The Gold-Silver Price Ratio is Starting to Drop and Investors are Turning Towards Precious Metal Stocks
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NEW YORK, June 24, 2020 /PRNewswire/ -- Gold and silver prices continue to climb as investors turn to safe-haven assets amid global economic uncertainty, creating an exciting opportunity for gold and silver stocks. After experiencing years of funding declines, investment dollars are pouring into the precious metals market via exchange-traded funds (ETFs), physical gold and silver purchases, and mining stocks. At the top of the list of promising gold and silver stocks are Barrick Gold (NYSE: GOLD) (TSX: ABX), Coeur Mining, Inc. (NYSE: CDE), Wheaton Precious Metals (NYSE: WPM) (TSX: WPM), First Majestic Silver Corp. (NYSE: AG) (TSX: FR), and Genesis Metals Corp. (TSXV: GIS) (OTCQB: GGISF).
Canadian gold ETFs brought in C$382 million in April, the biggest monthly gain in four years, and are now worth nearly C$3 billion. Meanwhile, gold ETFs across the globe have attracted $14.5 billion in investments in less than five months, surpassing the $11.7 billion that flowed into the funds in 2009.
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The increase in gold investments also allowed junior gold exploration company Genesis Metals Corp. (TSXV: GIS) (OTCQB: GGISF) to raise C$1 million in financing in March to fund ongoing drilling at its 290-square kilometers Chevrier Gold Project in the Abitibi Greenstone Belt, one of the most gold-endowed regions in the world.
Gold Prices Expected to Reach New Highs This Year
Although gold prices have already made a significant comeback in 2020, analysts see the prices continuing to rise. In April, Bank of America raised its 18-month gold price target, which is higher than the existing price record.
The bank increased its price target from $2,000, as governments around the world unleashed large amounts of monetary stimulus to prevent economies from collapsing during pandemic-related shutdowns.
The price target offers junior gold exploration companies like Genesis Metals Corp. (GIS.V) (GGISF.QB) a chance to gain additional funding and advance their gold projects, although the company is already fully funded for its planned work in 2020.
The company recently completed the Phase I drilling program at its Chevrier Gold Project, with a total of 2,502 meters in nine holes drilled, and plans to launch a second-phase drilling program once all assays from the current program are received and evaluated.
On June 24, Genesis Metals Corp. (GIS.V) (GGISF.QB) announced that it has commenced a staged surface exploration program that will be executed in the coming months at Chevrier.
The initial phase of the staged surface exploration program involves follow-up on the priority targets identified from the 2019 glacial till survey. The work will also include surface prospecting, sampling, and geological mapping, as well as geophysical tools, such as detailed drone/helicopter magnetic surveys. The aim is to delineate discrete gold targets for trenching and drill testing later in 2020.
Gold and Silver Miners Sell Off Assets, Sign Streaming Deals, and Secure Financing
Another trend that's happening among gold and silver stocks is the buying and selling of assets. Gold industry giant Barrick Gold (NYSE:GOLD) (TSX:ABX) just announced that it has sold 79.3 million shares in Shandong Gold Mining Co. for $210 million.
On June 22, Metalla Royalty & Streaming Ltd entered into an agreement with Coeur Mining, Inc. (NYSE: CDE) and third parties to jointly acquire an existing 1.3875% royalty interest in Coeur's operating Wharf mine in South Dakota for a total of $8 million. Wharf, which has been producing since 1983, was acquired by Coeur Mining in February 2015 from Goldcorp for roughly $99.5 million in cash.
In conjunction, Metalla Royalty will sell the 0.3875% royalty part to Coeur, which will be satisfied through the transfer of 421,554 Metalla shares that are currently held by Coeur to the third-party sellers. The transfer represents $2.23 million in value based on a price of $5.30 per Metalla share.
Just one day later, Metalla announced an increase in the size of the bought deal secondary offering, which now consists of 3.4 million common shares of Metalla currently held by Coeur at a price of $5.30 per common share for gross proceeds to Coeur Mining, Inc. of approximately $18 million.
Meanwhile, Wheaton Precious Metals (NYSE: WPM) (TSX: WPM) has signed a non-binding term sheet with Caldas Gold Corp to enter into a precious metals purchase agreement for the Marmato Project in Colombia. Upon entering into the Precious Metals Stream, Wheaton will purchase 6.5% of the gold production and 100% of the silver production until 190,000 ounces of gold and 2.15 million ounces of silver have been delivered; after that the stream drops to 3.25% of the gold production and 50% of the silver production for the life of mine.
Silver producer First Majestic Silver Corp. (NYSE: AG) (TSX: FR) also plans to sell off some of its assets and has inked a deal with Apollo Gold for the sale of its Jalisco properties in Mexico. Upon closing the agreement, Apollo Gold will pay First Majestic Silver Corp. $250,000 and issue 4.289 million shares in Apollo Gold (equivalent to 9.9% of Apollo's issued and outstanding share capital as at the date of execution of the LOI). Apollo Gold will also issue 1.5 million share purchase warrants, each warrant entitles First Majestic to acquire one share of Apollo Gold at $0.50 a share for a period of two years.
The six Jalisco properties, which total 52.4 square kilometers, include 15 highly prospective claims. First Majestic has a 100% ownership in 13 and holds a 45% stake in two of them.
Gold Investments Likely to Continue Growing
With monetary stimulus expected to continue and a global recession looming, both gold and silver continue to be seen as investment hedges. Although gold prices continue to face volatility, the long-term forecast for gold remains bullish.
Investors will likely continue to put cash into gold ETFs, with the 2020 inflows already exceeding any full year on record, and buy up gold stocks to protect their portfolio amid low interest rates,US-China tension, and a weakening US dollar.
Although it remains to be seen whether the gold-silver price ratio will drop further it does seem like investors are beginning to show increased interest in companies like Barrick Gold Coeur Mining, Inc., Wheaton Precious Metals, First Majestic Silver Corp and Genesis Metals Corp. (GIS.V) (GGISF.QB)
For more information about Genesis Metals Corp. (TSXV: GIS) (OTCQB: GGISF), click here.
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