Smart money sees opportunity in Gold and gold stocks post-COVID-19 – 5 stocks to watch
By Staff Writer
According to the just-published CPM Gold Yearbook 2020, “annual average gold prices rose for the fourth consecutive year during 2019. The gains during 2019 were stronger than those seen in any of the three previous years, with annual average gold prices up 9.8%. Gold prices reached a six-year high on an intraday basis during 2019 and ended the year 18.9% higher than at the end of 2018.”
CPM Group analysts foresee gold prices to continue on their upward path this year and to reach new record highs in the medium term thanks to ongoing central bank buying, gold’s safe haven status, low to negative interest rates, the COVID-19 virus, mounting global debt and strong gold ETF buying.
The CPM Group noted that investors were net buyers of 16.6 million ounces of gold during 2019, up 18.6% from 14 million ounces in 2018. Investors in gold ETFs added 10 million ounces of gold to their holdings on a net basis during 2019. This was the highest level of net additions to holdings since 2016.
The report went on to state that “The price rally that began in the second half of 2019 looks like it has the ability to sustain itself given various risks that are beginning to materialize.”
But what about gold and gold stocks after the COVID-19 pandemic eventually subsides? A recent report by mining analysts at CIBC was of the view that rising gold prices and, despite COVID-19 mine closures and other precautions, the solid balance sheets of beaten-down gold producers will make them buying targets.
“The current environment in 2020, with near-zero interest rates, market uncertainty and ongoing liquidity injections, provides a bullish set-up for gold and silver,” the CIBC analysts stated. “As the dust settles, we would expect the rebound to be rather swift.”
The TSX Venture Exchange Index chart shows an encouraging V-shaped recovery to about 400 – up from below 340 a few days ago.
Below are five gold stocks that are already recovering and deserve to be watched post-COVID-19.
Aurania Resources Ltd. [ARU-TSXV; AUIAF-OTCQB] is focused on precious metals and copper. Its flagship asset, The Lost Cities – Cutucu Project in southeastern Ecuador, is located in the Jurassic Metallogenic Belt in the eastern foothills of the Andes mountain range of southeastern Ecuador.
Liberty Gold Corp. [LGD-TSX; LGDTF-OTC] is exploring the Great Basin of the western United States. The company’s flagship projects are Black Pine in Idaho and Goldstrike in Utah, both past producing open-pit mines, where previous operators “only scratched the surface”.
Since its initial public offering in 2010, Teranga Gold Corp. [TGZ-TSX; TGCDF-OTCQX] has produced more than 2 million ounces of gold at its Sabodala operation in Senegal, West Africa. Its objective is to become a mid-tier producer. To that end, the company recently announced commercial production at its second gold mine, Wahgnion, located in Burkina Faso, and is carrying out exploration programs in three West African countries: Burkina Faso, Ivory Coast and Senegal.
“Consolidated first quarter production is likely to be between 85,000 and 90,000 ounces as expected,” said Paul Chawrun, COO.
Eldorado Gold Corp. [ELD-TSX; EGO-NYSE] is a mid-tier gold and base metals producer that includes mining, development and exploration projects in Turkey, Canada, Greece, Romania, Serbia and Brazil. Key operations include the Kisladag and Efemcukuru mines in Turkey, the Olympias Mine in Greece, and the Lamaque Mine in Quebec. Together they produced 395,331 ounces of gold last year, including 113,940 ounces from Lamaque where operations have been temporarily minimized to comply with provincial government-mandated restrictions to address the COVID-19 pandemic.
Skeena Resources Ltd. [SKE-TSXV; SKREF-OTCQX] is exploring two prospective precious metal properties in the Golden Triangle region of northwest British Columbia, Canada. The company’s primary activities are focused on the past-producing Eskay Creek Mine and Snip Mine. The company just raised $20 million.