We watched gold plummet from a high of $1,369 to a low of $1,180 in 2018.
However, as the Federal Reserve walks back its promise of higher interest rates, gold just exploded to a 10-month high of $1,344 – which wipes out 2018 losses.
“In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes,” noted the U.S. central bank.
That “patience” from the Fed is a sizable catalyst for gold prices.
At the same time, gold is rising on fear. In fact, the uncertainty of trade talks and fears U.S. markets could be running out of steam is also creating capital flow into protective assets, such as gold. Plus, the issue with Brexit has the potential to derail Europe, which has sent quite a few investors into golden safe havens, too.
“Gold prices continue to charge higher in an environment marked by heightened political uncertainty in the Eurozone, the U.K., and the U.S.,” says Christopher Vecchio, senior currency strategist at DailyFX, as quoted by Kitco.
As gold gains momentum, one of the top small-cap gold stocks to watch is New Gold (NGD).
New Gold Inc. (NGD)
New Gold Inc., an intermediate gold mining company, engages in the development and operation of mineral properties. It primarily explores for gold, silver, and copper deposits. The company’s operating properties include the Rainy River project located in Ontario, Canada; the New Afton project located near Kamloops, British Columbia, Canada; and the Cerro San Pedro mine located in the state of San Luis Potosí, Mexico. It also holds interests in the Blackwater project located to the Southwest of Prince George, British Columbia, Canada.
The company had impressive earnings of $22.7 million, or $0.04 per share, which was four cents ahead of expectations because it kept a lid on costs.
Unfortunately, guidance sent the stock from about $1.30 to 85 cents.
The good news was that gold production at its Rainy River mine will be between 245,000 and 270,000 ounces this year – ahead of 2018’s 227,784. The bad news, which sent the stock down, was that its all-in sustaining costs at that mine would be $1,690 to $1,790 an ounce.
That’s above 2018’s average of $1,501 because it’s forced to invest more money in the mine.
CEO Renaud Adams noted that: “2019 is a pivotal year for the Company as we reposition New Gold for long-term success. In 2019, we will work to establish Rainy River as a profitable and sustainable mining operation.”
While it’s not great news to hear, we believe that a good deal of that news has been priced in. NGD is worth watching as it finds support.