Six Gold Trends To Watch Closely In 2020
FN Media Group Presents Oilprice.com Market Commentary
London – November 7, 2019 – 2019 is already on track to be a major win for gold investors, and it’s not likely to slow down anytime soon. The global economy is looking increasingly dangerous, just as Goldman Sachs is saying that ‘peak gold’ may be right around the corner. Stock markets are beginning to look less interesting for savvy investors, and a ‘perfect storm’ for gold is already forming. Mentioned in today’s commentary includes: Pretium Resources (NYSE:PVG), Alamos Gold Inc. (NYSE:AGI), Osisko Gold Royalties Ltd. (NYSE:OR), IAMGOLD (NYSE:IAG), Kinross Gold Corporation (NYSE:KGC).
The biggest winners though? Gold miners. More specifically: miners who meet a specific but simple criterion…
1) They’ve got a tech edge
2) They’ve got a proven team
3) They’ve got the resources in the ground and the skill to bring them out.
New technology isn’t just unlocking new gold veins… it’s also rediscovering legendary gold hotspots such as the Klondike or Julius Caesar’s gold in Romania. And only a few teams have the experience and know-how to dig it up. With gold prices on the rise, gold miners are gearing up for what could become an unforgettable 2019.
Here are 6 trends to keep an eye on as you get into the gold game:
#1 The Next Big Growth Story
Canadian Pretium Resources (NYSE:PVG) is one of the most exciting growth stories in the gold space.
Pretium is sitting on top of a diverse portfolio of precious metal properties throughout the United States, Canada, and Mexico. Its prized mine, however, is Brucejack mine in British Columbia, which is fully owned by the company. A 2016 estimate estimated the total gold reserves of Brucejack at 8.7 million ounces. At today’s gold prices that’s no less than $11.3 billion.
Over 154,484 ounces of gold was unearthed in its first six months at this 2,700 ton-per-day high-grade gold mine. Now, Brucejack is averaging nearly 13 grams of gold per ton of rock mined, a very modest output that is allowing Pretium to keep their all-in sustaining costs well below the global gold mining average.
In terms of exploration, Pretium has administered comprehensive geological sampling in the vicinity (15-30km) of the mine and has unearthed deposits with grades as high as 19.25 grams of gold per ton.
Long term, investors are excited by the 100 percent company-owned snowfield property. In addition to porphyry-style gold and gold-copper deposits, the exciting -and reliable- property also benefits from molybdenum and rhenium mineralization.
#2 Undervalued Plays
The Ancient Romans excavated $16.8 billion at today’s prices in gold from this area of Romania, minting coins that were scattered across an empire 11 million square miles in size.
Modern research indicates that Europe still has billions in gold locked away, with hundreds of mines sitting around just waiting for re-activation.
The problem? Acquiring permits can be labor-intensive and sometimes impossible, thanks to EU regulation.
Back when permits were available, Barrick Gold, the world’s most valuable gold miner, got in on the action: the company pumped in $20 million to develop Rovina. Now Rovina is owned by Euro Sun… and Euro Sun has done the impossible… it just got its hands on a mining permit.
The Rovina mine has been classified as a “highly scalable” asset, with an immense growth potential, according to Cantor Fitzgerald. Mines like Rovina are hard to come by, even though the area is rich in ore. And Euro Sun (ESM, CPNFF) has gotten around its toughest problem – acquiring the licenses it needs to start developing Rovina’s full potential.
Industry experts like GMP and Cantor Fitzgerald agree that Euro Sun is significantly undervalued. Cantor Fitzgerald has deemed Euro Sun’s short-term target to be $2.10 – a huge increase from its current price. If this sounds too good to be true, just wait: GMP estimates Euro Sun’s value could be $2.70, an increase of a whopping 671%.
Right now, in large part thanks to the sorry state of the small mining stock market, Euro Sun is a penny stock. But that could change at any moment. With such a huge find ready for the taking, this could be the gold story of 2019. Plus, any small move on the gold market could potentially accelerate the company’s rise… from 5x to 10x to even 30x its current market cap.
