Gold miners remain optimistic about Trajectory of Gold Prices

By Staff Writer / May 07, 2021 / Article Link

Monday’s trading session saw futures for Canada's main stock edge higher on rising gold prices. As investors wait for a reading on factory activity data and earnings update, it is still early to discuss the pace of economic recovery in Canada and abroad.

Gold futures GCc2 gained 0.7% to $1,780.1 per ounce, helped by a pullback in the U.S. dollar and Treasury yields while worries over surging COVID-19 cases in some countries boosted the metal's appeal. 

Despite covid cases falling in some countries, the vaccination program has not been able to produce the expected result. Strong controversies surrounding underreported adverse reactions to Pfizer, AstraZeneca, Johnson & Jonhson and Moderna’s COVID-19 vaccines are raising concerns that the pandemic won’t be brought under control any time soon. Consecutively, the prolonged lockdown measures are putting even more strain on weakened economies globally.

This rising level of uncertainty saw investors turn to gold in an attempt to balance their portfolios and mitigate risk. Gold prices are rising again supported by a mildly bullish near-term technical posture and by rallying crude oil prices that hit a two-month high yesterday.

Even with the recent correction in gold prices, junior gold miners are earning money hand over fist. With the majority of mining stocks remaining undervalued, analysts see them as strong buys fundamentally. Their stock prices are too low relative to both underlying corporate profitability and prevailing gold prices. That gives gold stocks big potential to perform much better during gold’s next bull-market upleg, which is already underway.

A few of the mining stocks making headlines this week include Gold Mountain Mining Corp. (TSX-V: GMTN) (OTC: GMTNF), New Found Gold Corp. (TSXV: NFG) (OTC: NFGFF), New Gold Inc. (NYSE: NGD), K92 Mining Inc. (TSX: KNT) (OTC: KNTNF), and Sun Summit Minerals Inc. (TSX-V: SMN) (OTC: SMREF) As the value of gold is difficult to predict due to its reliance on many economic variables, gold miners offer  steadier approach to investing in gold. Any junior gold miner with a permit and a development project underway that doesn’t have a lot of debt is identified as being highly prospective.

Mid-tier and junior gold mines have superior fundamentals, smaller gold production and market capitalizations. Both are easier to grow. Those are the high-potential gold stocks that have historical benefited during periods of gold uplegs and corrections like the current one. As we see fundamentally-superior gold-stock prices already surge, the great majority of their gains are still yet to come since this sector upleg remains so young.