Bad Mood-ys
Contributed Opinion

1. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Barrick Mining Corp. and Getchell Gold Corp.
2. Michael Ballanger: I, or members of my immediate household or family, own securities of: Getchell Gold Corp. My company has a financial relationship with: None. My company has purchased stocks mentioned in this article for my management clients: None. I determined which companies would be included in this article based on my research and understanding of the sector.
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Michael Ballanger Disclosures

This letter makes no guarantee or warranty on the accuracy or completeness of the data provided. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This letter represents my views and replicates trades that I am making but nothing more than that. Always consult your registered advisor to assist you with your investments. I accept no liability for any loss arising from the use of the data contained on this letter. Options and junior mining stocks contain a high level of risk that may result in the loss of part or all invested capital and therefore are suitable for experienced and professional investors and traders only. One should be familiar with the risks involved in junior mining and options trading and we recommend consulting a financial adviser if you feel you do not understand the risks involve

For most of Friday afternoon, I was struggling to find something — anything — about which to construct a topic for this weekend missive that might be considered at best informative and at the very least entertaining. I thought about a few stories from my days as a college hockey player, but then quickly recanted because they are informative only to a very few and entertaining only in my septuagenarian memory banks. I considered a long dissertation in bear market rallies, but I covered that several times in the past month, so just as I had settled on my memories of Dow Theory Letters' late founder Richard Russell, a news flash came across the airwaves that sealed it. Out the window flew memories of Richard, and in flew a headline that refocuses the mainstream narrative on the primary threat to Western world solvency, and that headline was "Moody's Downgrades USA Credit Rating From Aaa."

The perma-bulls were quick to jump on their "X" (Twitter) feed and before the ink was dry on the announcement, comments like "a big nothing burger" and "will be irrelevant for the $ and the bond market next week- absolutely nothing new here!" to which Fred Hickey responded "No. There are U.S. Treasuries holders that are required to only hold AAA assets. They'll have to sell." 

Mr. Hickey has it squarely on-the-money with his retort because only seasoned analysts understand the importance of that "AAA" rating instead f the "AA1" the party-poopers at Moody's have just ordained. The U.S. bond market is larger by many multiples than the U.S.

stock market and when you try to imagine how many of those massive bond funds that will be forced to liquidate U.S. Treasuries due to, as Moody's puts it, "The increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns."

The impact was immediately felt by the S&P futures that plunged 30 full points within a few seconds of the release indicating that traders know the significance of the downgrade.

Followers of this publication also know only too well that the primary theme of The GGM Advisory since its first launch date in 2020. I have long been writing that the trajectory of U.S. debt growth would eventually catch up with the reality of stock market valuations. Mind you, Wall Street propagandists are masters at crafting narratives that suit their purposes.

Since that "Liberation Day" fiasco on April 7, the N.Y. boys exerted massive pressure on Wall St. wunderkind and Treasury Secretary Scott Bessent and magically within days the 130% tariff on China was back to 10% and the new narrative was "Middle East peace" with the president fawning over the Saudi Crown Prince in a speech to the Riyadh conference intelligentsia.

The next was an olive branch to the Iranians in an attempt to broker a uranium "deal" that will be broken at the first sign of Israeli aggression. All of these wonderfully crafted illusions of geopolitical calm and financial market stability served to lessen the intensity of the word "uncertainty" used thirty-eight times in four and a half minutes by Jay Powell at the last FOMC meeting. As a result, the S&P 500 has advanced over 23% since the April 7 "V-bottom" reversal and joins 2008 and 2020 as the triumvirate of spike bottom years now grace the history books.

Needless to say, the rally has been awe-inspiring and as the chart above would imply, the Wall Street machine that manufactures these amazing "stick saves" worked wonderfully in 2008 and 2020 because there was room from both fiscal (U.S. Treasury) and monetary (the Fed) sources to inject trillions of dollars of liquidity into the financial system that eventually gravitated to stocks. In 2025, they have no such luxury.

After watching the bond market seizure after "Liberation Day," the U.S. 10-year yield crashed from 4.40% to 3.85%; knee-jerked right back to 4.60%; then back to 4.13%; and this week touched 4.55% all within a fifty-day period. While volatility in the stock market has become commonplace, big swings in the bond market are not a sign of financial market stability. In fact, swings like the one that happened in the days leading up to and after April 7 are a clear signal of eroding liquidity, and of there is one thing that keeps Jerome Powell and Scott Bessent up at night it is liquidity (or lack thereof).

