10. December 2020 | 11:33 CET
Barrick Gold, Newmont, Triumph Gold: Where can you get a 300% return?
Even though the gold price has taken a breather in recent months, the general conditions for the crisis metal are still favorable. All over the world, central banks and governments are overturning support measures. In Germany in particular, the consequences of the pandemic restrictions are aggressively cushioned - at the expense of higher new debt. Meanwhile, it is clear that in economies such as the USA, corona aid has been effective. In some cases, the net wealth of households have even increased. But this points to a consumption backlog, which could result in rising prices and thus a growing awareness of inflation. In the first half of 2020, the gold price has already shown how sensitive it can react to such a development. Now that gold has regained its strength after the price losses, it may be a good time to enter the market.
time to read:
ISIN: CA8968121043 , CA0679011084 , US6516391066
"[...] Our projects are at the initial, high reward exploration stage. [...]" Humphrey Hale, CEO, Managing Geologist, Carnavale Resources Ltd.
Barrick with comeback potential
One company that is often the first choice for gold investments is Barrick Gold. The world's largest gold producer is currently earning big profits due to the high resale prices and is swimming in money. If the cash flows are so lavish, companies from the gold sector have often gone into acquisition mode. But these acquisitions are currently proving difficult—the reason: Travel to properties is only possible to a limited extent. Companies like Barrick, therefore, continue to sit on large cash reserves.
Despite the good general conditions, the Barrick Gold share has come back in recent weeks and has become cheaper. Although many gold connoisseurs see the decline as a welcome consolidation, the market seems to have exaggerated. Some insiders at Barrick also see it that way and have recently taken action. Despite the lower gold prices, the gold giant may still have been able to bring its sparkling commodity to buyers at prices of around USD 1,800 an ounce - this is more reason to cheer than to sell. The fact that the stock is currently trading at the April level may be a welcome opportunity for all investors who have missed the gold train so far.
Newmont with relative strength
Newmont's share is in a much better position - the share price has been moving sideways recently and has coped very well with the consolidation on the gold market. Newmont recently announced its production planning until 2025, which envisages a slight increase in production volumes. As these figures are subject to possible acquisitions, investors do not need to over-interpret them. However, the production costs speak a clear language, which should be around $ 970 an ounce in 2021. This figure alone shows that smaller consolidations do not play a significant role for Companies like Barrick and Newmont - whether gold is at $1,900 or $1,750 is irrelevant. What is decisive is the major trend, and this appears to remain intact, even given the political framework conditions.
Triumph Gold: Fully financed with illustrious neighbours
In view of this, the share price performance of the Canadian gold Company Triumph Gold is all the more surprising. The share is currently trading around the March level. It seems that the market has lost interest in many companies whose gold projects are not yet in production. However, Triumph is anything but uninteresting: The Company operates in the Canadian Yukon and has CAD 6 million cash in the bank. The drilling program for 2021 is thus fully financed. When you hear representatives of the Company speaking, they sound very relaxed about the project.
The Freegold Mountain project has a road and is located only about 175 kilometers from a deepwater port. In the immediate vicinity, Newmont is driving the Coffee Creek project forward. Spicy detail: If one wants to connect this project to the city of Carmacks by the shortest route, the route leads via Triumph's Freegold Mountain project. Perhaps this is also the reason why the mining giant already holds 12.8% of Triumph's shares. Another well-known investor is the Zijn Mining Fund. Another almost 42% of the shares are in institutional hands.
Gold stocks: From speculative to leisurely
Investors who are looking for gold stocks can take several paths: stocks such as Barrick or Newmont are known worldwide and offer a solid investment. The short-term potential of Barrick may appear somewhat more significant than that of Newmont, which has been very stable recently. If it should be more speculative for investors, stocks such as Triumph are also an option. With a market capitalization of less than EUR 12 million and cash on hand of CAD 6 million, the valuation currently appears to be low. If the gold rush ebbs away, however, stocks like Triumph can quickly disappear into oblivion. However, if the bull market picks up speed again, the potential is all the greater: Triumph's share price more than quadrupled between March and July 2020. Given the general conditions, the value is an exciting option for speculative investors.