Are These On Your List of Gold Stocks Today?
With the stock market today, futures gapped up big. Largely fueled by hopes of a coronavirus vaccine, broad sector stocks rebounded from last week’s lows. However, as is the case many times, gold prices reacted inversely to the market. Gold futures pushed to highs of $1,775.80 before falling back below $1,735 on May 18th. As for gold stocks, they too saw consolidation in the morning.
However, a few managed to reach fresh 52-week highs before the consolidation began. With more economic stimulus attempting to pass and current rates still at 0, the biggest concerns may not even be related to coronavirus right now. Rather, they may have much more to do with the financial battlefield ahead. That’s considering the trillions being spent to boost the economy during the shutdown.
Commercial real estate could be among the hardest-hit industries should the health crisis deepen, the Fed said last week. Furthermore, Chairman Jerome Powell, who is due to appear before the Senate Banking Committee on Tuesday, told CBS that a full recovery of the U.S. economy may stretch through until the end of 2021. That will heavily depend on the delivery of a vaccine.
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“Asset prices remain vulnerable to significant declines should the pandemic worsen, the economic fallout prove more adverse, or financial system strains re-emerge,” the central bank wrote, in its twice-yearly Financial Stability Report.
Gold Stocks Reach New 52-Week Highs
Even in light of the recent pull-back, several gold stocks have managed to hit fresh 52-week levels. What’s more, is that it wasn’t just lower-priced gold stocks but also some of the top names in the industry. Franco-Nevada gold stock (FNV Stock Report) for example, reached an opening high of $152.70. This came after premarket trading saw shares of the gold stock jump to $155.18. Analysts have remained bullish on Franco-Nevada. Last week, Deutsche Bank lifted its price target on the gold stock to $127. That was up 27% from its previous target. The bank maintains a Hold rating on FNV stock right now.
This month, Franco-Nevada entered into an agreement with SolGold PLC to acquire a 1% net smelter royalty for $100 million. This was with reference to all minerals produced from the Alpala copper-gold project in northern Ecuador. The Alpala project is owned by Exploraciones Novomining SA, which is held 85% by SolGold and 15% by Cornerstone Capital Resources Inc. The deal is set for completion once COVID-19 travel restrictions are lifted. In the interim, Franco-Nevada agreed to provide SolGold with a bridge loan of $15 million for a period of up to 8 months.
Newmont gold stock (NEM Stock Report) also marked a new 52-week milestone. During the regular session, NEM stock reached early highs of $68.77. This came shortly after premarket trading saw Newmont gold stock reach $70.15. For the last few weeks, Newmont has crept closer all-time-high levels. It’s currently trading in a range not seen since a time when gold prices reached record highs. This month, the company expects to begin safely ramping up operations at Peñasquito in Mexico. This follows the government’s designation of mining as an essential activity.
Gold Stocks Under $10 Push Higher
The record highs haven’t been singled out by higher-priced gold stocks. Several stocks under $10 are also tapping 52-week levels. Yamana Gold stock (AUY Stock Report) reached $5.59 before the market opened on May 18. During normal trading hours, AUY formally set its new 52-week high at $5.39. While shares pulled back during the first hour of trading, Yamana gold stock has shown some resilience heading into the mid-morning session.
The company updated on its Phase 2 expansion earlier in May. It strategically positions Yamana’s Jacobina project to generate further value “bringing forward cash flows and increasing its leverage to gold prices.”
Jacobina achieved the Phase 1 objective of 6,500 tons per day (tpd) in the first quarter of 2020. This was a full quarter ahead of schedule and without the inclusion of the benefits expected from the installation of all the plant modifications.
These are scheduled for completion in mid-2020 according to the company. Yamana stated that it continues to evaluate the Phase 1 actual performance and pursue further debottlenecking initiatives to determine what is the sustainable throughput level in excess of 6,500 tpd that the mill can achieve without additional investment.
In addition to Yamana, Kinross gold stock (KGC Stock Report) has also followed through with new highs. Similar to gold stocks mentioned previously, KGC reached higher, pre-market highs. In this case, KGC hit $7.75 earlier in the day and formally put in new 52-week highs of$7.49 during the normal trading session. Like Franco-Nevada, analysts have remained bullish on Kinross gold stock. Last week, CIBC raised its price target to $9. This was a 4.7% increase from its prior target. The firm currently maintains an Outperform rating on KGC.
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