27. April 2021 | 07:21 CET
Newmont, Triumph Gold, Barrick Gold: This development makes gold interesting again
Gold has been in the shadows for months. Now the precious metal could start to shine again - the reason: Asia is demanding gold on a massive scale. In March, India imported a whopping 153 tons of gold, which is more than it has done in years. China is also jumping back on the gold bandwagon. The People's Bank of China (PBOC) is now allowing imports of gold again. Within the next few months, 150 tons of gold alone will be imported into China. For the gold price and corresponding shares, this could be the starting signal.
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ISIN: US6516391066 , CA8968121043 , CA0679011084
"[...] We quickly learned that the tailings are high-grade, often as high as 20 grams of gold per tonne; because they are produced by artisanal miners, local miners who use outdated technology for gold production. [...]" Ryan Jackson, CEO, Newlox Gold Ventures Corp.
Newmont: Where is the fantasy?
When it comes to gold shares, investors first think of the big companies like Barrick or Newmont. The latter Company convinced in the past fiscal year and increased sales by about one-fifth. Although profits fell due to special effects, the business was enough to raise the quarterly dividend by a whopping 60%. Newmont mines about 80% gold and slightly less than 20% copper. Both metals were in high demand in 2020. While gold has weakened a bit recently, the copper rally at first glance caused joy among Newmont shareholders.
However, this mixture of factors did not help the share: On a one-year horizon, the value is trending sideways with a slight downward tendency. The reason for this could be the lack of imagination surrounding the share. Dividends may please many a conservative investor, but they are not enough to paint a positive picture for the future. Here, Newmont lacks fresh, new projects.
Triumph Gold: Dynamic value with moderate valuation
One of those projects could be Triumph Gold's Freegold Mountain project in Canada's Yukon. Newmont is already a shareholder in Triumph Gold and operates its Coffee Creek project nearby. Even an important road to Newmont runs through Triumph's territory. Recently, Triumph additionally secured the Big Creek property, which is expected to host gold and copper. In the coming weeks, drilling will help to examine the properties in more detail and explore the potential.
In the winter, Triumph Gold's management was relaxed and emphasized that they have sufficient funds in their coffers for the upcoming exploration work. With the new Big Creek project, the Company has another chance to convince the market with positive drill results. In an environment in which gold is stabilizing and, especially in Asia, the precious metal is again more strongly relied on, the shares of Triumph Gold could become interesting. In terms of the chart, the value is still at the bottom. As soon as good drill results meet a better environment for gold, the share should be more in demand again. Those who can already position themselves strategically today and have a few weeks to months should look at the value.
Barrick Gold: 17% loss in one year
Another company that could take Triumph Gold's promising projects into production is Barrick Gold. Arguably the best-known gold stock, most of its value is dependent on the precious metal, with only a small percentage accounted for by copper. Last year, Barrick considered how to give its share price a bit of a boost and thought aloud about increasing its exposure around copper. Projects that profitably unearth both the precious and industrial metal would be ideal for Barrick.
Barrick's stock is not a profit maker - on a one-year view, the stock lost about 17% despite the gold bull market. In comparison, Triumph Gold's annual loss of around 20% seems marginal - after all, it is a more dynamic stock, which also nearly doubled in the past year within a very short period. Given the dwindling reserves at established producers and the associated pressure to act, even cautious investors should not hastily dismiss stocks like Triumph as too speculative. Valuations have come down significantly in recent months and the stage as a project developer offers the opportunity for dynamic development. Thus, even smaller investments can make a noteworthy contribution at the portfolio level.