There is a Gold Rush on, Here are Our Plays…

There is a Gold Rush on, Here are Our Plays…

$XAU, $SLV, $GOLD, $NEM, $AGGFF, $FNV, $RGLD, $PAAS

The smart money has already started and gold prices are up, breaking through 6 year highs.

Gold miners are having an incredible year. And if a crash comes, getting gold into your portfolio is absolutely Key

With all that in mind, here are five companies gold investors should consider:

#1 Newmont Goldcorp (NYSE:NEM, TSX:NGT)

There is a new gold giant in town.

The merger of Barrick Gold Corporation and Newmont Goldcorp Corporation, two of the world’s largest gold companies, has created a gold giant, Nevada Gold Mines LLC, the likes of which has never been seen before.

While Newmont’s stock price for its share of the joint venture has only seen a minor bump compared to Barrick’s outstanding 41% since the merger, it is undoubtedly in a better position

Newmont’s new assets may take up to 3 years to reach optimal levels, meaning the positive impact of the merger is going to continue to be felt for a long time to come.

As for its current position, its Q-2 earnings showed some very positive results, growing to $2.26-B from $1.66-B the previous year. Its production has also seen a boost, with Newmont digging up 1.5-M oz of gold in Q-2 setting its highest Quarterly haul in years.

There are some management issues for the mega-firm to iron out since its merger – with a leadership swap which will see CEO Gary Goldberg step down to make way for Tom Palmer, COO since Y 2016.

In more good news for the company, higher gold shipments from Goldcorp assets should see Newmont’s revenue increase by roughly 45% in Y 2019 from the year earlier.

The new gold assets will also help to insulate Newmont from volatility in the copper market and its joint venture with Barrick appears to be working well for both companies.

#2 African Gold Group Inc. (TSX:AGG.V; OTC:AGGFF)

There is a new goldrush taking place in an unexpected hotspot.

It all started when some artisanal miners stumbled across a couple of large gold nuggets.

One of those nuggets weighed 1kg and was worth $45,400, and that wasn’t even the biggest. A 2nd nugget that was found came in at nearly 3X the size and worth $122,500.

And that is just the beginning.

The mine where these nuggets were discovered has been shown to have visible gold extending all the way from the surface down to 200 meters. This discovery truly is unique.

To make things even better, the mine is located on one of the largest gold belts in the world, meaning that African Gold Group’s (TSX: AGG.V; OTC:AGGFF) Kobada mine in southern Mali has been quick to draw investor attention.

South Africa has lost its crown as the world’s largest gold producing area to a new region in West Africa. A region that now includes this new Kobada Mine.

The initial aim of AGG was to produce 50,000 oz/year from Kobada – a respectable production level, but it is now aiming for 2X that. A 100,000 oz/year production level from a deposit that is expected to exceed more than 2.2-M oz. And as if that is not enough, it has only focused drilling on less than 10% of its perspective concessions, so these numbers could be much, much bigger

At today’s gold prices, you are looking at $3.1-B in gross revenue and that is from a company with a $30-M market cap.

West Africa is undeniably the hottest gold spot on earth, and for good reason. The region is stable, the labor costs are low and the licensing process is incredible speedy compared to other regions, 3 months versus the 5-7 years you can see in North America.

The timing couldn’t be any better for AGG and the Kobada mine. There are already 61 new assets in production or construction stages in the area, with 24 more assets undergoing economic assessments and an incredible 367 assets in exploration. This is currently the center of the gold mining universe.

It isn’t any surprise then, that AGG was easily able to raise fresh funds for the Kobada operation.

And it probably helped that the AGG management team reads as a who’s who of mining industry professionals and financial experts who have been producing gold success stories for decades.

Two of the company’s directors, Sir Sam Jonah and Bruce Humphrey, already have a combined experience of 100 years working the finances for mining operations.

There are very few individuals as respected or experienced as AGG’s mining engineer Danny Callow. He has served as the mining head for Glencore’s Africa Copper division, where he built and operated a number of copper and cobalt operations in Africa to more than 400,000 tonne per year. He was also responsible for building the world’s largest cobalt mine.