#3 Partnerships, Partnerships, Partnerships
Next on the ‘gold stocks to watch’ list is Canada-based Alamos Gold Inc. (NYSE:AGI), a mid-tier gold producer that owns four fully functional gold mines in Ontario and Canada.
Apart from their gold mines in Canada and Mexico, Alamos owns additional development projects at home in Manitoba, Canada with its Lynn Lake project, in Mexico with La Yaqui and Cerro Pelon, an extension of the Mulatos Mine, and even as far-flung as Turkey, where it owns the Kirazli, Agi Dagi, and Camyurt development projects. Its Kirazli project is especially significant as the company recently received a key operating permit from the Turkish Department of Energy and Natural Resources…
This massive development will permit Alamos to scale up construction, with the goal of kicking off initial production at the mine by the end of 2020. This is exciting news because Kirazli’s probable reserves sit at 10,078,000 ounces, or approximately $13 billion in revenue for the company.
Additionally, Alamos Gold also closed a major deal with Metalla Royalty and Streaming, securing $8 million in Metalla shares in a sale of 18 royalties on assets not owned by Alamos. The deal means that Alamos will now own 6.26% of Metalla.
Alamos’ growing portfolio and key partnerships make it an interesting stock to watch for goldbugs and stock market investors alike.
#4 Diversity Is Key
Osisko Gold Royalties Ltd. (NYSE:OR) boasts an exceptional portfolio of assets spread across the globe, with plenty more royalties and exploration in development. Osisko Gold Royalties is now being watched very closely by investors who have zeroed in on a telling deviation amid the vast amounts of data available on all publicly traded companies – you see, the key to successful trading is not having just access to the information, but knowing what exactly to look for and what to make of it.
In this case, the movement that has caught the market’s eye is that the firm’s Mesa Adaptive Moving Average (MAMA) has moved above the Fractional Adaptive Moving Average (FAMA). In layman’s terms: there is potentially some major upward mobility in Osisko’s near future.
With its investors feeling bullish about Osisko’s prospects, the company’s stock has climbed at a healthy clip over the last year. To get into the nitty gritty, “shares have moved 6.53% over the past 4-weeks, 58.50% over the past half year and 25.48% over the past full year.”
Osisko is a smart, low-risk investment thanks to its consistent growth and impressively reduced debt. Investors who were lucky enough to get their hands on Osisko stock in the last quarter of 2018 will be the first to tell you what a rewarding buy it is.
#5 Rock Solid Fundamentals
Another company to watch is Canada-based IAMGOLD (NYSE:IAG). The enthusiastic young company is a budding mid-tier gold miner that looks like it’s on track to become a major in the gold mining industry.
Sure, the company has withstood some recent setbacks, first by postponing its Cote Gold project and now by revealing a plan to lay off 32% of the workers at its Westwood mine. These moves, however, have kept stock prices appetizing and set the company up for a major bounce back. Many traders are still bullish on IAMGOLD, expecting continued growth from the ambitious company.
The company originally amassed a fair bit of hype when it produced some 214,000 ounces in Q1 2017 thanks to its successful operations in South America and Africa. Now, this past June, IAMGOLD closed a new and a momentous deal with Japanese commodity giant Sumitomo, which will result in the development of a new Ontario gold project.
Right now, is the perfect time for investors to get involved with IAMGOLD as the buzz wears off but the projections are rock solid for this quickly-growing commodity.
#6 Social Responsibility Matters
Kinross Gold Corporation (NYSE:KGC) is relatively new on the scene, founded in the early 90s, but it certainly isn’t lacking drive or experience. In 2015, the company received the highest ranking of any Canadian miner in Maclean’s magazine’s annual assessment of socially responsible companies.
While Kinross posted a significant loss in the fourth quarter of 2018, the company is making strong moves to turn around its earnings, including the hiring of a new CFO, Andrea S. Freeborough.
“Andrea’s successful track record at Kinross and throughout her career, including accounting, international finance, M&A, and deep management experience, will be an excellent addition to our leadership team,” said Mr. Rollinson. “We have great talent at Kinross and succession planning is a key aspect of retaining that talent for the future success of our Company.”
By. Meredith Taylor
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