Investing in junior gold mining stocks is a high-risk, high-reward strategy. Junior gold mining companies are small- to medium-size market cap companies involved in active exploration of gold resources. If executed correctly, investing in junior gold mining stocks is one of the best ways to make huge profits. If you own a junior gold mining company that is working on a promising project, all you have to do is wait until the company hits on a treasure. Junior gold mining companies invest heavily into exploration, feasibility reports, research and technology-based analysis before actually starting their mining activities.
Why Should You Invest in Junior Gold Mining Stocks?
According to a report by Van Eck Global, gold production peaked in 2003, with major gold companies avoiding new mining operations and diversifying into other precious metals. The rate of major new gold discoveries has also dropped since 1998. This leaves an open ground for junior gold mining companies to actively engage in gold exploration in promising parts of the world, including Africa, Canada and U.S. Junior gold mining companies who produce solid results also have the potential to become takeover targets, resulting in massive gains for shareholders.
Gold prices plummeted to their 9-month low on March 3 amid rising treasury yields and a strengthening dollar. The safe-haven asset is also losing ground as the economy comes back to normal following the mass availability of coronavirus vaccines. However, long-term investors should never base their decisions on volatile market movements. Investing in gold and other precious metals stocks is always a solid investing strategy for those who are willing to wait.
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Gold prices may be retreating as of now but analysts believe that the Fed’s policy to keep the interest rates near zero and higher inflation would help gold. Earlier this year, Moody’s raised its price sensitivity range for gold to $1,200 to $1,500 per ounce, compared to its previous range of $1,100-1,400 per ounce. The ratings agency cited lower rates and economic recovery for the increase.
Safe-haven stocks have seen their importance jump as volatility grows. Even the smart money is struggling keeping up with the changing market trends. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 88 percentage points since March 2017. Between March 2017 and February 5th 2021 our monthly newsletter’s stock picks returned 187.5%, vs. 75.8% for the SPY. Our stock picks outperformed the market by more than 111 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Let’s start our list of the 10 best junior gold mining stocks to buy now.
10. VanEck Vectors Junior Gold Miners ETF (NYSE: GDXJ)
VanEck Vectors Junior Gold Miners is one of the best junior gold mining ETFs to invest in if you want exposure to various junior gold mining stocks. The ETF usually holds companies that generate at least half of their revenue from gold or silver mining projects and with a potential to generate 50% of their revenue after their projects are developed. Some notable holdings of the ETF include Hecla Mining, SSR Mining, Endeavor Mining, First Majestic and Yamana Gold.
9. Serabi Gold plc (OTCMKTS: FTMNF)
UK-based Serabi ranks 9th on the list of 10 best junior gold mining stocks to buy now. The company owns gold mining projects in Brazil. It is operating the Palito Mining Complex, which is estimated to produce approximately 40,000 ounces per annum of gold. The company also owns Coringa Gold Project in the Tapajos region of northern Brazil. The project’s potential is calculated to be 38,000 ounces per annum of gold after development.
Serabi Gold PLC currently has a $43.6 million market capitalization. It delivered a -12.98% return in the past 3 months and settled at $73.50 per share as of the closing of March 3, 2021.
8. Newcore Gold Ltd. (OTCMKTS: NCAUF)
Canada-based Newcore Gold is one of the best junior gold mining stocks to buy now. The company is operating the Enchi Gold Project in Ghana. The company’s shares have gained 269% over the last 12 months.
Newcore Gold Ltd. currently has a $58.2 million market capitalization.
7. Lundin Gold Inc. (OTCMKTS: FTMNF)
Ranking 7th on the list of 10 best junior gold mining stocks to buy now is Lundin Gold, the Canada-based gold mining and exploration company that owns the Fruta del Norte gold mine in southeast Ecuador. The mine, according to the company, is one of the “very few multi-million-ounce, high grade gold assets in production.” The mine, which was discovered in 2006, was bought by the company in 2014 for $240 million. In 2020, the company produced 242,400 oz of gold.
Lundin Gold Inc. currently has a $2.35 billion market capitalization. It delivered an immense 106.47% return in the past 12 months and settled at $10.21 per share in the closing of March 3, 2021.
