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Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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This Top Base Metal Producer Is Diversifying -- Into Gold

The last two years saw miners rushing away from gold -- into metals like copper, zinc, and iron ore.

But news this week suggests that trend may be reversing; signaling investment capital and investor confidence returning to precious metals.

The development comes in Mexico. Where local press reports that one of the country's largest base metals producers is planning to take its first steps into the gold mining business.

The company is Minera Autlan, Mexico's largest producer of manganese ferroalloys for the steel sector, which said that it is on the verge of buying a minority stake in an unnamed gold mine -- with a formal announcement expected in the next few months.

The move into bullion reportedly comes as Autlan's management has grown concerned about falling profits in the steel sector, prompting a push to diversify the company's mining activities. Related: Macroeconomic Instability For Emerging Markets Thanks To Commodity Bust

The fact that management would consider gold as its first purchase speaks highly of the prospects they see for the sector. Given that precious metals represents a greater departure for the firm than, say, copper or zinc.

And Autlan is reportedly putting serious capital behind its new ventures, with management having set aside $300 million for new mining projects. Related: Can Tesla Deliver A Self-Driving Electric Car Before 2020?

That suggests the upcoming gold mining purchase could be first in a number of new ventures, which, in turn, would mean that Mexico's gold sector could see a significant infusion of capital from this new source.

Such purchases would also be a great "line in the sand" for the gold market in general. Showing that top minds in the mining sector are seeing good potential in precious metals -- even at today's lower prices.

We'll see exactly what type of projects Autlan targets -- watch for an announcement on specifics over the next few months.

Here's to buying at the bottom,

Dave Forest

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