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October 7th, 2020 | 11:45 CEST

Nornickel, Newcrest Mining, Triumph Gold: Which stock benefits from rising gold prices?

  • Gold
Photo credits: pixabay.com

While the price of gold is slowly but surely picking up speed again, many investors are asking themselves with which share they will best profit, from rising precious metal prices. Many investors initially think of stocks such as Rio Tinto or BHP Billiton - but these companies are virtually not involved in the mining of precious metals. To profit from rising prices, investors must take a closer look. At first glance, Nornickel's stock seems to promise more of an investment in a producer of industrial metals. Still, the company also has many precious metals on offer - platinum and palladium account for more than 40% of the commodities produced. More critical are nickel and copper with a share of almost 50%. Gold and silver are only by-products.

time to read: 2 minutes | Author: Nico Popp
ISIN: CA8968121043 , US55315J1025 , AU000000NCM7

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    Nornickel: Environmental disaster impacts

    Even before the crisis, analysts assessed Nornickel as being solidly positioned. However, the stock has mostly escaped the commodity boom since the outbreak of the pandemic: On a one-year horizon, investing in Nornickel has yielded zero return. Among other things, an environmental scandal in Siberia has burdened the share. A tank of Nornickel spilt 21,000 tons of diesel and threatened a nature reserve. Observers even compared the incident with the 1989 accident of the oil tanker Exxon Valdez, and even Russian President Putin intervened and publicly criticized regional authorities and company management.

    Despite the wide range of strategic industrial and precious metals on offer, Nornickel's stock does not currently appear to be the right choice for investors who want to profit from the precious metal boom. Although platinum and palladium are also climbing, the metals appear to be too dependent on demand from the starving automotive industry.

    Newcrest Mining: Good fundamentals, scarce stock

    The situation at the Australian mining company, Newcrest Mining, is more straightforward. The company produces around 85% gold. Copper plays only a minor role. Thus the share qualifies itself from the outset as a suitable precious metal investment. Even before the pandemic, Newcrest was committed to the expansion and pursued the goal of acquiring promising projects. Newcrest also attaches great importance to the exploration of new deposits. In the first half of the year, for example, Newcrest succeeded in identifying new deposits at the Red Cris Mine in Canada.

    However, this good news has not been rewarded by the stock market: On a one-year horizon, the stock lost 12.8% - Newcrest Mining's shareholders did not benefit from the recent precious metal boom. Only short-term investors with the right hand could make a quick profit between March and August. Given the company's solid fundamentals and, in particular, its low costs, the stock seems to be well prepared for further losses.

    Triumph Gold: Interesting shareholders

    On a one-year horizon, even Triumph Gold's stock failed to convince all investors and posted a loss of around 12%. The company is exploring for gold and copper in a 200 km² area in the so-called Dawson Range, in the Canadian district of Yukon. The company recently completed the search for mineralization near the surface and is set to release more detailed results in the coming weeks.

    Jesse Halle, Triumph's exploration manager, is already confident that the results will reveal the new potential for the project. These results are to be explored in more detail from 2021.

    Thanks to successful financing round, this exploration program is already secured - shareholders do not need to fear any further capital measures. In the past, big names have participated in financing rounds: Currently, Newmont Mining and other professional investors are among the shareholders, in addition to the Zijn Mining Fund. The company has a current market value of only EUR 23 million.

    Smallcaps with more imagination

    While stocks such as Nornickel or Newcrest Mining score with mature business models and a high degree of transparency, stocks such as Triumph Gold offer investors a high degree of imagination. This is due to the early stage of exploration activity - virtually every report from the company can trigger significant market reactions. This can make even small investments promising in the long term. For many larger companies, however, small improvements and achievements are often less critical.


    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.

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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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