Gold Continues to Rally: Time to Add Miners to the Portfolio? Andrew Walker | January 13, 2018 | More on: GG G
A sharp rise in the price of gold over the past month caught many pundits by surprise, and investors are wondering if more gains are on the way.
Let’s take a look at the current situation to see if this is the right time to buy gold stocks.
Strong move
Gold is up $90 in the past month, rising from US$1,239 to US$1,329 per ounce.
On the surface, the rally is a bit of a surprise, given the outlook for interest rate increases in the United States and the absence of fear in the market.
Rising interest rates tend to be negative for gold, as they increase the opportunity cost of holding the yellow metal, which doesn’t provide any yield. Higher rates can also put a tailwind behind the U.S. dollar, in which gold is priced, although that has not been the case in the past year.
In fact, the U.S. dollar index, which measures the value of the American dollar against a group of key currencies, just hit its lowest level since September.
As the dollar weakens, holders of foreign currencies often take advantage of the situation to buy gold.
On the fear side, the recent decision by North Korea to join the Olympics initially hit gold prices, as safe-haven buyers exited positions based on geopolitical fears. The dip, however, didn’t last.
So, why is gold rising?
Weaker inflationary pressures in the United States could be forcing analysts to question the assumption the U.S. Fed will raise interest rates three times in 2018. If the market starts to price in two moves or less, gold could extend its rally.
Another theory links the gold surge to the pullback in cryptocurrencies. Some pundits say funds that went into the digital currencies in Q4 2017 are now finding their way back to gold, as fears increase about a potential cryptocurrency crash.
Which stocks should you buy?
Gold stocks have moved higher, but not at the pace one would expect given the surge in gold prices, so there might be an opportunity to make a contrarian bet and add some miners to the portfolio.
One stock to consider is Goldcorp Inc. (TSX:G)(NYSE:GG).
The company is working its way through a turnaround program and appears to be on the right track.
Management is targeting a 20% increase in both reserves and production over the next five years, while all-in sustaining costs are expected to fall by the same amount.
If gold continues to recover, Goldcorp should see strong improvements in margins and cash flow.
At the time of writing, Goldcorp trades at $17.40 per share. Last February, the stock was at $23 when gold traded for close to US$1,240 per ounce, so there could be some upside in the near term.
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Fool contributor Andrew Walker owns shares of Goldcorp.
Note .... The gold bull market in the 1970s and 1980s happened even as the Fed tested record-high interest rates. The yield on the 30-year Treasury bond rallied sharply during the late 1970s, eventually topping 15% in 1981. Gold rallied from about $100 per ounce in 1976 to over $850 per ounce in 1980.
Caledonia Mining boosts gold production, benefits from foreign exchange gain Caledonia has signed a new power supply agreement which appears to have reduced the incidence of load-shedding
Caledonia Mining Corporation -
Gold production is set to rise to 80,000 ounces per year, from 2020 Caledonia Mining Corporation PLC (LON:CMCL)(TSE:CAL) produced 12,712 ounces of gold from its Blanket mine in Zimbabwe in the second quarter of 2019, up 6.4% on the amount produced in the first quarter.
Gross profit for the second quarter was US$7mln, 37% higher than in the second quarter of 2018, due to lower on-mine costs.
Operating profit for the quarter before foreign exchange gains was just over US$6mln, 21% higher than the corresponding period a year earlier.
Net profit attributable to shareholders for the quarter increased by almost 800% to US$23.3mln, due to the substantial devaluation of the newly introduced Zimbabwe currency which resulted in some cost savings and a large net foreign currency gain.
Adjusted earnings per share, which excludes unrealised foreign exchange gains, was US$0.268, 19.5% lower than in the second quarter of 2018, due to deferred tax adjustments arising from the calculation of Blanket's taxes in local currency.
Cash generated by operating activities during the first half was US$8.4mln.
Due to operational difficulties relating to grade and unreliable power, production guidance for 2019 has been reduced from a range of 53,000 to 56,000 ounces to a range of 50,000 to 53,000 ounces.
However, the company has not reduced earnings guidance for 2019, which remains in the range of US$0.86 to US$1.17 per share due to a higher than expected gold price and lower than expected costs.
Blanket has recently signed a new power supply agreement which appears to have reduced the incidence of load-shedding.
After the end of the quarter, on 24 July 2019, the company announced the completion of the shaft sinking at Central Shaft.
This important milestone marks a very significant step towards completing the investment programme at Blanket in the second half of 2020, after which production is expected to increase to the target level of 80,000 ounces per annum from 2022.
Following the implementation of indigenisation in September 2012, Caledonia owns 49% of the Blanket Mine in Zimbabwe. Caledonia continues to consolidate Blanket and the operational and the financial information set out below is on a 100 per cent basis unless otherwise indicated. The company continues to work with the relevant regulatory bodies in Zimbabwe to obtain the outstanding approvals so that it can complete the purchase of the 15% shareholding in Blanket that is owned by one of its indigenous shareholders.
Gran Colombia Gold (TSX: GCM) - TOP 3 globally @ 17g/t. $540 AISC. PAY ATTENTION TO THIS COMPANY -
CRUX Investor Published on 13 Aug 2019 The highlights from the Interview with Serafino Iacono, Chairman of gold producer Gran Colombia Gold(TSX:GCM).
Segovia - they operate 3 or 23 gold mines in a concession. They own the mineral rights and the land so they don't pay any Royalties.
Producing over 193,000 oz of gold per annum.
Marmato - they changed the design of the mine to an underground mine.
Producing 30,000oz of gold rising to 180,000oz.
A very clever group who have come up with innovate ways (eg: issuing Bonds) to finance this company in to a mid-tier gold producer. Listen to the terms of the Bond and how quickly they are paying back their debt.
