Last week saw gold stocks up their performance; right up until Friday. New nonfarm payroll figures came out that surprised Wall Street and boosted morale across the board for stocks. As a result, gold stocks and other mining stocks dipped at the end of the week. But does this mark a bear market for gold? Some may say yes but others still argue that gold stocks are just getting warmed up.
According to Philip Newman of London-Based consultancy Metals Focus News, “A weaker global economy in 2020 is likely to mean stronger gold prices…“We don’t have a [forecast for a] tremendous rally, but we do have it moving gradually higher.”
Citing a macro-economic backdrop, the outlook for 2020, in general, could be troublesome. Monetary policy could loosen next year as central banks weigh economic outlook versus global political spats. Newman estimates that roughly $12 trillion in debt across the globe is negative-yielding, well above that of 2017’s $8 million. With low or even negative yields, it completely gets rid of the “opportunity cost” associated with holding gold.
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Furthermore, the sharp move we’ve realized in stocks could have created lower values associated with gold. What that means is that there could be “considerable room for gold investments to grow” in 2020 according to Newman.
Silver & Gold Stocks To Watch
As the macroeconomic backdrop suggests positive momentum for gold, other mining stocks could also benefit. Silver could also perform well in 2020. Metals Focus anticipates silver prices to average around $16.20/ounce this year compared to $15.71 last year. As far as 2020’s outlook is concerned, silver could average $19.40 if Metals Focus is correct.
“Some hedge funds this year have been shorting silver outright because of the trade war and what that’s done to base-metals prices,” Newman told Kitco News. “Although it’s still a work in progress, we are seeing the amount of silver that is going into automotive markets continue to grow. Even in regular cars that you and I drive, we are seeing increasing electrification.”
Silver & Gold Stocks To Watch #1: Hecla Mining Company (HL)
First, on this list of gold stocks to watch, Hecla Mining (HL Stock Report) had a strong second half of 2019. During mid-August, shares of HL stock traded below $1.40 at times. As of the start of December, Hecla has already reached highs of $2.99.
November was a busy month for the mining stock. Hecla reported its third-quarter results citing strong silvery production. The company produced over 3 million ounces of silver along with over 77,000 ounces of gold. This helped the company report an adjusted EBITDA of $69.8 million and generate free cash flow of $28.8 million.
“The third-quarter performance, including our increased adjusted EBITDA results, demonstrates significant progress toward our twin financial goals of having no net revolver indebtedness at year-end and refinancing our senior notes,” said Phillips S. Baker, Jr., President, and CEO. This has helped Hecla attract higher analyst price targets. B. Riley lifted its target to $2.75 from $1.80. Also, Cantor Fitzgerald upped its target to $2.50 from $2.
Silver & Gold Stocks To Watch #2: Turquoise Hill Resources (TRQ)
Next on this gold stocks watch list, Turquoise Hill Resources (TRQ Stock Report) has woken up this month. After quarters of dormancy and sideways trading, TRQ stock managed to rally big during the first week of December. It was also one of the top mining stocks on Robinhood to watch for December. Since the beginning of the month, the gold stock is up over 30%.
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Insiders own nearly 50% with institutional ownership coming in at 38.5% according to data from FinViz. But while most mining stocks declined at the end of the week last week, Turquoise Hill broke out big. What’s interesting to see is that there hasn’t been much by way of gold stock news for TRQ.
Turquoise Hill is expanding its Oyu Tolgoi mine in Mongolia into one of the world’s largest copper mines. The company cited in its December investor presentation that it’s on track to achieve its 2019 guidance for copper (125k-155k tons) and looks to increase gold production up to 240k ounces.
The company’s Oyu mine was cited as one of the world’s largest new copper-gold mines in the South Gobi area of Mongolia. Furthermore, according to the company, it’s got the potential to operate for 100 years. We’ll see if the trend from last week can continue into the second full week of December.
Silver & Gold Stocks To Watch #3: Newmont Gold (NEM)
Another one of the top-performing gold stocks this month was Newmont Gold (NEM Stock Report). Similar to TRQ, NEM stock rallied last week as other gold names consolidated after the nonfarm figures came out. Not only has the stock carried on a multi-week uptrend, but for the year, shares are up considerably.
Since the beginning of 2019, Newmont stock has jumped up by as much as 23%. That’s from January 2 to its 2019 high. Considering that Newmont Gold pulled back to lows of $29.77 in the second quarter, the recovery path has been strong.
After pulling back in early November to Q4 lows of $36.07, it was nothing but uptrend since then. The mining stock was recently ranked by Newsweek as the top mining company for 2020. “Robust financial performance and effective risk management require strong, transparent governance and the integration of sustainability into all aspects of our business,” said Tom Palmer, President, and Chief Executive Officer.
This decision by Newsweek was based on the evaluation of some 2,000 public companies. Newmont was also ranked by the Dow Jones Sustainability World Index as the top global gold mining company for a 5th consecutive year.
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