The gold price hit a five-year high Friday morning after a week of gains, trading at US$1,398 after the US Federal Reserve on Wednesday seemed to indicate an interest-rate cut is on the horizon.
According to an analysis undertaken by Bloomberg, markets are now pricing in a 76% chance of a 25-basis-point cut as early as July, with the probability of a 50 bp cut at 24%.
A rate cut usually happens during periods of economic weakness or labor-market softness, neither of which are the case in North America in the first half of 2019.
So what’s driving up the price of gold?
It seems that growing fears of a trade war and Middle East tensions are urging investors back into the yellow metal in droves. One look at the key gold ETFs that track the performance of gold companies show that is likely the case.
The major gold ETF, the VanEck Vectors Gold Miners ETF (NYSE:GDX), is at its highest point this year at US$24. Its cohort, the VanEck Vectors Junior Gold Miners ETF (NYSE:GDXJ), is up 8% month-to-date, and the one-month chart indicates that there is room to grow:
(source: QuoteMedia Inc)
Whatever the case for the precious metal right now, there is real value in junior gold stocks in 2019. Here is a list of juniors whose share price charts are tracking with the GDXJ:
DRDGOLD Limited (NYSE:DRD) opened Friday up 5.9% at US$2.86 in New York. The South African-focused producer is a highly unusual miner as it cleans up the environment by re-treating old mine dumps and opening sterilized land for development. It was one of the first South African companies to jettison traditional mining to focus on extracting gold from tailings, which are the byproducts left over from mining. Shares of DRD have risen 49% over the month of June on no new news.
Telson Mining Corporation (CVE:TSN) opened Friday at C$0.37 in Toronto. The Canadian miner has two Mexican gold, silver and base metal projects, including its wholly owned Campo Morado Mine. It also has the Tahuehueto project in development, estimated to produce gold, silver and base metals beginning in 2019. Its shares have gained 21.2% in the past month.
Great Bear Resources Ltd (CVE:GBR) opened Friday at C$3.88. The precious metals company is seeing serious potential at its Dixie Lake project in Red Lake, Ontario, where it recently made a new discovery at the Bear-Rimini zone shows multiple shallow gold zones. Shares have been on a tear over the month, gaining 35.6%.
Pure Gold Mining Inc (CVE:PGM) opened Friday up 1.8% to C$0.58. The junior gold company's Madsen project has high-grade gold in Red Lake, Ontario and a feasibility study showing a low-cost path to production. Highlights of the study outline a 12-year, 800 ton per day underground operation, with probable mineral reserves of 3.5 million tons at 9 grams per ton containing 1 million ounces of gold. Its shares have tracked 9.4% higher during the month-to-date period.
Gold Resource Corporation (NYSEAMERICAN:GORO) opened Friday at US$3.20, and its shares have gained nearly 11% since May. The resource group runs two mining units in Mexico and Nevada. It operates the Arista underground mine at the El Aguila project, where initial output started in 2011, and advancing the Mirador underground mine, which it says has the potential to increase future annual silver production by around 500,000 silver ounces and 1,000 gold ounces. In Nevada, the company has high hopes for the Isabella Pearl project, where an open pit operation is being targeted to begin this month.
Fiore Gold Ltd (CVE:F) shares opened 3.8% higher on Friday morning at C$0.42. The company is a new Americas-focused gold producer and explorer with the producing Pan Mine in Nevada as well as a suite of exploration projects in Nevada, Washington State and Chile. Its shares have gained an astonishing 69.2% over the last 30 days.
Wesdome Gold Mines Ltd (TSE:WDO) was up 3.2% at Friday's open at C$5.53. The biggest company by market capitalization on this list, the Toronto-based gold miner is primarily focused on its gold operations in Ontario and Quebec. Shares of Wesdome have risen 21.8% over the month.
RNC Minerals (TSE:RNX) gained 3.2% at Friday's open at C$0.64. The Toronto-based company made international headlines last September when it revealed one of the largest gold discoveries in recent memory at its Beta Hunt mine in Western Australia, pulling out two nuggets containing 4,000 ounces of gold as part of a discovery that totaled 9,250 oz. It followed that with an additional gold discovery in May. Unsurprisingly, shares have increased 46% since May.
--Updates shares and commodity price--
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