As Gold Pauses, Investors Rush for Cheap Gold Stocks

By Staff Writer / July 31, 2020 / Article Link

After gold prices skyrocketed past their 2011 all-time highs of $1,920, gold’s spot price slid back to $1,930 in Thursday’s trading session, down 0.6% from its earlier closing price of $1,940, as gold bulls took a pause before another attempt to push the precious metal higher off its record levels.

The growing concerns regarding the course of the US economy persist, so is unlikely to see the value of the gold to slow down in the coming months.

As we find ourselves in the midst of the busiest week of the second quarter of earnings season, gold stocks slipped in morning trading Tuesday, as one of the biggest weeks for corporate earnings heats up.

The slowdown of gold prices gives investors an opportune moment to grab some gold stocks while their price has dipped and they are trading under $20 per share.

Canadian junior gold miner Equinox Gold is producing gold from six mines right now and just announced an expansion. The junior gold producer has said it’s “rapidly advancing toward its vision of producing one million ounces of gold annually.”

EQX topped analysts’ bottom-line estimate last quarter and its revenue soared from $35.4 million in the year-ago period to $130 million. CEO Christian Milau also noted that its $350 million of cash on hand helps put the firm “in a strong financial position and fully funded for its organic growth plans.”

EQX shares have surged 56% in 2020 to crush the S&P 500’s sideways movement and its industry’s 21%. The current Zacks estimates call for Equinox’s adjusted fiscal 2020 earnings to soar 255% to $1.03 per share, on the back of 184% sales growth that would see it reach $800.2 million.

Coeur Mining is another junior gold miner operating in North America. Its more diversified production operation features a mixture of gold and silver, as well as zinc and lead. That gives the miner an additional layer of resilience against a fluctuating market. CDE stock has rallied 225% since mid-March and 75% in the last month, as silver prices surge.

The Canadian gold mining industry has been able to withstand the effects of the coronavirus pandemic. Pierre Gratton, the president and CEO of the Mining Association of Canada, believes it will have a positive ripple effect for the Canadian economy as a whole.

"We do pay the highest wages in the country, so those people are then spending their money and that also helps the rest of the economy that is hurting," Gratton said.

The soaring price of gold is also prompting renewed interest in mining projects. As a safe haven, until investors start to see a little bit more stability, gold will remain their choice of investment vehicle and its price will continue to grow.