Gold Digger: Which three ASX gold stocks have made the most gains over the past year?

Strange to think that it is a year since the world was turned upside down when the World Health Organisation declared COVID-19 a worldwide pandemic in mid-March 2020.

In the week that followed the price of gold tumbled nearly $US200 to $US1,477 per ounce ($2,443/ounce), but it quickly recovered and hit an all-time high of $US2,070 per ounce in August.

Since that time, gold has been on a downward trend and went as low as $US1,700 per ounce in early March, although it has recovered to $US1,725 per ounce this week.

For a while last year, gold seemed the natural place for investors to park their cash while the COVID crisis swirled around them, until that is cryptocurrency Bitcoin started to take off.

Competition for gold is heating up on two fronts

Since the turn of the year, gold has faced competition on another front, rising yields or interest rates on long-dated US Treasury bonds.

Higher bond yields make gold appear less attractive as the yellow metal generates zero income (unless leased out, that is), and higher yields in turn push up the US dollar making the currency stronger against gold.

Bitcoin’s price performance recently has attracted heavy hitters in the form of hedge funds, banks and corporations who may otherwise have put some cash into gold.

All these factors beg the question, where next for gold prices?

More stimulus spending

Some gold market commentators suggest that talk of another round of emergency spending for the US economy in the form of stimulus spending will put pressure on the US dollar.

President Joe Biden has spoken this week of injecting another $US3 trillion into the US economy only weeks after Congress passed a $US1.9 trillion spending package.

“We are likely to see wider deficits. We are likely to see higher debt. We are likely to see dollar depreciation. All these will be positive for gold,” State Street Global Advisers chief gold strategist, George Milling-Stanley, told Kitco.

Growing US economy and stronger US dollar

On the flip side, some analysts argue that bond yields are likely to move even higher, perhaps to 2.5 per cent, as the US economy steadily recovers from the COVID crisis.

“With the dollar now sitting at a four-month high against a basket of its peers, the popular view of a weaker US currency is now being put to a big test,” chief market strategist at forex trader FXTM, Hussein Sayed, told Kitco.

Large spending deficits for governments are less scary to investors who see an expanding economy and inflation start to erode government debt piles.

“While higher debt levels should be considered a negative factor for a currency, investors are instead focusing on growth expectations,” said Sayed.

Working out the price direction of gold is now a complicated affair that has to include calculations on the US dollar, Treasury bond yields, physical demand and supply factors, and cryptocurrencies.

Winners & Losers

Here’s how ASX-listed gold & silver stocks are performing:

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Small cap standouts

Based on their share prices from a year ago at the start of the worldwide COVID pandemic, some ASX gold companies have made outsized share price gains. They are as follows:

SUREFIRE RESOURCES (ASX:SRN) +2550%

In November 2019, disappointing results from a promising drilling program at the flagship Victory Bore project sent Surefire Resources’ share price into a tailspin.

The explorer regrouped and, in August, announced the acquisition of a couple of historic WA gold projects.

In November 2020 – one year on from the flop at Victory Bore — the WA explorer announced thick, high grade gold in its first ever drill program at the newly acquired Yidby project.

Results, including 40m at 3g/t, sent the stock through the stratosphere.

THOMSON RESOURCES (ASX:TMZ) +1419%

Precious metals explorer Thomson is acquiring the previously producing Webbs and Conrad silver projects in NSW.

The high-grade Webbs deposit produced ~55,000t of ore grading at least 23oz (about 710 grams per tonne) silver between 1884 to 1901.

Conrad was historically one of the largest silver mines in the New England region, producing about 3.5moz of silver along with lead and tin.

NEW AGE EXPLORATION (ASX:NAE) +1250%

New Age is preparing to roll out a drilling program for its Pilbara gold prospects in April after completing a detailed aeromagnetic survey of the area.

The exploration tenements are located 50km south of De Grey Mining’s (ASX:DEG) Hemi gold discovery near Port Hedland in WA’s Pilbara region.

Aeromagnetic data highlighted several ‘Hemi style’ intrusive gold targets at New Age Exploration’s Pilbara gold prospects, and the maiden drilling program will assess these.

“We are now moving at pace to finalise all preparations to commence the drill program,” executive director, Joshua Wellisch, said.