Gold Price Rises Above US$2,000 for the First Time – Which Gold Stocks to Look for?

Summary

• Gold has breached the price level of US$ 2,000 per ounce
• Gold stocks have delivered triple-digit returns on YTD basis
• Greatland Gold Plc has nearly yielded 700 per cent return during the unprecedented crisis

Investors who are willing to bet on rising gold prices, find Gold stocks exciting. Investing in Gold might be riskier, but it also comes along with its own set of rewards. The precious metal is currently witnessing a breakout, as the price has breached the level of US$ 2,000 per ounce. The precious metal has delivered nearly 30 per cent price return in the last six months. These Gold stocks might attract more investors if the economic fallout continues amid the novel coronavirus and ends up being worse than expected.

(YTD-Gold Chart, Source: Thomson Reuters)

Since January 2020, the world economically has changed drastically. The outbreak of the pandemic has devastated the world economy along with claiming several lives. Most of the sectors such as hospitality, travel, tourism, and leisure have been severely impacted. Investors’ wealth has been eroded significantly and has left them high and dry. In addition, negligible economic activity has led to significant drop in oil prices. Several people are being furloughed or have lost jobs amid the lockdown induced by Covid-19. This sought of pressure created on the world economy, tends to help Gold historically. Market experts believe that inflation is likely to creep in by the end of 2020.

Also read: Gold Miners Emerge as Safe Havens for the Investors During the Coronavirus Crisis

The British government’s plan of easing down the lockdown restrictions lacked clarity and created a room for confusion. Due to this ongoing lack of clarity, and a continuing low consumer demand, nothing much can be said about how the economic growth will be shaping up, at least in the short-run. Therefore, investors are looking forward to parking their money, where they can get attractive returns. Market experts believe that gold prices tend to go higher through various market cycles as seen in the past.

Also read: Five gold stocks on the LSE amidst the Coronavirus scare

Gold Mining has always been a complicated business with many unseen uncertainties that might come into play shortly or in the mid-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 shall discuss gold miners/stocks in the United Kingdom listed on the London Stock Exchange based on their recent price returns amid the coronavirus crisis.

(Source: EODHD/Others, Thomson Reuters)

1. Greatland Gold Plc: YTD Total Return- 683.30%

London-headquartered, Greatland Gold Plc (LON:GGP) is a gold exploration and mining company, primarily focused on gold. The company achieved high-grade results from Newcrest drilling majorly conducted last year. The company confirmed its strong financial position and continued its Paterson exploration programmes in 2020 with cash & cash equivalents of more than £4 million as of 31 December 2019.

The AIM listed group, with ticker symbol “GGP” has been trading at GBX 14, down by 0.71 per cent, as of 6 August 2020 (10:15 AM GMT+1). The company provided a price return of nearly 683.30 per cent on YTD basis, despite the economic disruption caused by the coronavirus pandemic.

2. Goldplat Plc: YTD Total Return- 205.80%

Goldplat Plc (LON:GDP) is a UK based mining company, which is engaged in gold exploration and production. The Company is engaged in gold recovery projects in South Africa and Ghana and has an underground mining operation in Kenya. The Company is listed on the FTSE AIM All-Share index. Goldplat had highlighted that it expects to report a profit in 2020. The Company's operations were impacted due to the lockdown in South Africa, although the operations have resumed now. Goldplat's subsidiary Goldplat Recovery Limited (GPL) reported an operating profit of £2,067,000 in Q4 FY20 and £5,511,000 for full-year FY20. Gold Recovery Ghana Limited (GRG) generated an operating profit of £280,000 in Q4 FY20 and £638,000 for full-year FY20.

The LSE listed group, with ticker symbol “GDP” has been trading at GBX 7.75, down 2.52 per cent as of 6 August 2020 (10:16 AM GMT+1). The company provided a price return of nearly 205.80 per cent on YTD basis, despite the economic disruption caused by the coronavirus pandemic.

3. Petropavlovsk Plc: YTD Total Return- 190.40%

FTSE 250 listed Petropavlovsk Plc (LON:POG) mining company has delivered resilient performance in a challenging environment. The Company has delivered a decent financial performance in the first half of the fiscal year 2020, followed by satisfactory operational highlights in the first quarter of 2020. During the first half of 2020, the gold production was up by more than 40 per cent.

The stock has delivered a price return of 190.40 per cent on YTD basis. While writing on 6 August, at GMT 10:17 AM+1 before the market close, POG shares were trading at GBX 36.15, marginally down by 2.30 per cent from previous day closing price.

4. Condor Gold Plc: YTD Total Return- 166.70%

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

On 6 August 2020, at GMT 10:20 AM+1, Condor Gold Plc shares were trading on the London Stock Exchange at GBX 54.00, up by 3.85 per cent from the previous day closing price. The stock has given 166.70 per cent price return on YTD basis.

5. Katoro Gold Plc: YTD Total Return- 137.80%

Katoro Gold Plc (LON:KAT) is a mining and exploration company based out of the United Kingdom. The company is developing a gold project in Tanzania based Lake Victoria Goldfields and other gold projects at Lubando and Imweru.

Katoro Gold Plc has informed about accomplishing hiving off its Imweru gold project. The project disposal has been made to Lake Victoria Gold Limited. The total staged consideration of the disposal is USD 1.0 million and a 1.5 per cent NSR (Net Smelter Royalty) on all future gold production. The Mining Commission in Tanzania has endorsed the transaction. The stock has given 137.80 per cent price return on YTD basis. While writing on 6 August, at GMT 10:22 AM+1 before the market close, KAT shares were trading at GBX 2.26, marginally up by 2.73 per cent from previous day closing price.

Comparative chart: GGP, GDP, POG, CNR, and KAT

(Source: Thomson Reuters)

Gold investments are 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, associated risks in the nature of business and industry must be evaluated, given the unprecedented crisis caused by the pandemic.