Deep concerns about economic stability drives these mining firms
- Hycroft Mining (HYMC): With internet speculators targeting HYMC, it’s one of the gold penny stocks you can’t ignore.
- Harmony Gold Mining (HMY): Primarily located in resource-rich South Africa, HMY has enjoyed significant momentum recently.
- Kinross Gold (KGC): The sale of its Russian project could reduce geopolitical vulnerabilities down the line.
- B2Gold (BTG): A low-cost international gold producer, B2Gold benefits from relatively stable geopolitical exposure.
- Platinum Group Metals (PLG): Enjoying the potential for large production of multiple precious metals, PLG is one to watch.
- Avino Silver & Gold Mines (ASM): Focused on the exploration of gold, silver and copper, ASM enjoys sudden relevance.
- Nornickel (NILSY): A name for the true speculator, NILSY could enjoy substantial upside value if Russia reopens.
With the fear trade surging higher these days, investors will do well to consider precious metal mining firms. True, the underlying assets are simply commodities at the end of the day. However, because of their intrinsic worth and long history of representing stores of value, nothing shines quite like gold during periods of turmoil. But could the same cynical benefit apply to gold penny stocks?
Let’s get down to it: Prospective participants of gold penny stocks must gird themselves for the possibility of incredible volatility. Just because relevance is on tap doesn’t mean that these specific ideas will jump higher. At the same time, being completely risk averse can be the riskiest decision of all because it denies you robust upside opportunities. Therefore, take a measured approach congruent with your risk-tolerance profile.
Still, the one factor that could really drive up gold penny stocks is the expansion of the money stock. If you think about it, the fundamental nature of our economy didn’t change under the new normal: Used cars didn’t become intrinsically more valuable, nor did residential units. What did change was the amount of money “printed” into existence, thus causing myriad reactions.
Since the Federal Reserve seems reluctant in raising benchmark interest rates too fast too soon, the money stock issue might not be addressed for a while. While that hurts the American people in the long run, it could help lift these gold penny stocks to buy.
|HMY||Harmony Gold Mining||$4.77|
|PLG||Platinum Group Metals||$2.06|
|ASM||Avino Silver & Gold Mines||89 cents|
Hycroft Mining (HYMC)
It’s in the news, so we’ve got to talk about it. Recently, cineplex operator AMC Entertainment (NYSE:AMC) made what Wedbush Securities analyst Michael Pachter decried as an “idiotic” and “embarrassingly stupid” decision: the company acquired a significant amount of equity in Hycroft Mining (NASDAQ:HYMC).
According to Pachter, he doesn’t necessarily view buying gold penny stocks as a silly move. Rather, he means that “it’s inappropriate for a movie theater company to step so far out of their core business and into some completely unrelated business that will not drive any traffic to their theaters,” in a phone interview with The Verge.
Be that as it may, HYMC stock has been a clear beneficiary of the decision, however you feel about it. Up 235% on a year-to-date basis, it’s one of the top-performing gold penny stocks to buy. But given the fundamental reason for pivoting to precious metals (fear trade), HYMC is worth consideration with speculative funds.
Harmony Gold Mining (HMY)
Although Harmony Gold Mining (NYSE:HMY) doesn’t have the notoriety of gold penny stocks like Hycroft, it’s still a solid performer, up nearly 15% YTD. While it shouldn’t form the bulk of the basis for your investing decision, HMY appears to have formed a bullish consolidation pattern since the beginning of March this year. If so, the consolidation could end up to the upside given the cynically robust backdrop.
Not surprisingly, HMY began picking up serious momentum following Russia’s dangerous decision to invade neighboring Ukraine. With war at the doorsteps of western Europe, concerns ring sharply about geopolitical instability. That’s part of the reason why Harmony is in the news. With most of its projects located in resource-rich South Africa, the mining firm represents an indirect hedge against further international volatility.
HMY isn’t all technical news either. In its fiscal year ended June 30, 2021, Harmony generated sales of $2.8 billion atop net income of $346 million. In the prior year, Harmony suffered a net loss of $60 million.
Kinross Gold (KGC)
One of the more intriguing gold penny stocks available for trading, Kinross Gold (NYSE:KGC) managed to catch the attention of the Wall Street Journal. The reason? It reported that the mining firm was nearing the sale of its Arctic Russian mine to Fortiana Holdings. If approved, it could represent the first sale of a western company’s assets in Russia since the Kremlin’s decision to attack Ukraine.
