Inca One Gold is a stock I own and because of its current entry point I am making it my top stock pick for August. The price of gold has simply soared this year. Think about this as of the last trading day of July year to date the S&P 500 is now up 1.2% as of Friday’s close and the Nasdaq is up 19.7%.
Meanwhile gold is up 29% and silver is up 35.7%.
Mining stocks are up even more with the GDX mining stock ETF up 46.6% – and the best small cap mining stocks have gone up even more than that.
One of the simplest rules of successful stock trading is that if you want to beat the market then you want to buy what is beating the market. That’s is one reason why I made Inca One Gold (OTCMKTS: INCAF) one of my top stocks earlier this summer. Now it dipped in July to bring a nice entry point for the stock. It is a small cap gold producer that trades on the Vancouver stock exchange under the symbol IO and on the US OTC as INCAF. Take a look at the chart.
This stock did more than double from March to its most recent peak in June – it went up 4X in price! It has since pulled back down enough to cause its daily stochastics overbought/oversold indicator to give an oversold reading by falling below 20. It also has fallen close to its 50% retracement level of its March low and June high, which is sitting in the 40-42 cents area. This typically acts as a powerful support area for a stock.
We should see the stock build a bottom in this area and begin to consolidate to build a new new to rally off of. With the gold bull market in full force though if you look forward to the future this stock has a lot more going for it then just one rally back up. Unlike most small cap mining stocks this one produces gold.
The thing is from a valuation perspective I believe this stock deserves to more than double from here. In bull markets most small cap exploration gold stocks reach market caps of $25 million USD. These are companies that do not produce gold, but do drilling of properties to prove up a deposit worthy of mining. Inca One though has a market cap of only $10 million USD and it produces gold!
The company operates two milling facilities in Peru that process gold ore from small scale artisan miners – the first public company granted the right to do so by the Peruvian government. Together they are capable of processing up to 450 tonnes of gold ore a day and put the company on track to produce over 25,000 ounces of gold a year with the capability to increase that production. Departures Capital gave an overview of the company last month on Youtube.
Inca One Gold also is making deals with other mining companies to process ore for them with its milling operations. It announced that it entered a contract with PPX last month in a press release. According to the release:
“Under the terms of the OPA, PPX will deliver 40,000 tonnes, approximately 110 tonnes per day (“TPD”) of gold-bearing material during the first year, with a minimum grade of 8 grams of gold per tonne to the Company’s Kori One processing facility. Initial shipments will commence during Q3 from gold-bearing material that is currently on PPX’s stockpile. Additionally, and in line with the Peruvian Government decree announced on June 4, 2020 outlining a staged restart of industrial activity across the country, PPX is in the process of restarting production at its Igor Project in order to ramp-up to previous production levels.”
“The Igor Project is permitted for up to 350 TPD and has approximately 223,000 ounces of measured and indicated resources and 77,000 ounces of inferred resources (please see the NI 43-101 Report on the Igor Project on the PPX website or on SEDAR). PPX has been operating in Northern Peru for three years and has been looking to build a relationship with a government approved processing facility that has excess capacity to process their material and scale up as production at the Igor Project increases.”
“We are extremely pleased to secure a significant contract and establish this new relationship with a recognized and proven mining operator in Peru,” stated Edward Kelly, President and CEO of Inca One Gold. “To provide context, Inca One processed 55,000 tonnes of material in 2019, and this contract represents approximately 73% of last years’ total throughput. In other words, the OPA provides supply for approximately 25% of the total milling capacity of our two plants. As licensed miners and ore processors, we both value transparency, business ethics and intend to build out a significant and mutually profitable business relationship.”
Inca One Gold has the fundamentals to be a good long-term play on gold production and the irony is that its success is providing an entry point. The stock went up so much from April to June that a pullback was likely to happen and it came. Now the stock is showing signs of stabilization for an entry point at a moment in which gold, silver, and many mining stocks are flying away from people. This is why now is the time for Inca One Gold in my view.
-Mike
Disclosure: Mike Swanson owns shares of Inca One Mining. Because it is a small cap stock with a market cap of less than $100 million he has put himself in a trading blackout on the stock and will not buy or sell a share of it for at least 30-days from the date of this post. Wallstreetwindow.com, is owned by Timingwallstreet, Inc., which is being compensated by a third party (Leadgopher LLC DBA Pinnacle Ad Network) to conduct an investor awareness advertising and marketing campaign for Inca One Mining. This third party paid Timingwallstreet Inc., $5,000 to produce and disseminate this and other similar articles and send traffic to them through paid advertising campaigns. This compensation should be viewed as a major conflict with our ability to be unbiased, more specifically: This communication is for entertainment purposes only. Never invest purely based on our communication. For more on trading risks read our policy statement by clicking here.
