7 Silver and Gold Mining Penny Stocks to Brighten Your Portfolio
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Analysts at Citigroup expect silver to reach as high as $40 an ounce over the next 12 months, another 60% from here, and Goldman Sachs thinks we may be heading into another commodities super-cycle. If that happens, we could see gold and silver prices surge from here.
In this video, I’ll show you why prices for precious metals are heading higher this year and reveal seven penny stocks to put in your portfolio for leveraged returns.
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Nation, while the price of precious metals have come down lately, we could be just starting a decade-long boom in gold and silver. The price of gold was up 23% last year and 81% off the 2015 lows. Beating that, the price of silver surged 53% in the last year alone.
Is it worth investing in Silver and Gold?
Analysts at Citigroup expect silver to reach as high as $40 an ounce over the next 12 months, another 60% from here, and Goldman Sachs thinks we may be heading into another commodities super-cycle.
The last such cycle in the decade to 2012 saw the price of gold jump almost 600% over the period, blowing past the financial crisis like a hiccup!
And it’s all based on two factors that are driving prices higher. Expectations for inflation rose to a two-year high last week with analysts expecting prices to rise 2% over the next year and possibly even higher.
The other factor but related to that is the weakening U.S. dollar which is already down 12% against the other major currencies and expected to fall another 10% this year.
Nation, nearly seven trillion in stimulus spending saved our butts from another Great Depression but you can’t just throw that much money at the economy and not expect there to be consequences. Those consequences are just starting to come home and could mean gold and silver prices zoom higher this year!
What are the Best Gold and Silver Penny Stocks?
Now we’ve talked about owning the physical gold and silver before but those of you in the nation know, I like the miners better. When prices are rising, the miners can use that financial leverage to magnify the effects, boosting profits to create a higher return.
And when you’re talking about gold and silver mining stocks, the heavy-weights like Newmont or Barrick Gold can do well but they can’t touch the returns you’ll get from the undiscovered penny stock miners, those pre-production and developmental stage explorers.
So that’s what I want to focus on today, looking at the penny stock silver and gold miners with the most potential to turn this commodities super-cycle into profits for your portfolio!
Now remember, these are highly risky companies. Not only do they lack the financial leverage of the established players like Newmont, most of these have all their assets tied up in a few projects so its feast or famine depending on those sites.
First here and smallest of the group, $47 million Silver Dollar Resources, ticker SLVDF on the U.S. exchanges and ticker SLV in Canada.
Silver Dollar’s flagship asset is the La Joya project in Mexico where the latest drilling revealed significant mineralization in 15 of 17 holes including nearly 1,800 grams per ton of silver equivalent. The company recently closed a $10.5 million financing round with lead orders from Eric Sprott and First Majestic Silver to advance the project.
The team is being led by Perry Durning and Bud Hillemeyer, geologists with over 87 years of exploration between them and experience with big miners like BHP and Hecla Mining.
Silver Dollar also has two projects in Canada near Red Lake, an area that’s produced over 29 million ounces of gold in projects back to the 30s. So the company has solid exploration potential, strong financial backing…Eric Sprott owns 19% of the shares and First Majestic Silver owns another 16% of the company. In fact, insiders hold 41% of the total shares issued. 2021 could be a very good year and this is one of my favorites from the list so I’ll leave a link to the investor presentation below.
Check out this investor presentation by Silver Dollar Resources.
Avino Silver and Gold Mines, ticker ASM, is the oldest company in our list with 35 years of production and a $128 million market cap.
Avino owns three properties; the Eagle and Minto projects in Canada and its main site, the Avino mine in Mexico. The COVID shutdowns and a strike at Avino weighed on production last year but the company is estimating 2021 production as high as 2.8 million ounces which would take it back up near the 2018 peak.
Shares have jumped four-fold off the March low but could have another forty- or fifty-percent upside if it can hit this year’s production targets. The company has a strong balance sheet with $12.5 million in cash against just $4 million in debt and a cash cost of $12.56 per ounce, less than half the current price on silver.
Taseko Mines, ticker TGB in the U.S. and TKO in Canada, just recently broke above my $350 million cap screener but still has that penny stock potential to the company.
The company is a copper miner but if we are heading into a commodities super-cycle and if we hit that 5% GDP growth this year, you definitely want exposure to the industrial metals along with gold and silver.
Taseko is also further along than some of the others on the list, already producing out of its Gibraltar mine. It’s got near-term development in Florence, Arizona and three longer-term projects in Canada. On top of 60,000 tons of production with a remaining mine life of 18 years at Gibraltar, the Florence and other projects could add another 125,000 tons of production and at cash costs as low as $1.13 per pound.
The price of copper has jumped 65% from its low last March to $3.50 a pound and should keep building as that economic rebound takes hold.
Galiano Gold, ticker GAU, is one of the few profitable penny stock miners. The company operates the Asanko gold mine in West Africa with 251,000 ounces mined in 2019 and a market cap just under $300 million.
Management is guiding to 245,000 ounces for this year at an all-in-sustaining cost of $1,150 per ounce…which against the current price of gold at $2,000 an ounce leaves a lot of room for profit.
But why I like this one, on top of that low-cost production, management is finding ways to keep costs down and even lower them further. Mining costs were lowered 25% in the first nine months of last year versus 2019 and I think the company can come in under that $1,150 per ounce AISC estimate.
Another pre-production miner here, Paramount Gold Nevada, ticker PZG is exploring on two assets in Oregon and Nevada.
The company’s Grassy Mountain, Oregon project completed a feasibility study last September to estimate 390,000 ounces of proven and probable gold reserves. The company estimates an initial capex cost of $98 million to start producing and average annual free cash flow of $35 million.
The Sleeper Gold project in Nevada is estimated to have over three million measured and indicated ounces of gold with an initial capex cost of $175 million and production life of nine years. With gold at $2,000 an ounce and silver at $25, the company estimates a 52% rate of return on the project and it’s profitable even if gold slips to $1,500 an ounce.
The company’s balance sheet isn’t quite as strong here with $4.5 million in cash against $5 million in debt but major shareholders hold 27% of the shares including three larger miners so shouldn’t have any funding problems to develop those mines.
Gold Resource Corporation, ticker GORO, is one of the few penny stock miners that actually pays a dividend.
The company has over a decade of production and $130 million in annual revenue with nine consecutive years of profitability through 2019. Gold Resource owns six high-grade gold and silver properties in Oaxaca, Mexico with two of the mines already in operation.
On 2019 sales of $135 million, the company reported a profit of $0.09 per share and an all-in-sustaining cost of production of just $646 per ounce, one of the lowest in the industry.
Total proven and probable reserves at the projects is 2.8 million tonnes of gold equivalent and the company has over $36.5 million in balance sheet cash against no debt, so this one is going to be a cash flow machine.
Monarch Gold, ticker MRQRF, is a Canadian miner with four projects in the Abitibi greenstone belt.
Of the projects, Wasamac is in development and the Beaufor mine is in maintenance but can be brought back into production without any special permitting. Monarch recently closed a $13 million financing round and sold its Fayolle project to IAMGOLD for $11.5 million. So with $30 million in balance sheet cash and no debt, the company has the finances to take these projects into production.
The company estimates 1.8 million ounces of proven and probable reserves at Wasamac alone with permitting underway and profitability on gold as low as $1,300 an ounce. At an all-in-sustaining cost of just $630 an ounce, it’s one of the lowest cost producers in Canada.
Now that's literally precious GOLD mine, isn't it? Of course, it's yours to decide but I encourage you to consider silver and gold mining because it's booming, and that could just make you more returns in the future.
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