A small cap gold mining stock that is gaining traction is Bullfrog Gold Corp (OTCMKTS:BFGC). Recently, Bullfrog Gold had announced additional land acquisition next to its Bullfrog Project in Nevada. While gold and the mining end of the business remains a mystery to many investors, those who watch the markets are looking for opportunities in domestic producing areas. Read more HERE. Bullfrog Gold Corp. is emerging as a junior gold stock with all the rights stimulus such as excellent land positions, experienced management and known domestic producing gold deposits already developed previously by majors. Looks like they have set the stage for great things on a domestic U.S gold situation that you have to see.
Hecla Mining Company (NYSE:HL) is one of the gold producers whose stocks have recorded triple digit gains this year, mirroring the surge in gold prices amid global economic uncertainty. However, recent weeks have been characterized by volatility in gold stocks and Hecla stock has not been spared the downturn. Worries about the Federal Reserve raising interest rates before the end of the year have contributed to dimmed appetite for gold with the impact being felt in the stock of gold miners.
Producing more when prices are high
The management of Hecla reasoned that it would be great to get the most out of the rising gold prices. That resulted in Hecla stepping up production of gold so that it could sell more of the yellow metal at a higher price for more profits. Hecla’s gold production increased 41% in 2Q2016, while silver production jumped 71% in the same quarter.
As a result, Hecla generated record $171.3 million in sales, which rose 64% YoY. The high production levels, mine efficiency and rising gold prices helped Hecla to post a 164% increase in adjusted EBITDA for 2Q.
If HL maintains its production and efficiency strategy and gold prices rebound, then the company’s earnings could continue rising in 2017.
Can gold prices rebound?
Gold prices have been hammered in the recent weeks by growing expectations that the Fed will hike rates in December as indicated at the central bank’s last policy meeting in September. But what the Fed eventually chooses to do with rates will largely depend on the quality of economic data being reported.
Mixed economic data may persuade the Fed to delay hiking rates, which would immediately spark new demand for gold. However, bullish economic data would provide a strong case for the Fed to increase the cost of borrowing. In the event the Fed hikes rate in December, demand for gold would shrink and prices of the commodity would decline, thus dragging down gold stocks.
However, a December rate hike could mean that the Fed would be reluctant to raise rates swiftly in 2017. As such, rate hike in December could have limited impact on gold and gold stocks.
Hecla stock is up more than 177% YTD. The stock gained 2.3% in the last session to close at $5.24.