Gold Stocks To Watch For March 2020
Gold prices and gold stocks for that matter have been pushing higher and higher amid the last bout of market uncertainty. That was true right up until last week. While gold prices reached some of the highest highs in the last 7 years, that was short-lived. For the majority of gold stocks, that was also the case. But are there certain gold stocks to watch amid this latest trend that didn’t get hit by a coronavirus infection?
To understand that, we need a general overview of the markets last week. If you weren’t watching last week – I don’t know how you couldn’t be – the S&P 5000 had its worst week since the financial crisis-era. For 7 consecutive days, the market tumbled. Just to give you an idea of how bad it got, the SPDR S&P ETF (SPY – Free Report) opened at $337.79 on February 19th.
While many saw the markets reach new highs, they also saw a massive fall-out from coronavirus fears. By February 28, the SPY hit lows of $285.54 equating to a 15.5% drop in 7 days and a level not seen since last October.
Gold Stocks Not Immune To Coronavirus
Many assume that market fears = gold prices jump, that was not the case for the majority of gold stocks. Gold futures reached highs of $1,691.70 on February 24th and while the drop wasn’t as long as the S&P, the damage was also done. By Friday (2/28), the price of gold dropped to lows of $1,564. This 7.5% dip triggered a number of gold stocks to reverse their bullish courses.
Most large-cap gold stocks like Barrick Gold stock (GOLD – Free Report), Newmont Gold stock (NEM – Free Report), Kinross Gold stock (KGC – Free Report), and Franco Nevada gold stock (FNV – Free Report) all felt the pressure. What may have contributed to this is the supply and demand of certain countries crippled by the novel virus.
“Physical transaction in China and India are typically conducted face to face, and we anticipate that these transactions are going to plummet as the coronavirus crisis plays out,” said Peter Grant, vice president of precious metals at Zaner Metals. But this might not be a long term point of contention. As others have pointed out, new or expected stimulus plans may start to play a role.
“Our Fed should start being a leader…We should have the lowest interest rates…And now we have this problem…You saw where Germany is lowering and also infusing a lot of money into their economy. I haven’t heard our Fed say they should do this.”U.S. President Donald Trump
Lower rates could be just a starting point. The U.S. Federal Reserve Chair, Jerome Powell expressed a very uncertain outlook for the economy. He cited the coronavirus as posing “evolving risks” and that the Fed will use its “tools and act as appropriate to support the economy.”
Gold Stocks Outpacing & Maintaining Bullish Position
While most gold stocks felt the pressure, there were others, including junior gold stocks that didn’t seem as affected by the coronavirus. Take, IMC International Mining (IMIMF – Free Report) (IMCX) for instance. This was one of the gold stocks we’ve discussed over the last 2 months. Heading into March, shares of the junior gold discovery company has upheld a generally bullish trend. Since the U.S. listing went online in late January, we can look to its Canadian listing for a bigger picture of the gold stock.
At the start of the year, shares of the company traded around $0.25CAD. By the end of the month, it had reached highs of $0.50CAD. However, it has maintained a level of trading in a channel between $0.38 CAD and $0.45 CAD for the better part of February. While this may not appear to be a major stand-out for the stock – a sideways trend – consider the rest of the sector.
Barrick Gold stock saw a drop of nearly 20% from 2/24 to Friday’s low. Franco Nevada gold stock dropped 15% during the same period while Yamana Gold (AUY – Free Report) dipped over 25%. If that doesn’t paint the picture, look at the Direxion Junior Gold Miners ETF (JNUG – Free Report). On February 24th the ETF opened at $104.60 & by Friday hit lows of $42.50. That’s a 59% drop for junior gold stocks in general.
Gold Stocks To Watch: What Is Going On With IMC International Mining Right Now?
Considering the last fact with JNUG, it might be a question the markets are starting to ask right now: What’s going on with IMC International Mining Right now? It’s one of the few juniors actually holding a trend. Over the last few weeks, the company has released a few significant updates that could suggest growing anticipation for its next move:
IMC International Mining Corp. Announces Thane Minerals Inc. Property Acquisition & Addition of Chairman, Greg Hawkins
First, the company announced a potentially big acquisition opportunity in early February. IMC signed a letter of intent to acquire Thane Minerals which owns 100% of the Cathedral property in northern British Columbia, Canada. The significance of this property is its location and close proximity to high production gold zones.
The Cathedral Project is in an area called the “Quesnel Terrane” which is host to past and planned production. Furthermore, the deal would see industry veteran, Greg Hawkins come onto the company’s Board as Chairman.
Hawkins was the Founding Project Consultant and/or Founding Director of seven public and private Exploration/Development ventures including Brohm Mining, Banro Resource Corp, African Gold Group and other companies that were eventually acquired for millions and even billions of dollars:
- Tagish Lake Gold Corp – Acquired by New Pacific Metals, a company with a market cap of over $760 Million. Hawkins is also the current Director of the company.
- Yellowhead Mining – Acquired by Taseko Mines for nearly $20 million
- Dayton Mining – Acquired by Pegasus Gold Inc. for $390 million
- Nevsun Resources – Acquired by China’s Zijin Mining for $1.8 Billion
In addition, the company not only was able to raise additional capital but appointed a new Chief Financial Officer. David Charlton is a Chartered Professional Accountant (CPA) with over 7 years’ experience working with junior mining, oil and gas, blockchain and cryptocurrency companies in the public sector. Prior to joining the Company, David worked for midsize audit firms where he serviced a variety of TSX Venture Exchange and CSE-listed companies in audit and assurance, business consultation, financial statement preparation, and compliance.
What’s Next For Gold Stocks This Month?
Coronavirus fears have pushed global interest rates lower. As one of the signals of the future of the global economy, this could be a key metric to pay closer attention to than the virus itself. It essentially reflects an overall rush to safe-havens. It also shows anticipation that the Fed and other central banks could further cut interest rates.
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In general, long-term interest rates drop to low levels during times of financial panic and recession. Right now, however, the economy is in good shape so “economic disruption” is more of the focus right now. But it’s also a reason that central banks could leave rates low (or lower) indefinitely. That is until there is a dramatic change in global economics. That obviously continues to tighten the margin on the ability (or lack thereof) for the world economy to weather any more storms.
In response to the Fed’s ability to offset a mild to a moderate recession, Joseph Gagnon, a senior fellow at the Peterson Institute for International Economics told The New York Times, “If this is a severe shock, they don’t have the ammunition to deal with it.”
This could continue to drive bullish sentiment for gold stocks after coronavirus panic settles down. While most gold stocks have corrected, where will the next gold price bull run put those other gold stocks that haven’t pulled back thus far? Since the start of 2020, plenty of gold stocks saw dramatic uptrends in volume and share price. Will gold stocks 2.0 produce even bigger gains if the global economic environment remains the same?
Pursuant to an agreement between Midam Ventures LLC and IMC International Mining Corp. (CSE: IMCX) (IMIMF), Midam has been paid $200,000 for a period from January 7, 2020, to February 14, 2020. Midam has been paid an additional $200,000 and extended its period of coverage to March 14, 2020. Midam has been paid an additional $200,000 and extended its period of coverage to July 9, 2020. We may buy or sell additional shares of IMC International Mining Corp.(CSE: IMCX) (IMIMF) in the open market at any time, including before, during or after the Website and Information, to provide public dissemination of favorable Information about IMC International Mining Corp. (CSE: IMCX) (IMIMF). Read our full disclaimer here.
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