6. Jaguar Mining Inc. (OTCMKTS: JAGGF)
Canada-based Jaguar Mining is a promising company ranking 6th on the list of 10 best junior gold mining stocks to buy now. The company is operating several mines in Brazil, including the Turmalina Underground Mine, Pilar Gold Mine and the Roça Grande Gold Mine. The stock has gained a whopping 253% over the last 12 months. In November 2020, Laurentian Bank of Canada analyst Barry Allan reiterated a Hold rating for the stock with a price target of C$7.50.
Jaguar Mining Inc. currently has a $544.2 million market capitalization. It delivered a whopping 268.78% return in the past 12 months and settled at $7.56 per share on March 3, 2021.
5. DRDGOLD Limited (NYSE: DRD)
DRDGOLD is a South Africa-based gold mining company involved in the exploration and mining of precious metals from the retreatment of surface tailings. Recently, H.C. Wainwright analyst Heiko Ihle reiterated a Buy rating for the stock with a price target of $19, representing a significant upside to the $9.47 share price as of March 4. In October, the stock rallied after the company said its production jumped 45% on a quarter-over-quarter basis in the third quarter. Adjusted EBITDA in the quarter increased by 110%.
DRDGOLD Limited currently has a $792.3 million market capitalization. It delivered a decent 21.83% return in the past 12 months.
4. Golden Minerals Company (NYSE: AUMN)
Golden Minerals is one of the best junior gold mining stocks to buy now. The Colorado-based company is operating various gold mining and exploration projects in Mexico, Argentina and Nevada. In January, the company started the production of gold and silver at its Rodeo project in Mexico. The company also plans to start production at Velardeña Properties in 2021-2022. In February, the company posted results for its most recent quarter. Revenue in the period came in at $5.6 million, missing the Street’s estimates by $0.14 million.
As of the end of the fourth quarter, 1 hedge fund in Insider Monkey’s database of 887 funds held stakes in Golden Minerals Company. Jim Simons’ Renaissance Technologies is the biggest stakeholder in the company, with 433,215 shares, worth $390,000.
3. Galiano Gold Inc. (NYSE: GAU)
Galiano Gold is a Canada-based precious metals exploration and mining company. H.C. Wainwright reiterated recently reiterated a Buy rating for the stock with a price target of $2.80. One of the major mines owned by the company include the Asanko Gold, which spans over 21,000 hectares on the “highly prospective” and under-explored Asankrangwa Gold Belt, according to the company’s website. The stock is up 21% over the last 12 months.
According to our database, the number of GAU’s long hedge funds positions decreased at the end of the fourth quarter of 2020. There were 5 hedge funds that hold a position in Galiano Gold Inc. compared to 6 funds in the third quarter. The biggest stakeholder of the company is Sun Valley Gold, with 23.7 million shares, worth $26.6 million.
2. Seabridge Gold Inc. (NYSE: SA)
Toronto, Canada-based Seabridge mines gold and other precious metals. The company operates the Kerr Sulphurets Mitchell mine located at about 65km north-west of Stewart in British Columbia. According to estimates, the mine is expected to produce 130,000t of gold, copper, silver and molybdenum ore per day. In December, Canadian mining company Pretivm Resources agreed to sell its Snowfield gold mining property to Seabridge Gold for $100 million in cash.
With a $34.4 million stake in Seabridge Gold Inc., Weiss Asset Management owns 1.6 million shares of the company as of the end of the fourth quarter of 2020. Our database shows that 9 hedge funds held stakes in Seabridge Gold as of the end of the fourth quarter, versus 10 funds in the third quarter.
1. Hecla Mining Company (NYSE: HL)
Idaho-based Hecla Mining tops the list of 10 best junior gold mining stocks to buy now. The company is a major producer of silver, with operations in Greens Creek, Lucky Friday, and San Sebastian. In 2019, the company produced 9.9 million ounces of silver from its Green Creek mines. The stock has gained 111% over the last 12 months.
As of the end of the fourth quarter, there were 10 hedge funds in Insider Monkey’s database that held stakes in Hecla Mining Company, compared to 17 funds in the third quarter. Sprott Asset Management, with 1.87 million shares of HL, is the biggest stakeholder in the company.
You can also take a peek at Top 10 Car Company Stocks to Invest In and Ray Dalio’s Top 10 Stock Picks for 2021.
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Disclosure: None. 10 Best Junior Gold Mining Stocks To Buy Now is originally published on Insider Monkey.