Marmato coming online will take this company to +400,000oz gold production.
Phenomenal team. growing at 15%-20% grows for the last 4 yrs and that was before the recent hike in gold prices.
They are anti-dilutive. Management hold a significant percentage 20-22%. They have put a large amount of their own money in to this.
Genuinely one of the smartest, most nimble management teams we have met. You need to look at this gold producer seriously. We are.
Serafino discusses:
1) Their two assets: Segovia (193,000oz producer) and Marmato (30,000oz producer)
2) AISC down from $1,100 to $540
3) The Bond with Canada: investors get all of the $1,250 of Gold's upside
4) Finances: Cash, tight hold on shares, the balance sheet and repaying debt
trunkmonk well, Gran Colombia Gold Corp. (GCM)(TPRFF) a first target $9 > > Higher BreakOut is a Start and a Long OverDue its very oversold and undervalued -
Gran Colombia TPRFF a step closer to get their rich Venezuela gold mines returned back, for the share price been more than >$800.-/share before -
The latest sanctions are an attempt to cut off funding for President Nicholas Maduro.
Opposition Leader Juan Guaido supports the measures, saying they put pressure on Maduro's "dictatorship" -
Guaido has told TPRFF that the mines will be returned and he want help to restart them all - Al Jazeera's Teresa Bo sat down with Juan Guaido in Caracas.
trunkmonk well, Gran Colombia Gold Corp. (GCM)(TPRFF) a first target $9 > > Higher BreakOut is a start and a Long OverDue its very oversold and undervalued -
Jim Rickards: $10,000 Gold Is Coming (RERUN) - 11,708 views Kitco NEWS Published on 8 Aug 2019
Gold has been one of the best performing assets in 2017, and Jim Rickards, best-selling author of Currency Wars told Kitco News that he saw even more potential for the yellow metal.
Rickards credited rising geopolitical tensions as a source of gold's tailwinds.
"People seem to have very short attention spans. I’m just looking down the road and you can see the war is coming," he said.
Gold Price Will Hit $3,000 Once This Happens | Dr Jim Willie PhD 16,332 views SilverDoctors Published on 15 Aug 2019
Dr Jim Willie PhD; says the US bond market is the problem, and the cabal is funneling investors directly into it. #Gold & #silver are on the move because of this, but once a couple of certain things happen in the bond market, gold and silver are really going to take off!
Thanks for coming back for Part II of this important interview.
Some of the topics covered include:
- Big trouble for the US Dollar and the US bond market.
- The world dumping US Treasuries.
- Is China stockpiling silver, and who is helping them?
- What’s up with the United States’ deteriorating foreign policy?
- Big money is moving into gold & silver.
For discussion on all of those topics and a whole lot more, tune-in to the video in its entirety.
Gran Colombia Gold (TSX: GCM) - TOP 3 globally @ 17g/t. $540 AISC. PAY ATTENTION TO THIS COMPANY -
CRUX Investor Published on 13 Aug 2019 The highlights from the Interview with Serafino Iacono, Chairman of gold producer Gran Colombia Gold(TSX:GCM).
Segovia - they operate 3 or 23 gold mines in a concession. They own the mineral rights and the land so they don't pay any Royalties.
Producing over 193,000 oz of gold per annum.
Marmato - they changed the design of the mine to an underground mine.
Producing 30,000oz of gold rising to 180,000oz.
A very clever group who have come up with innovate ways (eg: issuing Bonds) to finance this company in to a mid-tier gold producer. Listen to the terms of the Bond and how quickly they are paying back their debt.
Marmato coming online will take this company to +400,000oz gold production.
Phenomenal team. growing at 15%-20% grows for the last 4 yrs and that was before the recent hike in gold prices.
They are anti-dilutive. Management hold a significant percentage 20-22%. They have put a large amount of their own money in to this.
Genuinely one of the smartest, most nimble management teams we have met. You need to look at this gold producer seriously. We are.
Serafino discusses:
1) Their two assets: Segovia (193,000oz producer) and Marmato (30,000oz producer)
2) AISC down from $1,100 to $540
3) The Bond with Canada: investors get all of the $1,250 of Gold's upside
4) Finances: Cash, tight hold on shares, the balance sheet and repaying debt
CORRECTION: Gran Colombia Gold Reports Second Quarter and First Half 2019 Results; Raises 2019 Production Guidance and On Track to Meet 2019 Cost Guidance
trunkmonk well, Gran Colombia Gold Corp. (GCM)(TPRFF) a first target $9 > > Higher BreakOut is a Start and a Long OverDue its very oversold and undervalued -
Gran Colombia TPRFF a step closer to get their rich Venezuela gold mines returned back, for the share price been more than >$800.-/share before -
The latest sanctions are an attempt to cut off funding for President Nicholas Maduro.
Opposition Leader Juan Guaido supports the measures, saying they put pressure on Maduro's "dictatorship" -
Guaido has told TPRFF that the mines will be returned and he want help to restart them all - Al Jazeera's Teresa Bo sat down with Juan Guaido in Caracas.
trunkmonk well, Gran Colombia Gold Corp. (GCM)(TPRFF) a first target $9 > > Higher BreakOut is a start and a Long OverDue its very oversold and undervalued -
Jim Rickards: $10,000 Gold Is Coming (RERUN) - 11,708 views Kitco NEWS Published on 8 Aug 2019
Gold has been one of the best performing assets in 2017, and Jim Rickards, best-selling author of Currency Wars told Kitco News that he saw even more potential for the yellow metal.
Rickards credited rising geopolitical tensions as a source of gold's tailwinds.
"People seem to have very short attention spans. I’m just looking down the road and you can see the war is coming," he said.
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