Why Precious Metals Could Win 2021 (NYSE: EGO) (NYSEAMERICAN: BTG) (OTC US: GOLHF) (NASDAQ: PAAS)
December 16, 2020 at 08:12 AM EST
According to the latest data from BofA, we have seen $1.3 billion in asset purchases by central banks every hour since March. Every hour, another $1.3 billion. That’s nearly a trillion a month.
If you think that’s crazy, how about nearly 200 rate cuts around the world this year? That’s nearly one central bank rate cut for every day the market is open.
If you wonder how it fits into the fiscal side in the US, consider this: the treasury has issued nearly $3.5 trillion in US government bonds in 2020 – by far an all-time record.
If you add it all up, you arrive at an unmistakable conclusion: the slippery slope of direct monetization of the economy is already now well underway, spurred into action by the pandemic crisis. But tools born of crisis conditions rarely get put back on the shelf.
As a result, nearly every major analyst house on the Street has started to shift to the prospect that we may be in the early innings of a major US Dollar bear market. The corollary is the prospect of a continued long-term bull market in gold.
As investors look ahead to 2021 – and the potential for an inflationary cyclical boom as pent-up demand thunders back out into the economy following vaccine-driven herd immunity – a weak dollar, too much money creation, and inflationary cyclical activity could add up to a big year for the shiny yellow metal.
As such, we take a look at some of the most interesting stocks in the space, including Eldorado Gold Corp (NYSE: EGO), B2Gold Corp (NYSEAMERICAN: BTG), Delta Resources Ltd (OTC US: GOLHF), and Pan American Silver Corp (NASDAQ: PAAS).
Eldorado Gold Corp (NYSE: EGO) bills itself as a gold and base metals producer with mining, development and exploration operations in Turkey, Canada, Greece, Romania, and Brazil.
The Company has a highly skilled and dedicated workforce, safe and responsible operations, a portfolio of high-quality assets, and long-term partnerships with local communities. Eldorado’s common shares trade on the Toronto Stock Exchange (TSX: ELD) and the New York Stock Exchange (NYSE: EGO).
Eldorado Gold Corp (NYSE: EGO) most recently updated its shareholders with a few key data points, including news that its Proven and Probable gold Reserves totaled 17.7 million ounces as of September 30, 20201, compared to 17.5 million ounces as of December 31, 2019, an increase of 1.3%.
According to the release, the slight increase in overall Proven and Probable Reserves was attributable to increases at Kisladag, Lamaque and Perama Hill, offset by decreases at Olympias and Efemcukuru.
The stock has suffered a bit of late, with shares of EGO taking a hit in recent action, down about -5% over the past week. Over the past month, shares of the stock have suffered from clear selling pressure, dropping by roughly -7%.
Eldorado Gold Corp (NYSE: EGO) pulled in sales of $384.8M in its last reported quarterly financials, representing top line growth of 73.2%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($674M against $566.4M).
B2Gold Corp (NYSEAMERICAN: BTG) promulgates itself as is a low-cost international senior gold producer headquartered in Vancouver, Canada. Founded in 2007, today, B2Gold has operating gold mines in Mali, Namibia and the Philippines, and numerous exploration and development projects in various countries including Mali and Colombia.
B2Gold continues to forecast total consolidated gold production of between 1,000,000 and 1,055,000 ounces in 2020.
B2Gold Corp (NYSEAMERICAN: BTG) recently announced that its Board of Directors declared a cash dividend for the fourth quarter of 2020 of $0.04 per share (or an expected $0.16 per share on an annualized basis), payable on December 18, 2020, to shareholders of record as of December 8, 2020.
According to the release, as part of the long-term strategy to maximize shareholder value, B2Gold expects to declare future quarterly dividends at the same level. This is an encouraging sign for shareholders given the relationship dividend announcements generally have with in-house appraisals by a company if its own long-term balance sheet risk factors.
The stock has suffered a bit of late, with shares of BTG taking a hit in recent action, down about -6% over the past week.
B2Gold Corp (NYSEAMERICAN: BTG) pulled in sales of $649.2M in its last reported quarterly financials, representing top line growth of 58.2%. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($488.2M against $393.3M).
Delta Resources Ltd (OTC US: GOLHF) is a more speculative name as a junior mining prospect, but the company has positioned itself with powerful potential due to its Delta-1 (Eureka) and Delta-2 projects in the Thunder Bay area of Ontario and in the Chibougamau Mining Camp of Quebec. The company is also evaluating other projects in Canada deemed to have a strong potential for new discoveries.
In addition, Delta owns a 100% interest in the Bellechasse-Timmins gold property and deposits located in the Beauce Region of Southeastern Quebec, Canada. The Bellechasse-Timmins deposit contains a 43-101 compliant gold resource of 171,000 ounces at an average grade of 1.83 g/t gold in the indicated category and an additional 95,000 ounces at an average grade of 1.36 g/t gold in the inferred category. On July 3rd, 2020, Delta announced the sale of the Bellechasse-Timmins project to Yorkton Ventures Inc. for $1.7M payable over a period of 15 months following signing. The non-dilutive influx of capital will be directed on advancing the Delta-1 and Delta-2 projects.
Delta Resources Ltd (OTC US: GOLHF) most recently announced that it was granted the necessary encroachment permit to drill-test its Trans Canada Gold target at the Delta-1 Property, 50 kilometers west of Thunder Bay, Ontario.
According to the release, this initial permit, granted by the Ontario Ministry of Transportation, will allow Delta to drill up to 14 drill holes totaling 4,200 meters at any time between January and November 18, 2021. The drill holes will initially be testing the Trans Canada Gold Target over a minimum strike length of 700 meters underneath and south of the highway.
Shares of the stock have powered higher over the past month, rallying roughly 27% in that time on strong overall action.
Delta Resources Ltd (OTC US: GOLHF) had no reported sales in its last quarterly financial data. In addition, the company has a strong balance sheet, with cash levels far exceeding current liabilities ($1.7M against $303K).
Pan American Silver Corp (NASDAQ: PAAS) is an interesting name with exposure across the precious metals complex. The company owns and operates silver and gold mines located in Mexico, Peru, Canada, Argentina and Bolivia.
The company also owns the Escobal mine in Guatemala that is currently not operating. As the world’s second largest primary silver producer with the largest silver reserve base globally, PAAS provides enhanced exposure to silver in addition to a diversified portfolio of gold producing assets.
Pan American Silver Corp (NASDAQ: PAAS) most recently reported unaudited results for its fiscal third quarter (ended September 30, 2020), which featured revenue of $300.4 million, primarily reflecting lower quantities of metal sold, partially offset by strong realized precious metal prices. The company also noted that it recorded a $79.8 million increase in inventories during Q3 2020, of which approximately $25.0 million was in the form of dore and finished inventories.
“Low operating costs and strong precious metal prices contributed to robust mine operating earnings of $124.6 million in Q3,” said Michael Steinmann, President and Chief Executive Officer. “All operations are running, and projects are proceeding. We have replenished the heap leach inventories drawn down during the mine suspensions in Q2 of this year, are nearing completion of the first of two ventilation raises at La Colorada, which will re-open access to the high-grade area of the mine, and have started processing the high-grade ore from the COSE mine at our Manantial Espejo plant.”
The stock has suffered a bit of late, with shares of PAAS taking a hit in recent action, down about -10% over the past week.
Pan American Silver Corp (NASDAQ: PAAS) generated sales of $400.3M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of 15.8% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($309.4M against $383.2M, respectively).
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