On paper, the decision appears to be a huge blow to Kinross. Among gold penny stocks — or just gold miners in general — Kinross is the only large western mining firm with a presence in Russia. Of course, Russia is a massive resource hub so the impact cannot be ignored. Nevertheless, Wall Street seems to approve of the divesture, with KGC stock up nearly 6% over the trailing month.
True, the sale must hurt, but at the same time, if you have a longer-term outlook, the move is both necessary and potentially lucrative. Basically, Kinross won’t be exposed to Russia, which has proven geopolitical unpalatable. Thus, KGC can move forward without distractions.
Though B2Gold (NYSEAMERICAN:BTG) features a speculative profile, the mining firm has been on the move, gaining nearly 16% YTD. An international gold producer leveraging its low-cost profile, BTG has always been attractive as a gamble on the fear trade. But its exposure to relatively stable jurisdictions commands a premium under the circumstances.
Obviously, Russia dominates headlines here and abroad. Because of the constant exposure, it’s tempting to view the bullish thesis of geopolitical stability as a mundane factor. However, as Boeing (NYSE:BA) demonstrated, reducing exposure to pugnacious administrations may facilitate longer-term tailwinds. While Boeing reduced its building materials dependency on Russia, its rivals did not follow suit. Now, Boeing competitors find themselves behind the 8-ball.
Similarly, B2Gold is well-positioned in that it doesn’t have to worry constantly about looking over it shoulder compared to gold penny stocks that are tied to questionable projects. Obviously, this dynamic is no guarantee of future upside, but when you’re dealing with speculative trades, every advantage counts.
Platinum Group Metals (PLG)
An enticing idea among gold penny stocks, Platinum Group Metals (NYSEAMERICAN:PLG) operates the Waterberg Project, an underground deposit located in South Africa. According to the company’s website, Waterberg features an “attractive risk profile given its shallow nature. The project facilitates fully mechanised production with the potential to have amongst the lowest operating costs in the PGM sector.”
Because we’re talking about gold penny stocks, I must point out that geological experts estimate a significant gold reserve in the underlying project. But admittedly, the main focus with PLG stock is platinum and palladium. Both metals are incredibly rare — likely rarer than gold — with Russia dominating the latter’s production.
Therefore, PLG could be a geopolitically significant company. Coincidentally, Waterberg represents a joint venture between several international companies. Further, if the firm achieves its large-scale production goals, Platinum Group Metals could veritably skyrocket. It’s risky but it’s one to watch among gold penny stocks.
Avino Silver & Gold Mines (ASM)
Long a risky name — even compared to other gold penny stocks — Avino Silver & Gold Mines (NYSEAMERICAN:ASM) shed over 50% of its market value during the trailing five years. Obviously, that doesn’t do much for confidence. However, in the trailing three months, ASM seems to have found momentum, gaining over 10%.
Is this the narrative we can finally believe in for Avino? While the volatility risk for ASM is no joke, the underlying company has enjoyed a burst of relevance. In addition to mining the namesake assets, Avino also features exposure to copper mining and exploration initiatives. Moving forward, this industrial metal will likely command a premium for its myriad applications.
Perhaps most notably, copper is vital to electric vehicles. With crude oil prices skyrocketing the price of gasoline, many people are looking to EVs as a viable cost-effective alternative to personal transportation. Therefore, you can buy ASM for the fear trade and for the future of mobility.
Easily the most controversial name on this list of gold penny stocks, Russia’s Nornickel (OTCMKTS:NILSY) is not an investment for everybody. Indeed, you probably need to be an agnostic speculator, someone who only focuses on profit and not on ESG (environmental, social and governance) concerns. I’m not here to judge, though. I’m just here to present ideas.
If you can divorce Nornickel from the underlying politics, NILSY does seem like an attractive gamble. Just a few days prior to the violence, NILSY was trading hands in the upper $20 range. Suddenly, right as the Russian stock market went dark due in part to blistering sanctions, NILSY dropped to a staggeringly low $3.
Well, two pennies above $3 to be exact.
Though Russia partially reopened its market for trading, the fate of Nornickel and other high-profile Russian stocks remains to be seen. But should you be able to acquire NILSY for single-digit prices, you’ve got to imagine that over the long run, it should rise higher.
This article originally appeared at InvestorPlace.
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On the date of publication, Josh Enomoto held a LONG position in gold and AMC. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.