Gold’s Allure, Wall Street Focused on the Miners

Gold’s Allure, Wall Street Focused on the Miners

#gold #miners #WallStreet #investors #risk #C19coronavirus #banks #stimulus

$NEM $GOLD

Last yr precious-metals miners were seen by Wall Street as too leveraged and high-risk for the typical investor, but they raised $2.4-B in secondary equity offerings during Q-2 of this year. That is the most since Y 2013 and 7X more than the funds they raised a year earlier.

With the C-19 coronavirus chaos threatening economies worldwide and gold prices soaring on central banks monetary and stimulus programs, precious-metals companies are now the darlings of the investment community.

The sector, which once largely drew the attention of specialist funds, is now attracting a broad base of investors.

If this continues, it could be the start of a strong Bull market for gold stocks

The market for gold miners has been dominated by the Top 2 giants, Newmont Corp.(NYSE:NEM) and Barrick Gold Corp.(NYSE:GOLD), with investors shying away from many of the others. That was because balance sheets had too much leverage or companies had too few mines and projects to spread out the risk.

But now the junior miners are now starting to benefit.

Take the case of American Pacific Mining Corp., an exploration and gold-mining firm with market capitalization of less than $20-M. The company raised $3-M in Q-2, 6X more than it planned. Interest was so big that it had to turn away offers for more.

The reasons that boosted the appeal of gold miners are the very same pushing investors away from companies digging for metals like copper or lithium, which are more dependent on economic growth.

Base and industrial metals firms raised only $34-M in Q-2. That is a 40% decrease from the same frame a year earlier. Battery metals projects are also struggling to lure investors.

The allure of gold companies comes even as C-19 coronavirus makes mining harder, with a higher risk of infections in tight, closed spaces. Barrick last week said it continued to benefit from strong prices even as the chaos shuts down mines.

Investment in the sector is also coming in the form of mergers and acquisitions.

Deals heated up in Q-2, with 12 transactions valued at $2.86-B being announced, according to Bank of America. That is 2X the amount in Q-1 of this year.

Miners are are talking to their bankers and deals are getting done.

Have a healthy day, Keep the Faith!

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Paul Ebeling

Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he it the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.