Although gold prices soared in the recent past amid the banking crisis and associated fears, the precious metal might witness some pressure in the near term as economic data weakens the case for a Fed pause.
Given this backdrop, shares of gold mining companies GoldMining Inc. (GLDG) and Blackrock Silver Corp. (BKRRF) might not be worth putting your money on.
Fears of an economic slump and the recent banking failures made investors cautious about investing in risky assets, increasing the demand for the yellow metal. However, with the banking regulators' efforts, the jitters are anticipated to ebb away soon, leaving the grounds for a gold price rally shaky.
Edward Moya, senior market analyst at OANDA, told Reuters, “For gold to make that run back to record highs, you need the June rate hike completely off the table.”
In addition, DailyFX analyst Warren Venketas wrote in a note, “This week has had some aggressive Fed speak from its speakers and a continuation of that narrative could give the greenback a boost, leaving gold exposed on the downside.”
Furthermore, an improved labor market could lead to the Fed raising interest rates longer to keep inflation in check. An increase in the interest rate strengthens the dollar, and in turn, gold becomes weaker.
Against this backdrop, fundamentally weak gold mining stocks GLDG and BKRRF could be best avoided now.
GoldMining Inc. (GLDG)
Headquartered in Vancouver, Canada, GLDG operates as a mineral exploration company, acquiring, exploring, and developing gold assets in the Americas. The company functions in a diversified portfolio of resource-stage gold and gold-copper projects.
The stock’s trailing-12-month ROCE, ROTC, and ROTA of negative 11.64%, 5.88%, and 11.85% compare to the industry averages of 11.31%, 6.52%, and 5.12%, respectively.
For the fiscal year that ended November 30, 2022, GLDG’s operating loss stood at CAD13.66 million ($10.08 million) compared to operating income of CAD108.69 million ($80.19 million). Total comprehensive loss for the period and loss per share came in at CAD62.23 million ($45.91 million) and CAD0.09, respectively.
Analysts expect GLDG’s EPS to come in at negative $0.04 for the fiscal year ending November 2023. Also, the company failed to surpass the consensus EPS estimates in each of the four trailing quarters, which is disappointing.
GLDG’s shares have declined 23.7% over the past year and 18.7% over the past three months to close its last trading session at $1.00.
GLDG’s bleak prospects are reflected in its POWR Ratings. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
GLDG has a D grade for Momentum and Quality and an F for Value. It is ranked #40 within the 56-stock Miners - Gold industry.
In addition to the POWR Rating grades we’ve stated above, one can see GLDG ratings for Growth, Stability, and Sentiment here.
Blackrock Silver Corp. (BKRRF)
Headquartered in Vancouver, Canada, BKRRF is engaged in acquiring, exploring, and developing mineral properties in the United States. The company primarily explores for gold and silver deposits.
The stock’s trailing-12-month ROCE, ROTC, and ROTA of negative 224.09%, 142.38%, and 257.82% compare to the industry averages of 11.31%, 6.52%, and 5.12%, respectively.
BKRRF’s operating expenses for the fiscal first quarter that ended January 31, 2023, stood at CAD829.96 thousand ($612.29 thousand). For the same quarter, its net loss and loss per share came in at CAD2.04 million ($1.50 million) and CAD0.01, respectively. Moreover, its total assets stood at CAD6.11 million ($4.51 million) for the quarter that ended January 31, 2023, compared to CAD9.52 million ($7.02 million) for the year-ago quarter that ended January 31, 2022.
BKRRF’s shares have declined 72.5% over the past year and 30.7% over the past six months to close its last trading session at $0.24.
BKRRF’s POWR Ratings reflect its poor prospects. The stock has an overall F rating, equating to a Strong Sell in our proprietary rating system.
BKRRF has an F grade for Quality and Value. It is ranked #35 within the same industry.
In addition to the POWR Rating grades we’ve stated above, one can see BKRRF ratings for Growth, Momentum, Stability, and Sentiment here.
The Bear Market is NOT Over…
That is why you need to discover this timely presentation with a trading plan and top picks from 40 year investment veteran Steve Reitmeister:
REVISED: 2023 Stock Market Outlook >
GLDG shares were trading at $1.05 per share on Tuesday morning, up $0.05 (+4.50%). Year-to-date, GLDG has declined -7.08%, versus a 7.44% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
Fool's Gold: Why These 2 Stocks Are Not Worth Your Investment StockNews.com
