SBSW - Gold Just Crushed New 7-Year Highs Now What? Stocks To Watch
With Gold Surpassing $1,700 We Might Be Witnessing History & Gold Stocks Could Benefit The Most
Over the weekend there were some big global events that have now translated into higher gold prices. Not only were there more confirmed cases and deaths related to coronavirus, the global oil supply just got a shock. Thanks to not only COVID-19 but also questions of a global glut, which makes for cheap oil and destabilizes certain global economies. This all boiled down to a huge move higher for gold prices. Click the chart image below to get the big picture. You’ll see that gold prices haven’t been this high since December of 2012:
With previously agreed OPEC+ production cuts expiring at the end of March, questions now surface as to what Saudi Arabia and Russia will do next. The two superpowers can hypothetically pump as much crude as they want.
[Special Report] Small-Cap Gold Stocks are Providing Huge Opportunity for Investors
Oil was already on shaky ground last week and analysts are expecting this to be just the start. Ali Khedery was formerly Exxon’s senior Middle East advisor and now acts as CEO of U.S.-based strategy firm Dragoman Ventures:
$20 oil in 2020 is coming. Huge geopolitical implications. Timely stimulus for net consumers. Catastrophic for failed/failing petro-kleptocracies Iraq, Iran, etc – may prove existential 1-2 punch when paired with COVID19. https://t.co/cw5uzDz8Yx
— Ali Khedery (@alikhedery) March 7, 2020
As the world’s top oil exporter plans to raise its production significantly, this could further deteriorate prices. It came after the collapse of OPEC’s supply cut agreement with Russia earlier this month. While most are worrying about how markets will react this week, one sector, in particular, has been shining very bright: GOLD. This week we’ll be watching gold stocks closely as the current environment could have created a perfect storm for historic levels in gold.
Gold Stocks To Watch This Week
While many will pay close attention to large gold producers like Barrick Gold (GOLD-Free Report) and Franco Nevada (FNV-Free Report), others will be laser-focused on the junior gold stocks. These tend to spike higher in market rallies and dip further during market routs. Considering the circumstances, a bullish case is being made for junior gold stocks right now.
Last week, for example, IMC International Mining (IMIMF-Free Report) (IMCX) announced that its latest acquisition deal could be closed as soon as March 15. Given the scope of the proposed deal, it could open up more opportunities for the company to grab claims in northern British Columbia.
IMC International’s latest development is to acquire Thane Minerals, Inc. which owns 100% of the Cathedral Property in British Columbia. The Cathedral Project is in an area called the “Quesnel Terrane” which is rich in mineralization perfect for gold discovery.
The region plays host to past and planned production of 50 billion pounds of copper, 28 million ounces of gold, and has 16 producing and development projects. These are numbers that rival some of the top producing regions in the world. What’s more, if IMC International delivers on its expected closing date and does indeed acquire Thane Minerals they will have immediate access to a project which covers over 51,000 acres in Northern British Columbia. At the end of the day, IMC has strategically positioned itself to take full advantage of gold prices, right now. It has begun doing so through very recent deals that could increase the company’s gold assets in a big way.
More Junior Gold Stocks To Watch
In addition to IMC International, Sibanye Stillwater Ltd (SBSW-Free Report) and Kinross Gold stock (KGC-Free Report) could be two more juniors to watch. Not only will rising gold prices help when it comes time to report revenues but these juniors are also executing on several milestones to note. Kinross, for example, recently reported its Q4 and 2019 results. The market responded favorably but it may have been stating the obvious. Management either met or exceeded guidance targets for production, costs and capital expenditures for the past eight years.
Kinross reported a profit of $521.5 million or $0.41 per share in Q4. The numbers were a loss of $27.7 million or $0.02 a share for the same period the year prior. Management expects to further reduce capital expenditures by approximately $100 million in 2021 compared to 2020 guidance. Meanwhile, B2Gold (BTG-Free Report) has also fallen in line.
Shares of the junior gold stock exploded last week after pulling back during the last week of February. Since March 2, B2Gold stock jumped from lows of $3.89 to highs of $4.57 last week. While many gold stocks including BTG slipped at the end of the day Friday, this weekend’s gold surge could spark a boost at the start of this week.
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The company is also coming off of recent financial results. B2Gold generated revenues of $314 million in the fourth quarter, reflecting year-over-year growth of 36%. In addition, B2Gold’s consolidated gold production was 234,416 ounces in the fourth quarter. All of this helped the company’s board officially decide to declare a quarterly cash dividend for its shareholders.
Some Closing Thoughts On Gold Stocks This Month
The Coronavirus (COVID-19) has set the world ablaze with fear, anxiety & global economic uncertainty. This is leading investors to jump into “safe haven” investments, such as gold stocks. Over the last 20 years, gold prices have been on the rise consistently, standing the test of time. The last 7 years have seen a huge rebirth in a bull market for gold. Throughout the 1st quarter of 2020, the price of gold continues to rise & have even seen new 7-year highs.
With the route some countries are taking as far as oil is concerned, some analysts think the worst is yet to come. This all translates into a larger argument in favor of gold stocks seeing bullish potential.
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