Great Boulder Resources’ Share Price Lifts on Shallow Gold (ASX:GBR)

Great Boulder Resources’ Share Price Lifts on Shallow Gold (ASX:GBR)

The share price of Great Boulder Resources Ltd [ASX:GBR] has launched itself to the highest level we’ve seen this year thanks to some promising shallow high-grade gold finds.

Currently, the GBR share price is up 41.46% to 1.7 cents to trade at 5.8 cents per share — a level not seen since November last year.

Source: Tradingview

When we last looked at the GBR share price, the explorer had just announced a 3.7-kilometre extension at its Side Well Gold Project in WA.

However, the extension barely moved the share price at the time.

Making today’s share price action somewhat reminiscent of movements we saw during the gold rally in June through August 2020.

Here’s a lesson in gold investing

I think the GBR share price and its recent price actions are a great case study on what to make of the news from gold explorers.

Back in November, I asked the question: ‘Is GBR’s progress going unnoticed?

The explorer announced it had identified gold over more than 3.7 kilometres of strike, with mineralisation remains open to the north and south.

And all we see is a small bump in share price?

Today GBR announces shallow, high-grade gold mineralisation intersected at the Mulga Bill Prospect at Side Well.

The same area we saw results from in November.

This time the mineralisation intersected is far higher though, with highlights including:

  • 16m at 4.98 grams of gold per tonne (g/t) from 28m, including 4m at 17.71g/t from 32m
  • 12m at 1.20g/t from 68m, including 4m at 2.52g/t from 76m
  • 4m at 1.01g/t from 68m

GBR say the latest results demonstrate the continuity of mineralisation over an extensive strike length of 3.7 kilometres, demonstrating potential for a significant discovery.

And now we see the share price soar.

However, besides the first hole listed, the other holes do not contain grading significantly higher than we’ve previously seen.

Get to the point!

The point I’m trying to make here is to be cautious when evaluating gold stocks.

In my opinion, today’s share price action is highly reactionary and based on information we might have already been able to induce.

Because of the speculative nature of gold stocks to begin with, the share price action today could suggest that many investors were hesitant about the quality of gold grading at the project.

But with just a couple of holes containing higher grades than previously seen, the share price spikes.

And if you had been a speculator when news of the extension was released, today’s share price action might mean you have just broken even.

Don’t get me wrong, it is great to see GBR making good progress at Side Well, but I would be wary about its outlook.

If you are looking to get into gold, one way to get exposure is to buy stocks like GBR. However, these types of stocks are inherently risky — like we have just seen. Another play is to buy physical gold. For a step-by-step guide on how to buy physical gold, you can check out Shae Russell’s ‘Best Way to Buy, Sell, and Store Gold’ here for free.

Kind regards,  

Lachlann Tierney

For The Daily Reckoning Australia