10. June 2021 | 09:13 CET
Triumph Gold, Barrick Gold, Gazprom: Where 20% beckons in the week
Today, new inflation data is due in the USA. Inflation is estimated at 3.4%. But no matter how it turns out, the development of commodity prices in recent weeks and months is already pointing the way for inflation. While some observers expect that a normalization of supply chains could take some price pressure away, certain commodities are simply in short supply: wood, copper and even gold. In the case of the latter metal, rising investor demand could quickly rattle the market and tip it out of balance in favor of rising gold prices.
time to read: 3 minutes by Nico Popp
"[...] We can make a big increase in value with little capital. [...]" David Mason, Managing Director, CEO, NewPeak Metals Ltd.
Triumph Gold: Gold/copper project with illustrious shareholders
Those who want to add gold to their portfolio can do so in several ways: Physical holdings are expensive to purchase and require secure storage. ETCs only securitize a right to gold but are uncomplicated. However, instruments that track the price of gold one-to-one lack momentum. The latter is present in small gold miners. Companies like Triumph Gold have properties with proven gold deposits that they are developing. At the beginning of this journey, the resources in the ground are low-valued - after all, it is not clear if the gold will ever be mined. With each additional piece of the puzzle in the form of drill results or other company news, the prospect of eventual production can become more apparent, and the share price can rise significantly.
Triumph Gold is currently valued at just under EUR 20 million and has an exciting property in its portfolio with the Freegold Mountain gold and copper project. In addition, Triumph Gold has two other smaller projects with Tad/Toro and Big Creek. Freegold Mountain is 100% owned by Triumph and has been explored by the Company since 2006. A resource estimate assumes 2 million ounces of gold equivalent. High grades of copper also occur on the property. Freegold Mountain is characterized by an intact infrastructure and the already large exploration grade - between 2017 and 2020, the Company drilled 39,000 meters. In recent weeks, Triumph Gold's share price has already risen. Since mining giant and neighbor Newmont also holds 12.8% in Triumph Gold, there is also latent takeover fantasy. Newmont is advancing its Coffee Creek property a few miles from Triumph Gold's properties. Triumph Gold's stock is speculative due to the Company's early stage - but conversely, it also offers excellent opportunities to benefit disproportionately from rising prices in gold and copper.
Barrick Gold: Hands off the heavy cruiser!
The situation is different for the mining giant Barrick Gold. Although the Company operates gold mines worldwide, such a high degree of diversification is also a burden - the share at best marches in step with the gold price. Last year, Barrick was flush with cash, and free cash flow reached billion-dollar levels. Still, the market resented Barrick's luxury problem because the Company could not find a way to invest the cash wisely. In the end, shareholders received a special dividend. Barrick is also considering, from time to time, further expanding its share in copper. But nothing has happened as yet. Although the share price has increased by 15% in the past three months, the gold price has also recovered noticeably during this time. On a one-year view, Barrick Gold is in the red. The heavy cruiser of the gold market is currently not a good choice for investors.
Gazprom: Worth considering for cautious investors
When investors think about rising inflation, oil stocks also come to the fore again. In this context, the Russian energy giant Gazprom often comes to mind. Although Gazprom is suffering from the sanctions against Russia, the Company is benefiting from rising energy prices. After oil and gas sales were still down by clear double digits year-on-year for much of 2020, the situation has now normalized. The market is particularly pleased that Gazprom is investing in the future despite headwinds: While Nord Stream 2 is being discussed in this country, Gazprom is busily building pipelines to Asia. That should make it clear: Even if Nord Stream 2 becomes a billion-dollar deal and further sanctions are threatened - Gazprom is well-positioned and can sell its energy to Asia.
Since Gazprom's clear growth strategy is supported by a rich dividend of around 6%, the stock remains interesting. Yields of 25% in one year are nothing special, but the stock is heading for an all-time high. Therefore, for the cautious, the stock is a good option to beat the threat of inflation. Those who want to lower the capital investment even more or want really hot irons in their portfolio should take a closer look at Triumph Gold. The Company has been around for a long time, has interesting properties in a promising area, and has an illustrious shareholder base in Newmont and many other institutional investors. While standard stocks are good for returns of 20% a year, such a performance is quite possible in the week for small caps. Investors need to decide how best to allocate the diverse opportunities of the capital market in their portfolios.