Should These Gold Stocks Be On Your Long Term Watch List In 2020?
When we talk about investing in gold stocks, many investors tend to focus on the long term. There are a few reasons why this is the case. For one, gold stocks are usually quite stable. This means that the potential for large, short term gains, is not always there. Of course, there will always be swing traders in any industry, but gold stocks may not be the right stocks to trade if that is your goal. In addition to this, if we look at long term trends, gold stocks tend to rise over a longer time frame.
Gold stocks tend to rise and fall with the price of gold, itself. Although they can be more or less volatile than that price, they usually follow the same, general trend as bullion. During the past decade, gold is up around 52%. But during that 10-year timeframe, a lot has happened. While this may seem like a small amount over the period, those who invest in gold are doing so usually for the stability of the asset.
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After hitting a per ounce high of $2,089.20 in August, gold has since remained around the $1,960 mark. Whether you’re looking to diversify your watch list or simply add more gold names, these gold stocks have begun turning heads this month.
Gold Stocks To Watch: Freeman Gold Corp.
Freeman Gold Corp. (FMAN Watchlist)(OTC:FMANF) could be a rising star in the gold mining industry. The company focuses primarily on mineral exploration and extraction. Its business model usually follows a straightforward path. This means purchasing land, exploring the land, and then developing it into a gold producing operation. Although it does mine silver and copper, Freeman Gold is primarily concerned with the extraction of gold. Freeman’s main mining project is the Lemhi Gold Project, based in Lemhi County, Idaho.
The land consists of 99 unpatented claims and 11 patented claims. Freeman Gold reportedly has a large deposit of gold on hand. Estimates show that there are around 1 million ounces of raw oxide material at the Lemhi Project. Currently, Lemhi has 355 holes drilled in the areas with the highest concentrations of gold. These holes offer invaluable information as to what lies beneath the surface. Last year, Idaho was ranked No. 8 in the world in terms of its mining attractiveness by the Fraser Institute. This gives light to the fact that there is a great deal of potential for extraction at the Lemhi Project.
More recently, Freeman Gold acquired a back-in right from Yamana Gold Inc. (AUY Stock Report) over the Lemhi Project. The deal gives 4,035,273 shares of Freeman Gold to Yamana in consideration, equating to a 5% stake in Freeman. With the expertise of Yamana and Freeman Gold’s strategic advantages, the hopes are that this could open up new opportunities later on.
What’s more is that this week, Freeman also acquired the Moon #100 and Moon #101 unpatented mining claims, located within the historic resource area of its Lemhi project. The Moon Claims are located towards the northern portion of the historical resource area which is said to contain “significant gold mineralization”. Considering this recent progress and momentum from this week, will this be on your list of gold stocks to watch this month?
Gold ETFs To Watch: VanEck Vectors Gold Mining ETF
While the performance of gold this year has been quite good, gold mining ETFs have arguably seen considerable growth. The VanEck Vectors Gold Miners ETF (GDX ETF Report) shot up by around 41% so far in 2020. When compared to the S&P 500s gain of 3% in the same time, we can begin to see the value in gold ETFs. An interesting aspect of investing in a gold ETF is that investors can have more exposure to the broader market.
Rather than having a few small positions in some gold stocks, investors can have a much broader exposure to the gold mining industry. When considering ETFs like the VanEck Vectors Gold Mining ETF, we have to consider the more broad based aspects that make gold prices rise or fall.
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In addition, gold ETFs are a great way to hedge bets on the market when more traditional stocks are in decline. The VanEck fund in particular aims to follow the price and performance of the gold mining industry. It does this based on the NYSE Arca Gold Miners Index.
Gold Stocks To Watch: AngloGold Ashanti Limited
AngloGold Ashanti Ltd. (AU Stock Report) is a mineral exploration company focused on the production of gold. Based in South Africa, AngloGold has mines around the world in South Africa, Australia, Asia, and the Americas. While it does work in many aspects of the gold mining industry, the company mostly focuses on the production of gold. As of 2020, AngloGold has over 17 mines that span nine countries.
While it mostly is a gold stock, AngloGold also has exposure to the silver and uranium markets as these byproducts are a result of large mining operations. In 2019, AngloGold posted an EPS growth of roughly 71%. Many believe that this year will show similar, if not greater increases in its EPS. Estimates show that AngloGold could show an EPS growth this year of almost 125%. While these estimates may be high, there is no doubt that AngloGold has a lot of growth potential.
One of the interesting things about AngloGold is that analysts have continued to increase their projections for the company’s earnings. In the past month alone, analysts have risen their estimates for the company’s earnings by around 7%. While this does depend on what happens with COVID-19, AngloGold Ashanti looks like it is in a unique position.
Gold Stocks To Watch: Coeur Mining Inc.
Coeur Mining Inc. (CDE Stock Report) is another major gold mining stock to watch. Throughout 2020, Coeur has had some topsy turvy trading. This is mostly due to the effects of COVID on both the stock market and the gold mining industry. Because of COVID, Coeur Mining had to suspend production at its major mining operation in Palmarejo, Mexico. After this occurred, the company announced that it “will continue targeting safe execution of its operating plans and reevaluate instituting full-year 2020 guidance as the year progresses.”
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In its first quarter of this year, Coeur posted a sales increase of roughly 20% year over year. While the Palmajero mine had its operations suspended, the location itself still holds a major amount of gold mining potential. Additionally, Coeur completed a $100 million revolving credit loan to ensure that its finances would remain stable in the foreseeable future.
If we use last year as a guide to where Coeur was headed pre-COVID, we see a large amount of forward potential. In 2019, the company was able to push gold sales to more than 75% of its total revenue. This means that while Coeur may mine other materials, it is primarily a gold stock. In the past ten days ending on September 17th, CDE stock has shot up by around 10%. Since March of this year, Coeur is up by more than 130%. With a lot of growth potential on the horizon, Coeur remains a stronghold gold stock to watch.
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