It is worth remembering that when the Fed was created back in 1913 by an Act of Congress (the "Federal Reserve Act"), it was given two mandates: to maintain maximum full employment and to ensure price stability. What was never included in the fine print attached to the act was the phrase "and to avoid financial system instability."

Moves in bond yields the likes of which are now occurring with increasing frequency are a function of a) disappearing liquidity and b) massive leverage. Since foreign "whales" (as in large sovereign buyers of U.S. Treasuries) are absent, the big money-center banks are now being relied upon the be the primary buyers of U.S. bonds. In order to manage those massive positions, the regulators need to allow them to use equally massive leverage to maintain the positions. Any math student knows that if you are holding an asset using 10:1 leverage, a 10% drop in the market price equals a 100% loss of equity. Therein lies the hidden danger lurking beneath the surface, and why institutions like Silicon Valley Bank went under. Too much leverage and no risk controls.

The volatility of the 10-year bond yield shown here is a testimonial to the move in gold prices to above $3,500 per ounce this year. Large pools of central bank reserves that once found their safe haven in the U.S. dollar through the U.S. bond market are now replacing U.S. credit with gold where there is no counterparty risk and no possible chance of confiscation as happened to Russia after they invaded Ukraine

The mainstream financial media use as their benchmark for economic strength or weakness only one data set: U.S. stock averages. If the S&P 500 is up 23% from the lows, then all must be well with the economy.

Since stocks in the past month have ignored rising yields, which touched 4.55% last week for the 10-year and over 5% for the 30-year, they are now moving in direct contrast to historical patterns. The two magical levels above which stocks run into trouble are 4.5% for the 10-year and 5% for the 30-year.

So, deals with the Saudi Royal Family and peace offerings to Iran took a back seat to a debt downgrade by Moody's after the bell on Friday, as the futures lopped off twenty-five quick points before settling. Notwithstanding the fact that the FOMO crowd has once again taken control of the market narrative, all it takes is one ugly day to send them scurrying to the

sidelines. With RSI a hair under 70, and strongly overbought conditions for MACD, Money Flow, and TRIX indicators, the SPY:US and the QQQ:US are due for a pullback. If it follows the textbook script as a bear market rally, then a retest of the lows at $481.90 is in store. However, the sheer magnitude of the advance is forcing many strategists to reevaluate that premise. The crash in April just might have been a correction within a Zimbabwe-esque hyperinflated stock bubble more reflective of the rapid erosion in the dollar's purchasing power rather than a barometer of futures earnings growth. Once again, for this investor, the argument against "buying the dip" remains the debt monster, and while "gold is the money of kings, debt is the money of slaves."

Gold

It has now been three weeks since I posted a tweet on April 22 calling for a pullback — not a crash or an end to the bull market — in gold by anywhere from 13.3% to 21.9%.

Thus far, using the GLD:US as my proxy, it is down 7.5% while June gold futures are down 9.13% in the same time frame.

I posted this chart of the June gold futures the day that they peaked at $3,509.90 while sporting a relative strength index of 77.19 — seriously overbought.

Since that day, the market has been in an orderly and very healthy correction which has served to muffle the elated squeals of the gold bug "gurus" that were sending out multiple tweets on an hourly basis reminding readers/listeners that a) they have been gold bulls since 2015 and b) that it was going to $4,000-4,500 before any slowdown might occur.

What I now await is the drawdown under $3k during which I fully expect complete silence as they carefully dodge any association with gold mirroring those hedge funds and generalist portfolio managers that ignored gold from December 2015 until March of 2025.

It was then they suddenly discovered that they were seriously "underweight" gold and gold miners (as in, they owned neither) and opted to join the panicky scramble.

If gold trades back below $3k, these latecomers will become net sellers and it is at that very point that I will return to the status of net buyer.

The decision to downgrade U.S. debt by Moody's had no effect on the June gold futures after the announcement but that does not necessarily mean it will not respond when it re-opens for trading in the Sunday evening electronic session. June is a seasonally weak month for gold and I expect a bottom in that month with silver and the junior miners being the assets of choice. I covered a small portion of my GLD:US puts only because the 50-dma is at $291.37, which was pretty close to the weekly low at $291.78. I still hold the GLD June $310 puts from $6.50; they went out at $16.98 after touching $18.90 shortly after the opening.

This correction in gold and silver was urgently needed and rather than gnarl and gnash your teeth over "evil banksters" and "Crimex manipulation", the gold market is no longer under the control of the behemoths. If that were the case, it would never have gotten to $3k let alone $3.5K. It is the Asian hoarders that dictate the price for gold now and they have a lot more people and a lot more money on the bid than the West can ever imagine.

