If you were to look at the stock market today, you may have a different thought about gold stocks. For the most part, the shiny metal didn’t perform as well as it had last week. Yet the price of gold managed to squeeze out one last bullish cry to hold the line at $1,800 (for now).
Albeit the gold bull run may not be over, it has been on pause to start the week. Now beggars can’t be choosers as they say. But it’s worth mentioning that even with today’s dip, I couldn’t be too upset seeing as it took 9 years for gold to get back above $1,800. So what’s a few dollar-spread in the grand scheme of things, right?
That’s a conversation that could get a revisit at the end of the month. However, with a surge of coronavirus cases over the weekend, how much longer will gold pause? For those of us who were in the market about 10 years ago, this is that famous Yogi Berra scenario – Deja Vu all over again. If you recall, the months leading up to September 2011 saw “unprecedented stimulus measures” for that time. The quantitative easing during that time after the 2008 financial crisis lead to eventual inflation as we saw. But what about now?
[Read More] Can Gold Hold Its Gains This Week?
Another round of epic QE, a slow down in global economies, and another surge in cases. In addition to this, the White House has taken a different approach to one of those factors. Administration officials plan to intensify what they hope is a less conflicting message of the pandemic, according to senior administration officials. This comes after struggling to offer clear directives amid a crippling surge in cases across the country.
“The virus is with us, but we need to live with it,” is how one official said the administration plans to message on the pandemic according to NBC News.
Gold Stocks To Watch Right Now
We need to also consider that even without COVID, there are other factors that could help keep gold hot. Through the first six months of the year, those investors added $39.5 billion to gold ETFs, according to the World Gold Council. That far exceeds the $23 billion that entered gold ETFs during 2016, the previous annual record haul.
About 62% of that money has headed for U.S.-listed gold ETFs, like the SPDR Gold Trust (GLD) and the iShares Gold Trust (IAU), which together gathered more than $20 billion year-to-date. But a lot of the money has also headed for gold ETFs in Europe, and to a lesser extent, Asia.
According to the WGC, the gold ETF inflows are equal to 45% of global gold production during the first half of the year. But to be honest, some of the best gold stocks to watch might need a “silver lining”. Quite literally, silver has begun shining this week. Hecla Mining (HL Stock Report) reached a new 52-week high this week. Since March, HL stock has managed to bounce over 170% so far. All five of its mines are operating and production is strong according to the company. Silver production of 3.4 million ounces, and gold production of 59,982 ounces. The company also has a $76 million cash position.
“Our quick actions at the beginning of the pandemic minimized impact on our operations and finances, so production and cash flow generation were strong this quarter,” said Phillips S. Baker, Jr., Hecla’s President and CEO.
Freeport McMoRan (FCX Stock Report) is another one of the gold stocks to watch right now. In April 2020, Freeport announced revised operating plans in response to the global COVID-19 pandemic. The company is executing the revised operating plans in an effective manner while prioritizing the health and well-being of its employees, their families, and communities. Not only did shares reach new 52-week highs, but it also came after another key update.
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Freeport announced that it intends to offer senior notes in an underwritten registered public offering. FCX said it intends to use the net proceeds from the offering to fund its concurrent cash tender offers for up to $800 million Senior notes. The company’s portfolio includes the Grasberg minerals district in Indonesia and significant mining operations in North America and South America.
These include the large-scale Morenci minerals district in Arizona and the Cerro Verde operation in Peru. UBS also raised its price target on the stock from $12 to $16 this week.
Taseko Mines Ltd.
Taseko Mines Ltd. (TGB Stock Report) operates the Gibraltar Mine. This is the second-largest copper mine in Canada according to the company. There’s nearly 700 person workforce producing an average of 140 million pounds of copper and 2.5 million pounds of molybdenum per year. In a recent operational performance update, the company highlighted stronger performance.
“Production guidance for 2020 remains unchanged at 130 million pounds (+/-5%) with the expectation of being at the higher end of the range after the strong first five months of the year. With the current price of copper at roughly US$2.50 per pound, the highest price since its rapid decline in mid-March, coupled with the weak Canadian dollar and Gibraltar ‘s low cost structure, we are generating a healthy operating margin,”said Russell Hallbauer, Chief Executive Officer and Director of Taseko.
“Discussions regarding a joint venture with interested parties are ongoing and we are about to resume more in depth discussions with banks and other potential lenders regarding project financing,” concluded Mr. Hallbauer. What will this mean for the future of Taseko? That will be something to see as the year goes on. What we can see is that this week, TGB stock came within less than a penny of testing its 52-week high.
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