The U.S. Federal Reserve’s Latest Move Could Mean The Next Leg For Gold Stocks
What can you tell me about gold penny stocks or gold stocks in general? If you start with price, you could be missing out on a big opportunity right now and here’s why. So many novice investors pair gold prices inversely to things like the S&P or Dow. While this isn’t a bad rule of thumb, it can be a bit fuzzy when it comes to those times where all markets move in tandem.
So what do you look at when it comes to things like gold penny stocks? I personally look at financials and currency. Right now, the attention placed on the Federal Reserve could indicate a bullish market for gold prices right now. The main reason is that gold typically flourishes during times of low (and now no) rates.
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Since the first emergency rate cut to 1% last week, gold prices have tried to rebound. But due to the dramatic selling in broader markets, investors used gold for what it has historically been: a safe haven. While margin calls were being made, investors took out cash from the only thing left holding value, which was gold.
Next Leg For Top Gold Stocks?
While the sector pulled back roughly 15% from 2020 highs, that pales in comparison to things like the S&P, which dropped roughly 30% from 2020 highs. Now that the dust has settled a bit, it appears that gold has begun to shine once again. No matter the case that the market sees an interim rally, the financial situation isn’t changing right now. We’ve still got very low rates, while the government continues reposition funds to address whatever fall-out may exist after things get back to normal.
But right now, we’re seeing drastic measures to trim exposure to the coronavirus. Restaurants are closing, curfews are being instituted, and entertainment venues shut down. The economic blowback from this could be great and that could also mean an even greater desire for investors to focus on gold as the historic safe haven it has become known as.
Top Gold Penny Stocks To Watch: IMC International Mining
Many analysts have cited that during times where gold is bullish, junior gold stocks thrive. In the case of IMC International Mining (IMCX)(IMIMF), not only has the company benefited from the rising price of gold, it also hasn’t stumbled when the sector dipped. In fact, shares of IMC International Mining have maintained a relatively consistent level of support above $0.40CAD for weeks.
This week, shares have tested levels above $0.45. This follows the latest news that IMC plans to acquire Thane Minerals. The British Columbia based company owns 100% interest in the Cathedral property located southeast of the famous Golden Triangle region of B.C. Specifically in the Quesnel Terrane, this area boasts past and planned production.
Rider: It is noted that the results of nearby or adjacent properties are not necessarily indicative of the potential of the Cathedral property and should not be understood or interpreted to mean that similar results will be obtained from the Cathedral property.
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The reason why this month could be important for junior gold stock traders to watch IMC is due to statements made in the company’s last update. IMC reported that it plans to close on the acquisition around the middle of this month. So, while gold stocks continue to drive higher, IMC could be on the verge of an acquisition that could give direct access to the benefits of the Quesnel Terrane.
Top Gold Penny Stocks To Watch: Yamana Gold
Once again, Yamana Gold (IAG)(YRI) joins the list of top gold stocks to watch. Shares of Yamana gold stock have continued a 2-day rally that started on March 16. As of 11:30 AM EST, shares reached highs of $3.61. This extended the week’s gains to 57% from Monday’s opening price of $2.30. While the gold stock has been following the actual price of gold closely, it hasn’t been the only thing driving attention toward the low-priced stock.
Yamana has continued to report on its focus to streamline the business model in 2020. Not only does it continue to evaluate new mining opportunities, it has also shed some of its assets. Earlier in February, the company sold a royalty portfolio for $65 million. But in a strong business move, part of the transaction included a $45 million position in a newly formed company.
The angle on that was to realize both immediate value while also extending its reach as a passive benefit of a growth-oriented company. According to the company, “this model is similar to the approach that Yamana took with the creation of its Brio Gold subsidiary, which subsequently became a successful standalone public company and continues to provide valuation upside to Yamana today following Brio’s acquisition by Leagold Mining Corporation and Leagold’s pending merger with Equinox Gold Corp.”
Top Gold Penny Stocks To Watch: Kinross Gold Corp
Kinross Gold Corp (KGC)(K) has almost recovered what it lost over the last few weeks. At its 2020 high, Kinross gold stock traded at $6.27. On March 17, it narrowly closed in on the $5 level having reached morning highs of $4.93. Over the last 2 days alone, Kinross gold stock has rallied by as much as 81.25% from its March 16 low of $2.72. Something interesting to note is that its 50 day moving average registered at $4.98 on Tuesday. Kinross gold stock stopped just shy of that at its $4.93 high. Could this be a strong level of support or will it manage to break back above this technical point?
Shares gained last month after the company reported stronger earnings for 2019 and Q4. Revenue from metal sales was $996.2 million, up from $786.5 million a year ago and beating a Street projection of $947.8 million. Earlier this month the company provided a statement on COVID-19 discussing the steps taken to ensure business as usual.
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In an effort to stay ahead of any potential risks, the company closed its Toronto office for a cleaning and disinfecting. There’s also a business continuity plan already in place and Kinross states it hasn’t seen any impacts on production or product shipments at any of its sites.
Top Gold Penny Stocks to Watch: McEwen Mining Inc.
Shares of McEwen Mining Inc. (MUX) also continues its 2-day rally on March 17. Not only does this come on the heels of a bullish move in the price of gold but the company also reported full-year and Q4 financial results this week. Since Monday’s opening bell, MUX stock has seen a jump in price from $0.68 to highs of nearly $1 on Tuesday.
For the full year 2019, production was 174,420 gold equivalent ounces. That’s compared to 175,640 gold equivalent ounces in 2018. Furthermore, its three 100% owned mines generated a cash gross profit of $33.7 million in 2019 and a gross profit of $9.0 million. The company plans to host a conference call on Tuesday to discuss its results. Needless to say, shares of McEwen gold stock have managed to put on quite the show this week. Can that same trading activity continue through the remainder of the quarter?
Pursuant to an agreement between Midam Ventures LLC and IMC International Mining Corp. (CSE: IMCX) (IMIMF), Midam has been paid $200,000 for a period from January 7, 2020, to February 14, 2020. Midam has been paid an additional $200,000 and extended its period of coverage to March 14, 2020. Midam has been paid an additional $200,000 and extended its period of coverage to July 9, 2020. We may buy or sell additional shares of IMC International Mining Corp.(CSE: IMCX) (IMIMF) in the open market at any time, including before, during or after the Website and Information, to provide public dissemination of favorable Information about IMC International Mining Corp. (CSE: IMCX) (IMIMF). Full disclaimer here.
