Not Only Gold but Gold Stocks Can Also Be A Haven in The Time of Crisis

  • May 14, 2020 09:16 PM BST
  • Hina Chowdhary
    Director, Equities Research Hina Chowdhary
    1489 Posts

    Hina Chowdhary is the Director, Equity Research at Kalkine and has an extensive experience of about 15 years in the area of Research, which includes 5+ years in Equities Research particularly.She has earned a Master of Science degree from the renowne...

Not Only Gold but Gold Stocks Can Also Be A Haven in The Time of Crisis

Investing in Gold might be riskier, but for the majority of the time, it has proven rewarding. The precious metal last month had touched a fresh 7 years high. Investors who are willing to bet on rising gold prices, find Gold stocks an exciting proposition as well. It is now being said that Gold stocks might attract more investors if the economic fallout continues amid the novel coronavirus, and the situation ends up being worse than expected.

Since January, the world economy has witnessed a drastic change. The outbreak of the pandemic has devastated the whole world and claimed several lives. Most of the sectors, such as hospitality, travel, tourism, and leisure have been severely impacted. Investors wealth has eroded significantly, and the sudden slump in markets has left them high and dry. In addition, negligible economic activity has led to a significant drop in oil prices. Several people are being furloughed or have lost jobs amid the lockdown induced by Covid-19. This sort of pressure created on the world economy tends to help the yellow metal prices reach historical high. Market experts believe that inflation is likely to creep in by the end of 2020.

Meanwhile, the British government plans of easing lockdown lack clear direction and creates a room for confusion. Due to lack of clarity, nothing much can be said about how the economy will shape up, and how investors can look forward to parking their money. Market experts believe that gold prices tend to go higher through various market cycles, as seen in the past. This surge in Gold prices is due to demand factors.

In addition, Gold investment is considered as a method of storing value which can yield benefit in crucial times. The gold stocks are likely to generate great price returns when prices of gold as a commodity moves higher. However, before investing in gold stocks, which could be volatile sometimes, the risks in the nature of business and industry should be considered given the unprecedented crisis caused by the pandemic.

Gold mining has always been a complicated business with many unseen uncertainties that might come in to play shortly or in the long-term horizon given the current circumstances. This means that the prices of gold stocks might not always resonate with the price of gold as a commodity. In this article, we will discuss some gold mining stocks in the United Kingdom listed on the London Stock Exchange based on their recent price returns amid the coronavirus crisis.

  • SolGold Plc (LON: SOLG)

Australian company, SolGold Plc is into mineral exploration with interests in the discovery and exploration of gold and copper mineralisation. The company has deep assets in Equador. Recently, to finance its flagship Alpala copper-gold project, the company entered into a financing agreement with Franco-Nevada Corporation for US$150 million.

Since the pandemic struck the global markets in the last week of January this year, the shares of the company have made a low of GBX 10.00 on 16 March 2020. The stock price closed at GBX 26.00 on May 13, 2020. In a period of roughly two months, the stock has delivered a price return of 160 per cent.

On 14 May 2020, at the time of writing the report (before the market close, GMT 9:20 AM), SolGold Plc shares were trading on the London Stock Exchange at GBX 26.75. The stock has a 52-week High of GBX 40.95 and a 52-week low of GBX 10. The total market capitalisation of the company was £500.06 million.

  • Greatland Gold Plc (LON: GGP)

Greatland Gold Plc (LON: GGP), headquartered in London, is a company engaged in gold mineral exploration and mining. The company is well poised to accelerate with the ongoing projects as it does not have liquidity concerns. Last year, the company achieved high-grade results from its Newcrest drilling facility.

Since the coronavirus took a toll on the global economy in the last week of January this year, the shares of the company have made a low of GBX 3.12 on 18 March 2020. The stock price closed at GBX 8.70 on May 13,2020. In a period of roughly two months, the stock has delivered a price return of 178.85 per cent.

On 14 May 2020, at the time of writing the report (before the market close, GMT 9:41 AM), Greatland Gold Plc shares were trading on the London Stock Exchange at GBX 8.82. The stock has a 52-week High of GBX 9.80 and a 52-week low of GBX 1.45. The total market capitalisation of the company was £319.37 million.

  • Highland Gold Mining Ltd (LON: HGM)

AIM-listed gold mining company, Highland Gold Mining Limited has major assets in Central Asia and Russia. During the fiscal year 2019, the total gold production of the company was up by 12 per cent to more than 300 thousand ounces, ahead of its guidance. The Group’s EBITDA stood at US$205.1 million, up by 34 per cent in 2019.

Since the pandemic struck the global markets in the last week of January this year, the shares of the company have made a low of GBX 150.00 on 19 March 2020. The stock price closed at GBX 255.00 on May 13, 2020. In a period of roughly two months, the stock has delivered a price return of 70 per cent.

On 14 May 2020, at the time of writing the report (before the market close, GMT 9:58 AM), Highland Gold Mining Limited shares were trading on the London Stock Exchange at GBX 255. The stock has a 52-week High of GBX 259 and a 52-week low of GBX 150. The total market capitalisation of the company was £927.94 million.

  • Hummingbird Resources Plc (LON: HUM)

United Kingdom-based, Hummingbird Resources Plc, is a multi-asset gold explorer focused on Western Africa. At Yanfolila Gold Mine (Mali), the company produced more than 30 thousand ounces of Gold in the first quarter of 2020. The company managed to sell more than 24 thousand ounces of Gold at an average price of US$1,568 per ounce during the first quarter of 2020. The company has managed to reduce its debt quarter on quarter and has adequate cash reserves.

Since the coronavirus took a toll on the global economy in the last week of January this year, the shares of the company have made a low of GBX 18.50 on 16 March 2020. The stock price closed at GBX 27.50 on May 13, 2020. In a period of roughly two months, the stock has delivered a price return of 48.65 per cent.

On 14 May 2020, at the time of writing the report (before the market close, GMT 10:12 AM), Hummingbird Resources Plc shares were trading on the London Stock Exchange at GBX 27.20. The stock has a 52-week High of GBX 30.00 and a 52-week low of GBX 12.47. The total market capitalisation of the company was £97.39 million.

  • Condor Gold Plc (LON: CNR)

Condor Gold Plc is a gold miner based in London. In its first-quarter 2020 results, the company reported a gain of 92,477 pounds as compared to the loss incurred in the same period the previous year. The company has recently issued 500 thousand ordinary shares for exercise of warrants.

Since the pandemic struck the global markets in the last week of January this year, the shares of the company have made a low of GBX 20.95 on 18 February 2020. The stock price closed at GBX 41.00 on May 13, 2020. In a period of roughly three months, the stock has delivered a price return of 95.70 per cent.

On 14 May 2020, at the time of writing the report (before the market close, GMT 10:25 AM), Condor Gold Plc shares were trading on the London Stock Exchange at GBX 40.33. The stock has a 52-week High of GBX 47 and a 52-week low of GBX 16.50. The total market capitalisation of the company was £39.02 million.

 

 


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