KGC - Are Gold Stocks The Ticket To Profiting Off The Coronavirus?
The Latest Surge In Cases Continues To Push Money Into Safe Havens
Gold stocks and the price of gold have remained higher this week. After the late week surge last week, momentum is strong. The latest flurry of new coronavirus cases have caused more concern in the market from investors. While the S&P and Nasdaq have also pushed higher, the underlying tone may be a bit different.
The U.S. government and Federal Reserve aim to flood the market with money. Whether it’s unlimited quantitative easing or trillions in stimulus money, the printing presses are on right now. Meanwhile, this comes as the Fed cut rates just a few weeks ago. Not only did they cut them, but they also dropped them to 0%.
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In light of such an event, you can check at least a few boxes off in favor of a golden bull rally. This includes a “low rate environment” and the potential for a devaluation of U.S. currency due to more new money coming in. So, which gold stocks are performing well this week?
Gold Stocks To Watch: IMC International Mining
IMC International Mining (IMCX Stock Report)(IMIMF) is a junior gold company that has just hosted its first corporate conference call of the year. Its incoming Chairman, Greg Hawkins discussed the company’s near-term and mid-term plans for growth after it completes a new acquisition. Late last month IMC announced the signing of a letter of intent to acquire Thane Minerals and its Cathedral property. Through the multi-million dollar deal, IMC would assume control of a property that is located in a prime area with rich mineral deposits.
The Quesnel Terrane (where Cathedral is located) has been host to considerable gold and copper deposits. In fact, Quesnel specifically hosts past and planned production of 50 billion pounds of copper and 28 million ounces of gold. Cathedral is on this property located between two already established mines – Mt. Milligan and Kemess. Mt Milligan copper-gold porphyry deposit contains a combined Measured and Indicated Mineral Resource of 243.9 million tons at 0.134% Cu and 0.226 grams per ton of gold, containing 717.7 million pounds of copper and 1,769,000 ounces of gold.
Meanwhile, Kemess produced approximately 3 million ounces of gold and 700 million pounds of copper over the life of the mine. Considering the position and timing of gold prices right now, the near term plan for exploration to begin around May and drilling to begin before the end of the year according to Hawkins on the call could be enough to raise some eyebrows concerning the company. We’ll have to see what comes next.
Gold Stocks to Watch: Gold Resource Corporation
Gold Resource Corporation (GORO Stock Report)saw its stock move higher for the 4th consecutive trading day on Thursday. Shares hit a high of $3.26 during early trading. This came not only as gold prices increased but as the company also released a new update.
The company declared its March monthly dividend for shareholders of record as of April 13th. While dividends are appealing, the GORO stock dividend is 1/3 of a cent per common share. Essentially 3 shares will get you $0.01 dividend.
[Read More] Best Gold Stocks To Watch Amid Market Uncertainty
However, since July 2010, the company has returned $113 million to its shareholders in consecutive monthly dividends. It also allows for the conversion of cash dividends into physical gold and silver.
Gold Stocks To Watch: Kinross Gold
Kinross Gold (KGC Stock Report) also saw a nice move higher on Thursday. Shares tested its 50-day moving average around $4.85. Meanwhile, the stock has traded in a tight range between the 50 and 200-day moving averages. The company reported that it wants to impose a lockdown on Russia’s Kupol Mine. This was due to suspected coronavirus infection.
While the mine is set to continue to operate, Kinross doesn’t plan to ship ore for the time being. Despite this as the case, shares of Kinross gold stock continue to push higher. Earlier this month the gold stock reached lows of $2.72 but has since recovered in strong fashion. As of Thursday morning, Kinross gold stock managed to crack the $5 mark for the first time since March 11.
Something else to consider is that funds are betting big on gold right now. A recent report cited that Matthew McLennan owns gold bullion as a hedge because the future is uncertain, now more than ever. “If we knew what the future held, we’d probably have either all equities or all gold. But to recognize the limits of your knowledge is an important reason to own gold,” says McLennan, co-portfolio manager of the $1.2 billion First Eagle Gold fund (ticker: SGGDX). Will this also pose a benefit to lower-priced gold stocks like Kinross?
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