There's never been a better time to strike gold – no, I mean that literally.
The Predictive Discovery Ltd (ASX: PDI) share price charged out of a trading halt yesterday to hit a nine-month high after announcing some very promising exploration results.
The PDI share price surged nearly 150% to 2.2 cents when management said that its nine-hole diamond drilling program at its project in northern Cote D'Ivoire uncovered results that exceeded its expectations.
As I mentioned, Predictive Discovery couldn't have picked a more opportune moment to hit the motherlode as conditions for gold miners haven't been this good since the global financial crisis (GFC), in my view.
Gold shining brighter
Shareholders can thank this falling interest rate environment with the US Federal Reserve indicating its willingness to lower interest rates just hours after the Reserve Bank of Australia (RBA) cut rates here for the first time in nearly three years to a new record low of 1.25%.
This is good news for gold on a few fronts. Gold is a store of value but doesn't generate any interest. With rates heading towards zero here (and likely to fall in other developed economies), investors won't be getting much in terms of interest for holding cash.
The other thing is that the value of gold tends to rise in the face of economic uncertainty. With rates falling towards emergency levels, I think there are plenty of reasons for investors to be nervous.
This in part explains why the Newcrest Mining Limited (ASX: NCM) share price and Evolution Mining Ltd (ASX: EVN) share price has been performing well recently.
Strong exploration result
Coming back to Predictive Discovery, the junior explorer announced that it stuck "thick gold intercepts and high-grade intervals in a body that is up to 100 meters wide and at least 210m long, open to the south and at depth" at its joint venture Ferkessedougou North gold project at Ouarigue South.
"These results are a significant improvement on the initial reconnaissance RC results at Ouarigue South and suggest that overall gold grades are higher at depth i.e. below the near-surface weathered zone," said its managing director Paul Roberts.
"Deeper drilling along strike to the south may therefore produce higher grades than the initial, shallow RC holes. Also, most of the mineralised body contains reportable gold grades, which bodes well both for ore continuity and tonnage potential."
But investors shouldn't get ahead of themselves. It will be a while before Predictive Discovery will generate any cash from this promising project and it's anyone's guess what the health of the global economy will be like then.
