The world has been in all sorts of economic chaos due to the range of macroeconomic issues that have engulfed it in 2019. That has meant that investors have had a hard time getting comfortable. In such a situation, investors look toward things like gold stocks and other safe haven stocks for proverbial “security.” As the trade war between the United States and China rages and uncertainties regarding rate cuts continue, the price of gold is expected to rise.
Gold Stocks To Watch
Some of the notable stock gainers include:
- Asanko Gold Inc (TSX:AKG) up 50% in the past two months
- Harmony Gold Mining Co. (NYSE:HMY) has gained about 95% since early July
- NovaGold Resources Inc. (TSX:NG) is up over 85% since early June and made a new 52-week high last week.
But this is just the tip of the iceberg as the gold price boom reaches far and wide. Tepid global economic data continues to suggest a bullish case for gold. Non-farm jobs figures, China PMI and the business climate for countries like Germany could point to a slowing economy. This would help the stance on safe-haven stocks. Furthermore, if the Fed sticks to a plan that would involve more rate cuts, there could be even brighter days ahead for the yellow metal.
Gold Stocks #1: RosCan Gold (ROS.V)
These are “early days” in its exploration program. RosCan Gold Corporation (ROS.V) property position is not only on the prolific Siribaya Structure which hosts the Siribaya, Kabaya, Seko and Mankouke discoveries but also covers many other gold anomalies and several other structures. With a significant land position of 100%-owned permits in an area of producing mines, this junior miner may soon hit the radar of gold bulls.
RosCan recently announced positive assay results from both its diamond drilling and air core (AC) drilling programs at its Kandiole Project in Mali, West Africa. This drilling program was completed during April to July of 2019 and was designed to test both the north and south extensions of the Mankouke gold discovery zone and many other strong termite and soil, gold anomalies. Based on these highlights, RosCan management appears optimistic about the future prospects of the property:
|In hole ACMan 19-167||5.86 g/t Au over 26.0 m (incl. 9.44 g/t Au over 10.0 m)|
|In hole ACMan 19-168||3.74 g/t Au over 30.0 m (incl. 6.73 g/t Au over 6.0 m)|
|In hole DDH 19-04||8.63 g/t Au over 10.0 m (incl. 11.48 g/t Au over 7.0 m)|
|In hole DDH 19-03||6.53 g/t Au over 5.0 m (incl. 10.09 g/t Au over 3.0 m)|
|In hole DDH 19-03||5.56 g/t Au over 3.0 m (incl. 7.14 g/t Au over 2.0 m)|
|In hole DDH 19-08||3.45 g/t Au over 10.0 m (incl. 6.76 g/t Au over 3.0 m)|
This drilling indicates that the initially reported gold discovery (News Release January 24, 2019) has “roots” and is not near-surface enrichment (supergene). This drilling information clearly shows the potential at depth in this area and identifies that this is typical Birimian, hydrothermal-type gold mineralization.RosCan Corporate update, July 22, 2019
Gold Stocks #2: Eldorado Gold (EGO)
At nearly $9 a share, you would hardly believe that earlier this year, Eldorado Gold (TSX:EGO) was just a penny stock. This gold stock has rallied from 52-week lows of US$2.52 to 52-week highs of US$8.99 within the span of a few months. JP Morgan raised its price target this week from C$10 to C$13. National Bank followed suit by raising its target C$0.50 to C$11.50.
Though the company missed earnings estimates, prospects for gold are too hard to ignore. Gold production for the quarter totaled 91,803 ounces with 174,780 ounces produced year-to-date. Gold production included 33,140 ounces from Lamaque in its first quarter of commercial operations, of which 5,057 ounces were produced from stockpiles mined during the pre-commercial production period.
Furthermore, the company finished the quarter with approximately $300 million of available cash including $119.9 million in cash, cash equivalents and term deposits and approximately $179 million available under its $250 million line of credit, with $71 million of capacity on the line of credit allocated to secure certain obligations in connection with its operations.
Gold Stocks #3: Yamana Gold (YRI)
The third company on this list of gold stocks to watch: Yamana Gold (TSX:YRI). Similar to Eldorado, Yamana made new 52-week lows and highs within the span of just a few months. In May, the gold stock traded as low as $1.78 and just a few days ago it hit highs of $3.74.
Yamana saw its fare share of target price increases over the last few days as well. National Bank ($C4.50 to C$5.25), Either Capital (C$4.50 to C$5.5), RBC Capital (C$3 to C$3.50) and Raymond James (C$3.25 to C$3.50) all raised price targets. Yamana also announced the Reference Yields and Consideration payable in connection with its previously announced cash Tender Offer for its 4.78% Senior Notes due 2023.
Yamana Gold Inc. is a Canadian-based precious metals producer with significant gold and silver production, development stage properties, exploration properties, and land positions throughout the Americas, including Canada, Brazil, Chile, and Argentina.
Key Reasons Behind A Move In Gold
At the start of the year, gold was trading at just under $1,300 per ounce but since then it has gone on an incredible rally as more and more capital flowed into it. Over the past days, the price of gold hit $1520 per ounce. Many analysts believe that the price is going to rise further during the rest of the year. While Goldman Sachs stated last week that it believes that the price could breach $1600 per ounce in the second half of 2019, there are other analysts who believe that gold could even hit $2000 per ounce.
The assertion of these analysts is not completely overblown, considering the fact that the trade war between the United States and China has taken a turn for the worse. The two nations seemed to have been on the path to reconciliation toward the end of July but last week United States President Donald Trump imposed tariffs on $300 billion worth of Chinese goods.
In retaliation, China devalued its currency and analysts believe that it could also spark a currency war between the two nations. In such a situation, it is only natural for investors to quickly look for safer assets to invest in and at this point in time, it is hard to look past gold.