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April 29th, 2021 | 08:30 CEST

Barrick Gold, Yamana Gold, Sierra Growth: Step by step to gold investment

  • Gold
Photo credits: pixabay.com

Gold is on the rise again. The precious metal has already recovered from its lows, and in the long term, it is still on an upward trend. Added to this are rising inflation rates. The peculiar thing about it is that half the world is still in lockdown. As soon as the floodgates are opened again for consumption, growth and inflation will increase even more. Given this outlook, companies in the gold sector are currently of interest - after all, their share prices have not yet risen and therefore have potential. We present three stocks.

time to read: 3 minutes | Author: Nico Popp
ISIN: CA0679011084 , CA98462Y1007 , CA8263191055

Table of contents:


    Bill Guy, Chairman, Theta Gold Mines Limited
    "[...] Both the geology and the infrastructure around the project make for a very attractive cost structure. We expect to be able to produce at 50% of the current gold price. [...]" Bill Guy, Chairman, Theta Gold Mines Limited

    Full interview

     

    Barrick Gold: Where is the fantasy?

    Barrick Gold is the very first choice for many investors when it comes to gold stocks. The gold giant lives almost exclusively from gold mining. Only some copper is still extracted from the ground by the Company as a byproduct. 2020 went very well for Barrick - profits were bubbling. But the free cash flows did not create a bit of fantasy but rather perplexity. Where to put the money, shareholders and management wondered. In the end, there was a special dividend, which briefly put the shareholders in a good mood but also revealed that the gold giant was not making progress operationally. Shareholders would have liked to see acquisitions. There was also talk of a reorientation towards a larger copper share.

    But to date, nothing has happened in this direction. The share has lost almost 30% over the past year. Although one can assume that a comeback of the gold rally will also boost the share price again, Barrick will then sooner or later again face the problem of replacing reserves and at the same time creating a growth perspective. There are better alternatives in the gold sector.

    Yamana Gold: Medium-sized producer with pitfalls

    Yamana Gold's stock has held up much better over the past year, losing just over 10%. This relative strength could also be related to the fact that the Company, which focuses on copper and gold, recently acquired a stake in Ascot Resources. The Company is active in the Golden Triangle in the Canadian District of British Columbia and has developed projects. For Yamana, the investment offers the chance to renew reserves and to be able to accompany the development of an emerging mining district - it puts one foot in the door.

    For investors, Yamana Gold is more promising, but the stock remains an alternative for savvy investors only. As a medium-sized producer with five active projects, Yamana is always subject to the risk of something going wrong: water ingress, landslides, or other problems can shut down a mine for a short time. The quarterly figures are then almost impossible to maintain. So how can private investors invest in gold companies in the first place?

    Sierra Growth: Top or bottom with a favorable risk profile

    Those familiar with geology and the economics of mining projects can detail companies like Yamana and form their own opinion. However, those who want to reduce complexity and prefer some warrant on a comeback in the gold price can take a closer look at smaller companies, such as Sierra Growth. Sierra Growth operates in Nevada and Peru and develops properties there. What makes them unique is that the projects are in the early stages and have only been explored superficially. Detailed work is expected to turn the properties into tangible exploration projects - the targets: Gold, silver, copper and molybdenum. Initial grab samples returned promising results at several locations, such as 26.6 g/t gold and 78.6 g/t silver, or 667 g/t silver and 0.41 g/t gold.

    The next few months will show whether the early-stage projects deliver what they promise. What still sounds a bit vague from today's perspective takes on contours for speculative investors when looking at Sierra Growth's market capitalization: the Company is currently valued at just over EUR 8 million. Since Sierra Growth has several irons in the fire and an experienced team, speculative investors can take a closer look at the stock. Even if only one project offers potential for further exploration, the Company's low valuation can create excellent growth potential.

    Opportunity and risk as two sides of the same coin

    Investors have a free choice for investments in gold shares: Large producers profit from the gold price but offer little growth. Conversely, the pressure to replace reserves and create growth potential can even weigh on a stock's price, as in the case of Barrick Gold. Small companies like Sierra Growth act like a kind of warrant on commodity prices and exploration success. In the best case, rapid returns are possible. The earlier investors get on board, the lower the risk of a speculative investment story not delivering what it initially promised. What investors ultimately decide depends on their respective risk appetite.


    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may in the future hold shares or other financial instruments of the mentioned companies or will bet on rising or falling on rising or falling prices and therefore a conflict of interest may arise in the future. conflict of interest may arise in the future. The Relevant Persons reserve the shares or other financial instruments of the company at any time (hereinafter referred to as the company at any time (hereinafter referred to as a "Transaction"). "Transaction"). Transactions may under certain circumstances influence the respective price of the shares or other financial instruments of the of the Company.

    Furthermore, Apaton Finance GmbH reserves the right to enter into future relationships with the company or with third parties in relation to reports on the company. with regard to reports on the company, which are published within the scope of the Apaton Finance GmbH as well as in the social media, on partner sites or in e-mails, on partner sites or in e-mails. The above references to existing conflicts of interest apply apply to all types and forms of publication used by Apaton Finance GmbH uses for publications on companies.

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    Der Autor

    Nico Popp

    At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.

    About the author



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