Commodities prices strengthen, driving interest in cheap gold stocks

By Staff Writer / November 08, 2021 / Article Link

Gold price is approaching the $1800 mark, remaining near the highest levels in five days. Prices of the yellow metal seem to be unaffected by the record run on the Wall Street indices. Growing inflation fears amid supply disruptions and rising energy prices contributed to a weakening US Dollar, continue to benefit commodity prices.

Rising oil and gold prices drove futures tracking Canada's commodity-heavy main stock index on Tuesday. The prospect of strong corporate earnings further lifted investor sentiment.

With gold approaching a critical hurdle at $1795-$1796, i nvestors on the hunt for protection are turning to cheap gold stocks in this environment.

Gold stocks look like they possess very nice value, as the bullish case for precious metals builds up.

China Gold Resources (TSX:CGG) is a Canadian gold miner whose mining stock has climbed 102% in 2021. The stock is up over 150% from the previous year. In Q2 2021, China Gold delivered revenue growth of 46% to $304 million. Its net income soared 444% to $100 million and total gold production jumped 13% to 71,225 ounces. Shares of this gold stock currently have an attractive price-to-earnings (P/E) ratio of 4.7.

Torex Gold (TSX:TXG) is an intermediate gold producer with properties in Mexico. The stock has plunged 31% in the year-to-date period. However, its shares have climbed 6.7% month over month.

The company released its second-quarter 2021 results on August 5. It maintained its gold production guidance between 430,000 and 470,000 ounces. Revenue for the first six months of 2021 was reported at $437 million — up from $281 million in the year-to-date period in 2020. Meanwhile, adjusted EBITDA more than doubled to $267 million. This gold stock possesses a super-favourable P/E ratio of 3.6.

Kinross Gold (TSX:K)(NYSE:KGC) is another Canadian-based gold miner. It saw its shares drop 26% in 2021 but the gold stock has increased 8.6% month over month.

Investors remain hopeful for the company’s third-quarter 2021 results due to be released in early November. Kinross stock last had an attractive P/E ratio of 5.9. It offers a quarterly dividend of $0.08 per share, representing a 2% yield.

While choosing gold stocks to invest in, it is recommended to check gold prices on a daily basis. Markets are volatile at the moment due to the 4th wave of the COVID-19 pandemic and inflation fears can cause sudden fluctuations in prices. Supply chain bottlenecks are also contributing to rising economic and politic uncertainty.

However, sector-related factors are not the sole factor that influences gold prices. The direction in which gold stocks are moving is frequently influenced by world news.

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