Getchell Gold Corp.

It has been a long time since I discussed Getchell Gold Corp. (GTCH:CSE; GGLDF:OTCQB) in the weekly portion of this missive. Colleagues of mine who have completed due diligence on this undervalued Nevada junior are perplexed that it has yet to attract the attention of the institutional community after delivering a robust PEA in February that showed a 10.5-year LOM and a 46.7% after-tax IRR and a US$226.5m CAPEX with a payback of 3.1 years.

I am confident that the era of investor apathy is about to end for GTCH/GGLDF with the completion of their current funding round, which offers a $0.20 unit, granting investors one share plus a three-year half-warrant at $0.30. While older investors who enjoyed the gold boom of 2002-2011 recall companies in jurisdictions like Nevada commanding market caps per ounce of gold in the $50, $100, $200 per ounce range.

This was because intermediate miners looked to beef up their balance sheets with added ounces on the assumption that they would be subsequently rerated by the analysts. As it turned out, many marginal projects were acquired for inflated valuations based upon "indicated and inferred" ounces but few ever contributed to the expected rerating.

One such deal was IAMGOLD Corp.'s (IMG:TSX; IAG:NYSE) 2012 acquisition of Trelawney Mining and Exploration in 2012 for $600 million which went on "care and maintenance" one year later and only had its first gold "pour" in March of last year.

It took 12 years and a move in gold from $1,650 to $2,200 after forking out over $600m for the Cote Project to actually contribute any revenue to IMG's income statement. From April 2012, when they did the deal, until May of 2015, the IMG stock declined by over 88% while Cote remained as a classic white elephant.

I only point this out because that period of 2002-2011 earned the Canadian gold miners the ominous reputation as "destroyers of equity". Not only did Iamgold Corp. get sorely punished, industry leaders like Barrick Mining Corp. (ABX:TSX; B:NYSE) were forced to raise a not-so-paltry $3.0 billion back in 2009 to eliminate its stifling hedge book, which by then was seriously underwater.

Mistakes made by the gold miners have thrown a pall over the entire gold mining business, with the stench from decades ago still permeating the walls of the corporate boardrooms in the big capital markets centers like Toronto and London.

More recently, I received a note from a colleague that gave the history of the old and venerable Moneta Porcupine (now STLLR Gold Inc. (MEAUD:OTCMKTS; STLR:TO)) and how it has fallen into disrepair and disarray in recent years. Always touted as a cheap "call" on over 10 million ounces of gold, the company released a revised resource estimate in which total ounces dropped from 12.8 million ounces to 11 million ounces, with "indicated" moving from 4 million to 7.5 million. They also released a PEA which included a bloated $1.87B CAPEX but with a 13% IRR at $2,500/oz gold, that triggered an immediate 13% drop in the stock. With all these negatives, the stock still trades at CA$0.84, putting a market cap on it of approximately CA$120 million.

By contract, GTCH/GGLDF released their PEA last February and in it they used an average gold price of USD $2,250 (not $2,500) to arrive at a CAPEX of US$262.5M (not $1.87 billion) and an IRR of 46.7% (not 13%) and yet is capitalized at a paltry $56.6 million (not $120 million).

Now I am not piling on the demise of STLR for the purposes of character assassination because at $4,500 gold prices, I am sure that all numbers in the current PEA will be ramped up. However, at a $2,750 gold price, GTCH/GGLDF's Fondaway Canyon project generates a pre-tax IRR of 76% versus 46.7% at $2,250 gold. I shudder to imagine the numbers for Fondaway at USD $4,500 gold.

Major mining companies tend to get interested at the 15-20% IRR level and while 13% is considered "light" as far as profitability is concerned, a 76% IRR is out-of-the-park for a junior developer operating in Nevada.

Getchell Gold Corp. is a remarkably cheap proxy for owning gold. I hear that the current funding round is catching "legs" with some serious institutional interest starting to awaken for the first time. Once this financing closes, the drill will return to Fondaway Canyon and begin expanding the known resource, which stands at 648,000 ounces (indicated) and 1,670,100 ounces (inferred) for a total resource size of 2,318,100 ounces of gold.

So, you have a PEA many times more "robust" than most I have encountered, a perfect jurisdiction (Nevada), and lots of blue-sky potential through both exploration drilling and the rising gold price. There is also a point where the majors will decide that "enough is enough" and begin to acquire ounces at any and all costs. Once that happens, the generalist investors will come "over the wall" with Getchell Gold Corp. directly in their crosshairs.