Yamana Gold, Triumph Gold, Barrick Gold: Profiting From Market Weakness

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    By Nico Popp

    This article was written by news.financial writer Nico Popp

    Inflation is the hot topic again. But inflation is far from being a threat. This is probably also why the gold price is currently suffering. The reason: interest rates could rise in the long term, making bonds more attractive again compared to interest-free gold. But the past has shown that gold can often even profit from inflation when inflation rates are very high – after all, the precious metal remains the world’s oldest reserve currency. The gold sector companies have tomorrow’s gold in the ground with valuations far below current gold prices and that offers opportunities. We present three stocks.

    YAMANA GOLD: PRICE DOES NOT GET GOING DESPITE COPPER BUSINESS

    Yamana Gold’s share price recently hit its six-month low. The parent Company of Osisko Mining also mines copper and silver in addition to gold and should therefore actually be an attractive value. While gold is seen as a substitute currency, silver is growing in importance around renewable energies and electromobility. Copper has also benefited for months from the rising demand for electric cars and the even better prospects. So why is Yamana Gold’s share price falling?

    The share is suffering from the current crumbling price of gold. Recently, it had torn down some support levels, which then fueled fears of a further drop in the share price. Even the quite reliable figures of Yamana, which the Company recently published, could not change this. Investors who believe that the gold price can get back on track, regardless of its chart situation, can already take advantage of opportunities at the current level with shares such as Yamana. In the past, gold has shown itself to be an “Enfant terrible” several times and subsequently proved the chart technique wrong.

    TRIUMPH GOLD: THIS SHARE IS SMALL BUT FINE

    The share of the gold developer Triumph Gold has already found a bottom. The Canadians are developing their Freegold mining project in the Canadian Yukon step by step. Recently, they even bought some land. Last year’s exploration work all brought new discoveries of gold to light. But also copper, silver and molybdenum can be found in the drill cores. The interesting thing about the Triumph Gold stock is that the management has been undeterred for months and has the support of important anchor shareholders.

    These include Newmont Mining (12.8%) and the Zijn Mining Fund (9.8%). Triumph Gold currently has about CAD 5 million in cash and can support the next exploration program. Since the project has a good infrastructure and is strategically located between properties of other companies, the stock is worth considering. Those who think long-term are looking for a favorable entry in the current market environment and will let the stock lie.

    BARRICK GOLD: CLOSE YOUR EYES AND GO FOR IT

    Let it lie and think about something else could also be the apparent thought of Barrick Gold’s shareholders. The Company is simply not putting its horsepower on the road at the moment – the share price is plummeting. Barrick Gold is among the absolute world leaders in the production of gold. The precious metal accounts for about 95% of sales, with copper making up the rest. Consequently, it is no wonder that the share is currently suffering badly from the drop in gold price. Barrick even had the idea to focus more on copper in the future to get out of its price dilemma. We remember: Even a special dividend could not keep the shareholders in line – although the Company delivered high free cash flows in 2020 and could have gone on a buying spree. But Corona threw a spanner in the Company’s works.

    Given the current market environment, the chances are not bad that Barrick Gold will make acquisitions of smaller companies and set the course for growth. While the market might equate an acquisition with a higher risk in the event of a gold bear market, the Company certainly has the means to take risks with smaller and mid-sized companies. The stock remains a solid investment but is not particularly attractive in the short term.

    GETTING A FOOT IN THE DOOR WITH SMALL CAPS

    Whether investors choose a pure gold play, such as Barrick Gold or Triumph Gold, or go with a more diversified producer, such as Yamana, is a matter of taste. However, given the challenging market environment, one approach could be to keep position sizes small for now and put those funds into more speculative stocks instead. One candidate for this could be Triumph Gold. The Company has cash, a promising project and potent anchor shareholders. Nevertheless, the market capitalization is just about EUR 16.5 million.

    About the author Nico Popp

    At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories. That it depends thereby less on large names, but on the future potential and whether the market also recognizes these perspectives, was one of its first learnings at the stock exchange.

    Nico examines current events at listed companies and takes a closer look at companies that are traded under the radar of the market, in addition to well-known securities.

    In order to be able to take advantage of speculative opportunities on the stock exchange, Nico not only focuses on a balanced asset allocation of defensive and opportunity-oriented securities, but also on an intact risk management. “In addition to position size and entry in several tranches, investors should also develop a sense of timing and get to know a stock better before investing,” says the columnist.

    Disclaimer
    MiningIR host a variety of articles from a range of sources, our content, while interesting, should not be considered as formal financial advice. Always seek professional guidance and consult a range of sources before investing.