Both of these companies stock prices are way down - can anyone explain why, and do you guys see them going up?
This is what I understand is going on with gold stocks right now, and others can correct me if I'm wrong.
Gold mining stocks generally follow the price of gold. For example, gold exceeded $2000 an oz in mid-2020, and gold mining stocks, in general, also reached five-year highs at the same time. The price of gold fell to $1700 by the beginning of 2021, and gold mining stock values fell in tandem. Gold then went back up to 1900 in May 2021, and gold mining stocks went right back up with it. The price then fell almost to 1700, and gold mining stocks fell right with it.
However, and here's the curious thing right now, gold rebounded to 1800 by October, but gold mining stocks did not follow. They stayed low and even went lower. Many gold mining stocks hit 18-month lows this past December. I think it's a combination of various factors, primarily the bearish sentiment around the stock market under Biden's inept administration, plus a lack of confidence that the price of gold will continue to go up. Several gold mining companies at the end of the year announced record gold production, and their stock prices responded by decreasing by several cents.
The last month and a half or so the price of gold has started to go up again, and is now close to 1900. When the price of gold starts to climb like this, investors will generally start piling into the largest gold miners at first, because those companies will be getting the greatest benefit from the increase in price, since they produce the most ounces. Also, the larger companies are perceived as more likely to keep robust production flowing with economies of scale. Barrick Gold, one of the largest producers, for example, has seen its stock price climb from $18.50 to $23 over the past three weeks.
Once the large companies reach full valuation, then investors will start piling into the medium-sized companies. Alamos Gold, for example, started increasing about 10 days ago and has risen a little over a dollar in valuation. That's still far from its previous 52-week high, so it may have some more ground to gain dependent on the price of gold remaining steady or continuing to increase.
The last area for gold opportunists is small mining stocks, like GORO or RSG. They're more risky stocks, so investors will likely wait to see if the recent gold rally will sustain itself before going whole-hog into the junior miners.
Personally, it seems to me that the junior producers, gold and silver, such as GORO, RSG, Alexco, America's, Calibre, and a bunch of others are still at very attractive prices and have a lot of room to go up. I'm not sure if gold is ready to explode in price yet (i.e., exceed $2000), as I've seen predictions from a number of pundits who predict that it will happen anywhere from three months to a year from now. We'll see how it goes.
