Are Gold Penny Stocks On Your List This Month?
This year has been quite the year for gold penny stocks and blue chips alike. With COVID, wildfires, an election on the horizon, and more, investors have turned to gold as a way to avoid high volatility. In the past, gold has served as a more stable investment when markets are awry. This is because the price of gold does not fluctuate in the same way that stocks do.
Gold prices rise and fall based on market demand. If there is more gold in the industry, the price of gold might decline. On the contrary, if gold is scarce, the price tends to go up. Although this may seem simple, there are some intricacies to take note of when investing in gold stocks.
When it comes to investing in gold, there are a few ways that investors can go about it. The most obvious is investing in gold bullion. This means purchasing quantities of physical gold to be held in a safe place for a long period of time. Buying physical gold can be a good way to invest in gold, but the majority of investors cannot afford to purchase large bricks of gold bullion. In addition, security for gold bullion can be a large risk.
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The most popular way to invest in gold is with gold penny stocks. These are stocks that grow based on a company’s ability to mine existing property, or the purchasing and subsequent mining of new properties. Gold penny stocks have become very popular in the past four months as COVID has led investors away from riskier stocks.
Gold Penny Stocks To Watch: Freeman Gold Corp.
Freeman Gold Corp. (CSE: FMAN Stock Report)(OTC: FMANF) is considered to be a mineral exploration company. Its business model is centered around purchasing land to be developed into mining exploration projects. Freeman Gold is working hard to capitalize on the North American gold industry, with a key mine in the U.S. In August, Freeman Gold announced that it had begun a 5,000-meter diamond drill program at its Lemhi Mine Project.
Freeman made headlines at the beginning of September after striking a deal with Yamana Gold Inc. (AUY Stock Report). The deal gave Freeman Gold a back-in right from Yamana regarding the Lemhi Project. When this news came out, it was a big deal for both Freeman Gold and its shareholders. The back-in right allows Freeman to lower its financial risks for the Lemhi Mine. In addition, it gives Yamana a 5% equity stake in Freeman Gold. This equates to just north of 4.3 million common shares of Freeman Gold.
The President and CEO of Freeman Gold stated in regard to the deal that “we are delighted to welcome Yamana as a 5% strategic shareholder. Having a major gold producer with Yamana’s caliber take a significant position in our Company is a major vote of confidence in the project and the team we have assembled. We hope to work together in the coming months.” This statement helps to illustrate how crucial partnerships like these can be for gold stock investors. The deal should help to give both Freeman and Yamana a solid foothold to grow upon.
Since the beginning of 2020, Freeman Gold has showed a great deal of stability. Although part of this can be attributed to bullish sentiment in gold penny stocks, the other part is due to Freeman’s business model and financials. In early March, shares of FMAN stock were trading at roughly $0.30. As of early September, FMAN stock now trades at roughly $0.50. During that time, however, FMAN stock has hit highs of around $0.80, showing that there is a great deal of bullish sentiment for Freeman Gold.
Gold Penny Stocks to Watch: New Gold Inc.
New Gold Inc. (NGD Stock Report) is a gold penny stock that is showing solid momentum in September. On September 10th, NGD stock hit a two year high of $1.90. So far this year, New Gold Inc. has benefitted from the growth of the gold industry as well as the success of its own business model.
This includes its latest deal where it closed on the sale of its Blackwater project. This sale, worth $190 million in cash, also gives New Gold a gold stream of roughly 8%. A lot of New Gold’s trading momentum comes from its vast array of gold mines around the world. This includes the New Afton Mine in Canada, the Cerro San Pedro Mine in Mexico, the Mesquite Mine in the U.S., and more. The largest of these is the New Afton Mine, which contributes almost 50% to New Gold’s revenue.
New Gold CEO Renaud Adams stated in an update that “over the balance of the year, our operations will return to pre-COVID levels and we will complete all non-recurring capital projects…New Gold’s future will be supported by profitable operations (and) a stronger balance sheet.”
With shares trading around $1.90 as of September 10th, NGD stock has pushed the upper limits of historic highs. Shares haven’t traded at these levels since 2018.
Gold Penny Stocks to Watch: Great Panther Mining Ltd.
Great Panther Mining Ltd. (GPL Stock Report) is a precious metals mining and exploration company based out of British Columbia, CA. As of September of 2020, Great Panther operates three mines around the world. This includes the Tucano Gold Mine in Brazil and two silver mines in Mexico.
Additionally, Great Panther has several exploration projects including the El Horon, Santa Rosa, and Plomo mines in Mexico. It also holds an interest in the Argosy Project in Canada. While many mining companies specialize in one metal, Great Panther mines gold, silver, copper, lead, and more. This means that it has a very broad consumer base for its mined ore.
Year to date, GPL stock is up around 90% while the price of gold is up around 30% in the same time frame. As of September 10th, GPL stock reached a high of $0.9957. With over 50 years in mining, Great Panther Mining remains a stronghold in the precious metals industry.
Gold Penny Stocks to Watch: McEwan Mining Inc.
McEwan Mining Inc. (MUX Stock Report) is a mineral exploration company with projects in North and South America. The company reportedly has mines in Mexico, the U.S., and Argentina. While McEwan does mine base metals, the majority of its revenue comes from producing both gold and silver. This makes up roughly half of McEwan’s total sales.
In Mexico, McEwan wholly owns the El Gallo 1 mine. A few thousand miles away, it has a minority holding in the San Jose Mine based in Argentina. In terms of sheer output, more than 50% of the gold that it produces is mined from the El Gallo 1 mine.
At the end of August, McEwan announced that it had commenced a flow-through financing deal to continue exploring the Timmins Region of Ontario, CA. The deal consists of a private placement worth around $10 million or 6 million common shares of McEwan Mining. With these funds, McEwan should have the capital to explore the Timmins Region of Ontario in great depth.
The company has stated that 100% of the proceeds generated from this offering will go directly to the exploration of the Timmins region. Financing deals like this are quite common amongst gold penny stocks. Because mining gold and other precious metals can be a capital intensive process, fundraising operations are crucial to the exploration and growth of new mining projects. With this, investors should continue to stay up to date on what McEwan Mining is doing in the Timmins Region in the near future.
The above gold penny stocks are just a few stock picks out of a much larger industry. With gold seeing a newfound sense of popularity, many investors are turning to gold penny stocks to hedge their bets on the future. With major geopolitical events occurring weekly, investors should make sure that they are reading the news and staying in the loop.