Commodities & Metals

Gold and Silver Investors Have Fewer and Fewer Choices

Kinross Gold Corp. (NYSE: KGC) has seen its shares nearly double in 2020, but even at $9.30 a share, it has a consensus target price up at $9.80. Where that consensus gets interesting is that more upgrades were seen in recent days, with TD Securities raising its fair market price to $12 from $10 and Raymond James raising its target to $10.50 from $9.50.

Kinross now is worth nearly $12 billion. Unlike some of the larger mining stocks, Kinross’s earnings report was a better quality one, as the company said that all its mines continued production during the quarter, with all-in sustaining costs running under $1,000 per ounce and with capital spending plans on track for 2020.

Iamgold Corp. (NYSE: IAG) is much smaller than the larger operations, with a $2.3 billion market cap, but its $4.95 share price is still under Raymond James’s recently raised target of $5.50 (from $5.00). Very few U.S. analysts have targets on Iamgold, and investors should know that this company’s earnings report on Wednesday could make the “cheapness” look better, or it could look much worse. Jumping into value stocks ahead of earnings can be rather painful, and Iamgold has seen some interruptions due to COVID-19.

Endeavour Silver Corp. (NYSE: EXK) saw its shares rally about 5% to $4.50 after earnings, but this comes with a market cap of only $650 million, even after an 80% stock gain so far in 2020. The stock has a consensus target price now close to the current share price, but it looks as though the hurt from restarting of operations is being looked past. Endeavour’s net revenue was just $20.2 million in the quarter, and that came from the sale of 634,839 ounces of silver and 5,218 ounces of gold. Its average selling prices (per ounce) were $17.04 for silver and $1,862 for gold. This company operates three silver-gold mines in Mexico.

Bradford Cooke, Endeavour CEO, commented, “I am pleased to report that notwithstanding the suspension of mining operations during the 2nd quarter due to the COVID-19 pandemic, Endeavour was able to reduce its net loss quarter-on-quarter, as each mine generated positive Mine Free Cash Flow thanks to improved operating performance and higher precious metal prices.”

VanEck Vectors Gold Miners ETF (NYSEARCA: GDX) is the top gold-mining company exchange-traded fund and its top holdings include Newmont, Barrick, Franco-Nevada and Wheaton. The fund was up about 45% so far in 2020, and the $43.25 share price compares with a 52-week range of $16.18 to $44.46. This VanEck ETF now counts net assets under management of more than $18 billion, which looks to be up about 20% from last month, at the same time that many of the components within that ETF are now considered by Wall Street as above their fair value target prices.

There is one thing that may make even the “expensive” gold and silver stocks perform well in the coming months. Silver and gold prices have a lot of support from low and no interest rates, scared investors, uncertainty, trillions of dollars of newly created money and so on.

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