The Gold & Metals Weekly Navigator (May 10th, 2020)

Gold Mining Stocks Charge into Overdrive

Gold mining equities had a stellar week in the market, outperforming gold bullion and the S&P 500.  Institutional Portfolio Managers are increasing their allocation to gold mining stocks as a way to protect downside risk related to quantitative easing and fiscal budget expansion.

Gold & Gold Equities Performance May 4th-8th, 2020

Source: YCharts

Federal Reserve Keeps on Printing

The Federal Reserve has continued it’s massive balance sheet expansion, triggered by the COVID-19 pandemic. Total assets rose another $65.5 billion to a fresh record $6.7 trillion. Bank of America expects Fed’s balance sheet to rise to nearly $10tn by year-end.

Source: Bloomberg

Gold: History Doesn’t Repeat Itself, but it Sure Does Rhyme!

In their World Gold Forum presentation, Novagold presented a heck of a chart comparing gold’s current run to it’s run in the 70s.

Source: Novagold

Shandong Gold Acquires TMAC Resources (TMR)

On Friday May 8th, TMAC Resources announced that it had been acquired by Shandong Mining at a price of $1.75 in cash (4% premium to the previous day’s trading price). TMAC has a market cap of $194 million.

Needless to say this is a negligible premium for a stock that has been over $15 in the last 5 years and over $5 in 2019. The more important takeaway is the interest of Chinese mining companies in gold assets.

TMAC Resources 5-Year Share Price

Source: YCharts

IAMGOLD (IAG) Q1 Earnings

IAMGOLD reported Q1 results on May 4th after-market that were below street estimates, the stock initially fell -7% on the following trading day, however it was able to recoup losses ending the day down -1%.

IAM Gold Share Price May 4th-8th, 2020

Source: YCharts

EPS came in at a loss of $-0.01/share versus consensus estimates of $0.03/share. IAG’s 2020 production guidance was revised lower to 685-740koz, -2% below their previous guidance 700-760koz.  Additionally, cash costs and and all-in sustaining costs were revised higher, 5% and 8% respectively.

IAMGOLD – 2020 Updated Guidance

Source: IAMGOLD

Kirkland Lake (KL) Q1 Earnings

Kirkland Lake reported Q1 results that were in-line with street consensus pre-market on May 6th, the stock traded down -3% that day.

Kirkland Lake completed it’s acquisition of Detour Gold on January 31, 2020, Detour Lake is a large-scale open pit mine located in Northern Ontario that will provide KL with a pathway for production growth.

Kirkland Lake YTD Share Price

Source: YCharts

EPS ($US) came in at $0.70/share which as in-line with analyst estimates.  The company had withdrew 2020 guidance on April 1st as a result of COVID-19, in this earnings result the company stated that it will release new 2020 guidance when the Detour Lake and Macassa mines have returned to predictable levels of production.

Kirkland Lake Q1 2020 Results

Source: Kirkland Lake
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The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Capital 10X hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

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Capital 10X gets down to the real money business, actionable financial insights for traders and investors. We analyze company earnings, interview management teams and help teach the fundamentals of financial analysis and options trading. Our mission is to hunt for genuine 10 baggers.
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Brian
May 10, 2020 2:54 pm

Why have you stopped the Florida Cannibus report?

Thomas George
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Thomas George
May 17, 2020 9:56 am
Reply to  Brian

Hi Brian, we’re optimizing out content. We’ll be moving to a quarterly update on the FL cannabis report.

ED DULABA
ED DULABA
May 10, 2020 3:56 pm

Dont you think it’s too early for Gold stocks. Consensus opinion is deflation first then inflation possibly hyper inflation. Why not wait till we go down to recent lows or even lower, S&P, 1700-1800.Gold stocks will go down with the plunging market.