Gold Digger: Two charts that show how undervalued gold stocks really are
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Gold stocks are cheap, experts keep saying.
Well-known analyst Jesse Felder has now demonstrated the “pathetic performance” of the US gold majors in handy chart form.
The US listed BANG stocks (Felder’s play on FANG) include gold giants Barrick, Agnico Eagle and Newmont/Goldcorp.
Below is the relative performance of the BANG stocks along with the gold price:
“With the l [gold price] soaring over the past five years, you would think that [BANG stocks] would be outperforming — and yet the miners’ performance has been absolutely pathetic compared to the S&P 500,” Felder says.
This is due in part to the outperformance of the wider stock market, led by FANG stocks like Facebook and Google. That gap could be closed if we enter another equity bear market.
But Felder also believes, like many others, that the gold price is just taking a breather:
“If you believe, as I do, that gold prices are only in the middle of a new longer-term bull market (as the history of prior bull markets for the precious metal would suggest) then gold miner shares are just far too cheap at today’s prices,” Felder says.
The gold price continues to trade in a holding patten. It has barely moved over the past 6 months, gaining just 0.26%.
Despite a late week run, the price has dropped marginally over the past 7 days, from $US1795.48/oz to $US1786.5/oz.
This week 121 (46.5%) ASX gold stocks on our list went up, 87 (33.5%) went down, and 52 (20%) didn’t move.
A key catalyst for gold could come from the bond market. If inflation expectations rise faster than bond yields, that historically has been a reliable driver for rising gold prices.
Here’s how ASX-listed gold & silver stocks are performing:
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>>> Stocks missing from this list? Email [email protected]
$14m market cap NPM has gold exploration projects in Finland and Argentina. This week, there was news from both.
The first drill hole at the ‘Satulinmäki’ prospect in Finland hit promising 5m at 1.8g/t gold from 20m (including 3m at 2.7g/t from 22m and 1m at 4.3g/t from 23m). To date, 5 holes for 921m have been completed.
Meanwhile, sampling at ‘Las Opeñas’ in Argentina has confined anomalous gold and silver at surface across a 600 x 100m geophysical anomaly.
The sample results reinforce that Las Opeñas is a priority target for drilling, NPM says.
Fellow AOP suitor Gold Road Resources (ASX:GOR) one-upped its mid-tier colleague, with a $166 million all cash offer for the junior explorer yesterday morning.
Apollo owns the 1.1Moz Lake Rebecca gold project around 100km east of Kalgoorlie.
GOR’s 56c a share all cash offer would appear to trump the cash and scrip bid from Ramelius, which would have handed Apollo’s shareholders $99m all up in cash at 34c plus the balance in shares.
The Gold Road bid is a 23% premium to Apollo’s 45.5c closing price on October 14, before Apollo entered a trading halt ahead of the Ramelius deal, a 40% premium to the 30 day VWAP of 40c and a 73% premium to its 6 month VWAP of 32.4c.
Apollo stock hit a 12 month low of just 27c on December 15 last year.
Gold Road has also built a 19.9% stake in Apollo after picking up a number of shares at the 56c off-market offer price, effectively blocking the Ramelius bid which has a 90% minimum acceptance condition.
Apollo’s board, which recommended shareholders accept the Ramelius offer, has advised shareholders to take no action in regards to the Gold Road bid until it has prepared a target’s statement.
PUA is spinning out its gold exploration assets into new vehicle Vertex Minerals, which has lodged a prospectus to raise $5.5m at 20c per share.
The company’s assets will include:
The expected date for quotation on ASX is 21 December, 2021.