In the shadow of economic slowdown, The Fed’s excessive money printing, and all-around instability gold has been having a good run. This has created an opportunity for investors who are searching for a safe harbour in which to weather what many think will be a long and painful economic storm. This situation will be difficult but there will undoubtedly be some winners, particularly undervalued gold stocks like Inca One Gold Corp. (TSXV: IO.V, OTC: INCAF, FRA: SU92.F).
Gold prices are set to break the $1,900 barrier
To understand the potential of gold stocks in the current climate it is important to understand the dynamics of gold itself. Gold is still testing the $1,900 price barrier but is widely considered to push through it over the next few weeks. For the moment prices have experienced a slight downturn as investors engage in profit taking but this is unlikely to last long. Given that the Bank of America is predicting gold prices as high as $3,000 there is an incredible opportunity on the horizon.
Gold stocks like Inca One are in a unique position to benefit from this. According to a report by Fundamental Research Corp. Inca One is significantly undervalued compared to other gold companies, with an enterprise value of just $834 per annual production ounce, compared to an average of $5,557 per ounce for the wider industry. This undervaluation will only be exacerbated as gold prices rise and it represents an incredible opportunity for precious metals investors looking to protect, and even grow, their assets.
Why is Inca One Gold so undervalued?
We’ve talked about Inca One Gold Corp. (TSXV: IO.V, OTC: INCAF, FRA: SU92.F) in the past, particularly in relation to its powerful position in Peru. This South American nation could well become one of the biggest players in the gold market within the next decade. This is in part because it has the world’s largest untapped gold reserves and in part due to the large number of illicit mining operations that are not included in official statistics. The Peruvian government, and Inca One itself, have taken strong steps to help bring these black and grey market operations into the light through a permitting process.
Of particular importance to the Peruvian gold mining sector are small scale & artisanal miners. This group makes up approximately 20% of Peru’s total gold mining operations and since 2001 has grown by more than 81%, a figure that is expected to accelerate. With this in mind Inca One Gold has decided to focus on serving the needs of this growing sector.
Inca One Gold has two processing facilities in Peru and in 2019 processed around 24,850 oz (0.94 ton) of gold, or 35% of its total permitted capacity. This month Inca One signed a landmark deal with PPX Mining Corp. (TSX.V: PPX.V) which represents around 73% of 2019’s total production and 25% of the company’s total processing capacity in Peru. At the moment the deal is worth at least $18.5 million, but rising gold prices could make it even more valuable.
The company has also taken steps to open up new lines of business. Among which the most promising are its gold bullion store, and the XplorTracker project. The former will enable Inca One to secure better prices for its product and to take advantage of the lucrative coin premium. XplorTracker is the first comprehensive database of small scale and artisanal miners in Peru which will enable the company to identify and develop high potential stakes in the region.
Inca One Gold has been growing strong
Aside from signing new deals and developing new lines of business there are already signs that investors are waking up to the potential of Inca One Gold. The company has performed strongly over the last month as a result of its efforts and has today announced that it has raised approximately $1.8 million from an exercise of around 4.5 million common share purchase warrants. The excise price of the warrants was $0.40 per common share.
Inca One Gold plans on using these proceeds to purchase more gold-bearing material to process and for general working capital purposes. This represents a hugely positive step and will likely add to the strong positive momentum that Inca One has experienced over the last month and help propel the company into a strong 2020 performance in general, COVID or no.
Gold stocks like Inca One Gold are the big opportunity right now
Gold, and gold stocks, are having their moment in the sun. Right now is the moment for savvy investors to buy-in, before gold stocks really begin to take off. There is a small window of opportunity right now that will close as less experienced investors begin to wake up and pile into what they see as the next big thing. The key for investors will be to identify undervalued targets, just like Inca One Gold Corp. (TSXV: IO.V, OTC: INCAF, FRA: SU92.F).
DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.
This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.
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