But the real jewel in the crown of AGG is the company’s new CEO, with 30 years of experience in the industry and an incomparable CV. Stan Bharti has overseen countless successes in the mining industry, amassing over $3-B in investment capital and uncovering more than 20-M oz of gold.

And it’s not just his experience that has investors excited, Mr. Bharti has a real talent for reading the gold market. He correctly predicted two major price spikes in the mid-1990s and Y 2003. Then, in Y 2008, he took a small company at the height of the global financial crisis, and spun it off 4 years later in a deal worth $500-M.

With Bharti in charge and the Kobada mine about to enter operation, AGG is undeniably a stock to watch.

#3 Franco-Nevada (NYSE:FNV, TSX:FNV)

Not exactly a miner, Franco-Nevada makes its money from gold royalties and streaming as well as holding interests in platinum group metals and other assets.

And there is plenty of money to be made in this industry. It finances the mines of other companies and takes an easy share of the profits. So when gold prices are soaring, this is the place to be.

An excellent portfolio and a booming gold market has seen FNV’s portfolio soar with its share price up 39% YTD.

And this year has not even been particularly out of the ordinary, with the company returning investors a 526% return since Y 2007 without including dividends.

The company continues to add assets taking on a 2% royalty on both Marathon Gold Corp’s Valentine Lake operation and Gold Field’s Salaries Norte operation for $18 and 32-M respectively.

For a company worth roughly $18-B these assets are tiny, but it does show that the growth from this record breaking company is not stopping any time soon.

And there’s an even bigger deal in the pipeline, with FNV entering into an agreement with Range Resources Corporation for a deal worth $300 million.

The most significant part of this deal is that it shows FNV is looking to expand beyond just gold and platinum into the Oil & Gas space.

#4 Barrick Corporation (NYSE:GOLD, TSX:ABX)

Barrick may have lost its place as the largest gold company in the world this year, but it does remain the most profitable. It has 5 of the 10 largest gold mines and its production continues to climb.

In terms of sheer size, the mega-merger of Newmont and Goldcorp outstrips Barrick. But size isn’t everything.

Barrick has already risen 41% since May, on the back of rising gold prices and strong demand. It is currently blowing the competition out of the water and has hiked its dividends as prices climb.

In June, Barrick was being touted as the company to beat in gold markets – thanks to a strong balance of revenue to debt and production which has steadily increased, driven by a joint venture with Newmont in Nevada and the acquisition of Randgold.

Now, as well as increased dividends, its earning estimates are climbing.

It is undeniable that Barrick is an excellent hedge against downturns elsewhere in the market.

#5 Royal Gold (NASDAQ:RGLD, TSX.V:ROYL)

The 2nd stream-and-royalty gold firm on our list is a giant with a market cap nearing $8-B

With a 53% gainer in the last year, it is outperforming in the today’s Bullish gold market and it is showing no signs of slowing down.

Its short-term stock activity is what really differentiates this giant, with most investors using it as hedge against the current trade dispute.

Royal Gold has recently earned the reputation as creating a “business model that prints money” with its ability to pick up shares in various promising operation and simply sitting back to let the royalties flow.

As the gold boom picks up speed, the streaming space is undoubtedly one which savvy investors should be looking into.

#6 Pan American Silver (NASDAQ:PAAS) (TSX:PAAS)

When it comes to safe haven assets, investors should diversify away from only gold and look to get involved in an increasingly promising silver market.

Pan American is arguably the single best silver stock out there, with active projects in Canada, Argentina, Mexico, Bolivia and Peru. When gold move, silver does too, and the both of them are currently setting up for a bull run.

Pan American’s major acquisition of Tahoe Resources earlier this year has been a real coup for the company with its share price having jumped by over 60% since May.

The company’s President and CEO, Michael Steinmann, believes that the competition of that particular acquisition has established Pan American as “the world’s premier silver mining company with an industry-leading portfolio of assets, a robust growth profile and attractive operating margins.”.

The fact that this is now the largest publicly traded silver mining company has given mining investors even more reason to be excited. 

Stay tuned… 

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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