Gold stock analyst hails ‘once-in-a-lifetime’ trade opportunity in miners

Gold equities are being “mispriced unbelievably” in today’s market given the prospective rise in the metal’s price, says stocks expert and author Don Durrett, who is projecting gold at $4,000 (C$5,536) per oz. in his valuation models.

Durrett spoke about his strong conviction in gold stocks’ future value in the latest episode of the CrashLabs podcast hosted by EarthLabs Inc. executive chairman and founder Denis Laviolette.

Gold meanwhile, hit $3,357.40 per oz., on Wednesday, another historic high amid the metal’s surge over the past 18 months.

In the interview, Durrett highlights that most analysts focus too much on present metrics, whereas he values companies based on projected gold and silver prices, future production, and cash flow — using $4,000 gold and $100 silver as his base case.

“You’re projecting what that price will be,” he said. “And so you’re saying when the market collapses or when the bond market implodes, then you’re going to see what type of functional prices are you using now,” referring to the story arc on both gold and silver.

Durrett, recommended by Canadian billionaire investor Eric Sprott when he was a guest on the show in March, has been investing in the gold mining space since 2004 and started the website goldstockdata.com to track the stocks.

The author describes his approach as a “once-in-a-lifetime trade,” driven by the belief that the US bond market is headed for collapse, which would trigger a major bull market in precious metals. This future-orientated belief means he would avoid short-term investing in volatile miners, instead targeting undervalued producers with significant growth potential — specifically seeking what he calls “five-baggers” and ideally “ten-baggers.”

He also prefers producers over explorers and developers because of their multiple growth levers (organic growth, exploration and acquisitions) and cash flow generation.