving investment into gold – the safest of havens in a world not too sure where Trump is taking us one day to the next.

Trump’s clear intent is to box in China. It is too late for that, but he will be swinging the wrecking ball through the world we once knew until he extracts concessions. Beijing obviously has other ideas.

So as the World Gold council noted this week in polite terms, the environment remains supportive for further gains in the gold price. It also noted that gold backed ETFs attracted $US8.6bn in March.

That took total March quarter flows to $US21bn (226t of gold) - the second highest quarterly level ever in dollar terms. Investors are clearly nervous about where the tariff war, currently narrowed to a slugfest between the US and China – will end up.

Gold’s move back to all-time highs in Thursday’s monster relief rally in equity markets meant ASX gold equities had a particularly good day out, with some but not all returning to their reciprocal tariff levels.

Some investors buy the psychical gold ETFs for portfolio protection. Others prefer the leverage equity exposure can deliver.

That was on show on Thursday, with gold equities out-performing the gold price, remembering leverage works both ways.

The question now is can gold equities continue to out-outperform. Canaccord had a go at providing an answer during the week.

“Valuations remain relatively undemanding, particularly in the context of all time high (ATH) gold prices, trading at P/NAVs of 0.70x (vs historical avg of 0.84x), and an average implied gold price of US$2,383/oz, a ~20% discount to spot,” Canaccord said.

“A reversion to historical gold:gold equity averages suggests an ~16%/28% upside for the GDX and GDXJ, respectively, supporting our view that gold and gold equities will continue to outperform through 2025.”

Its preferred exposures are Northern Star (NST), Genesis (GMD), Perseus (PRU), Ramelius (RMS), West African Resources (WAF), Westgold, Andean (ASL), Predictive (PDI), Santana (SMI) and Strickland (STK).

Genesis (GMD):

Among that cohort, it was Raleigh Finlayson’s Genesis that recaptured lost ground and some in Thursday’s broad relief rally and gold’s return to ATH territory.

The 7.4% gain to $3.89 for the stock had another factor at play – the release of a resource/reserves update earlier in the week.

There was particular interest in a maiden reserve estimate for the Westralia deposit at Laverton of 8.4Mt at 1.4g/t for 370,000oz, with Genesis flagging substantial scope for growth.

The suggestion was that the declared aspiration to become a 400,000ozpa producer from the guided 190,000-210,000oz in FY2025 will likely happen well before Genesis’ so-called “Aspire 400” target by 2030.

Westralia was picked up in the 2022 acquisition of Dacian and like Dacian, has pretty much been forgotten about. But it has been put through the Finlayson grinder to emerge as a bulk open-cut operation rather than a selectively mined underground operation.

Genesis has a lot of other emerging options across its Leonora-Laverton operations to think that Aspire 400 will be reached ahead of time. It is typical under-promise and over-deliver stuff the market has come to expect from the highly rated Finlayson.

As the early move on early arrival at Aspire 400 is fleshed out, Genesis will increasingly be rated as a high-growth gold stock.

As it is, Canaccord increased its price target from $4.15 to $5.10 a share during the week.

FireFly (FFM):

Any AFL footy teams needing to fire-up the lads at half-time during this week’s Gather Round in Adelaide should get Darren Cooke into the rooms.

Cooke was on hand in Adelaide to attend the Resources Rising Stars’ Gather Round conference on Thursday, conveniently located at the Convention Centre which sits across the river from Adelaide Oval.

Along with every other stock on plant, Firefly was hit hard by the sell-off in equity markets ahead of Trump’s Liberation Day and the even bigger sell-off that followed.

What was a $1 stock at the start of the month sunk as low as 68c earlier in the week for a $180m loss in market value. But in Thursday’s relief rally it bounced 13% higher to 77c, still down heavily on the $1 start for the month.

So Cooke was in a mood to lift spirits at the conference. He did a fine job too outlining why the stock was set to “bounce very quickly from the volatility in the market”.

He said Firefly’s Green Bay copper/gold project in Newfoundland had the makings of becoming a 50,000tpa copper equivalent producer from a resource that since the project was acquired in October 2023, has grown to 1.2Mt of copper equivalent grading 2% copper equivalent.

Green Bay was a producer before being mothballed for sale to Firefly but it was small scale stuff. Cooke said because of the $A250m in sunk capital, Firefly had the ingredients of a mine already in place, with the resource base still in growth mode.

The previous owner ran a 500,000tpa mill. On the growth in the resource achieved in quick fashion by Firefly, there would be a 120 year mine life. That’s not going to happen, with Cooke saying Firefly now saw the “opportunity here for a much larger mill”.

A bigger picture still is likely to emerge as Firefly steps up its regional exploration for more VMS-type deposits which elsewhere in the world are known to occur in clusters.

Simply put, Cooke reckons Firefly is the best copper/gold development (and exploration) story on the ASX. You’ve got to love the enthusiasm.