12. March 2021 | 08:43 CET
Barrick Gold, Scottie Resources, Yamana Gold: Not only gold shines here
Quite a few market observers expect commodities to be at the beginning of a new supercycle. Recent inflation data also suggests that commodity prices will continue to rise. According to some observers, if inflation picks up speed in times of global lockdowns, this must be a significant signal for the post-crisis period. Indeed, the world is poised for a major return to normalcy in the second half of 2021. We highlight stocks that already look promising given this starting point.
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ISIN: CA0679011084 , CA81012R1064 , CA98462Y1007
Barrick Gold: A pure gold stock
The gold price surged after the first lockdowns in March last year and reached its high in August. Since then, the precious metal has been consolidating. Most recently, the gold price took another sharp tumble and sank below the USD 1,700 mark. This tumble also weighs on shares such as Barrick Gold. The value is often mentioned by investors as the very first address when it comes to gold shares. The Company is one of the largest of its kind and has projects worldwide, making Barrick predestined to profit from rising prices for precious metals. But what is the share price doing? Falling by 4% over twelve months - a gold bull market looks different.
Barrick's problems can be explained in the short term in the lower gold prices. In 2020, the stock lost because Barrick lacked prospects. The Company made good money but could not create a growth perspective. The reason: inspections and due diligence processes of new projects fell flat because of the pandemic. In part, Barrick Gold even considered significantly expanding its copper business, which is currently negligible, to provide for fantasy. As a pure gold play, the share is heavily dependent on the gold price. If this price climbs again, the Barrick Gold share will also benefit as the top dog. However, rapid price gains are unlikely, as the Company is too cumbersome for that.
Scottie Resources: The timing could be perfect
Scottie Resources is much more dynamic and, at the same time, more broadly positioned. The Company operates in the so-called "Golden Triangle" in British Columbia, where it owns the former Scottie mine and other claims. At the end of the year, the Company discovered further deposits about two kilometers northeast of the Scottie mine, which are to be explored in more detail in 2021. New results from the Scottie mine were added in February. The drill core revealed 12.6 grams of gold and 4.4 grams of silver over about 5 meters. Again, Scottie plans to follow up and launch more drilling, starting in the summer.
Scottie's stock is currently trading at last April's level and has regained much of the gains made in the hot second quarter of 2020. Given the recent discoveries and the clear prospect of drilling in the summer, the timing may be right for risk-averse investors. While other companies in warmer climes are already drilling, Scottie's second-half results could fall on more receptive ears in the market. There is also the prospect of gold and silver. The latter precious metal is needed around renewable energies and electromobility.
Yamana Gold: Something could happen here
The Yamana Gold share shows that versatility can pay off. The Company mines not only gold but also silver and copper. This mix of raw materials is good for the share price. Compared to Barrick, the stock is doing better in the sour season for gold investors. In the last five days, the share price has risen by 7%. Nevertheless, on a one-year horizon, the gain is only 10.5%. Even though Yamana has more to offer than just gold and is thus attractive around the topics of electromobility and sustainability, the negative influence of the gold price dominated until recently.
With the slight recovery that has taken place in the meantime, the Yamana Gold share should also benefit more strongly. The Company is diversified and thus more than a pure gold play. However, due to the existing production, the significant growth phase around the share is already over. Here, developers such as Scottie Resources could be ahead in the long term. The prerequisite for this: a sustained comeback in commodity prices.