Since gold’s big selloff started, many gold mining stocks have been simply slaughtered. And you can understand why…
Gold mining stocks are very closely tied to the spot price of gold itself, as the value of what they’re mining goes down as the spot price falls.
Sure, many established gold-producing miners have hedges in place, and might even have really low production costs… so they’re profitability is less tied to spot gold than other miners.
But most junior gold miners and gold mining penny stocks simply aren’t in this position just yet. As a response, gold’s spot price direction is the main factor that usually dictates where these stocks will move.
I’m not going to lie… it’s not been pretty for gold. Take a look at where gold has been over the last 6 months.
It’s been a major selloff early in the year. But as the chart shows, gold prices seem to be stabilizing around the $1,300 level after the precious metal hit a bottom in July.
That being the case, many investors might just be considering jumping back in, and I can’t blame them.
Here’s how I’d play it…
Obviously our research is focused on penny stocks… hot penny stocks for the most part. With that said, I think you should take a look at shares of Brigus Gold (BRD).
BRD is one hot penny stock. It’s up over 75% off it’s 52-week low! Just see for yourself…
Obviously Brigus has put in a bottom (in July- just like gold), and is now on the rise. But do you also see that breakout on high volume in mid-October?
Well that’s due to the company reporting very positive production and exploration data from their Black Fox mine. Here’s what they reported…
Q3 Production Highlights
- Record quarterly production of 27,174 ounces of gold, 76,799 ounces of gold year to date
- Sold 28,344 ounces of gold, 78,652 ounces of gold year to date
- Average grade of 4.34 gpt and average recovery of 94%
- Record throughput of 2,256 tonnes per day milled, 207,559 tonnes milled for the quarter
Average realized gold price of $1,330 (Excludes the impact of sales under the Goldstream agreement)
I’d say that’s not too to bad for a penny stock trading under $1! Did you miss that little detail on the chart above?
If you’re looking to get back into the gold game, then Brigus is a no brainier when looking for company-specific upside that’s also tied to the spot price of gold! Buying a share if BRD at $0.72 seems like a real steal since the book value of shares are around $1.05.
And remember, BRD is hot right now… up 75% off its bottom in July, and it’s rallied over 30% in just October alone!
Keeping you one step ahead,