Gold and silver have been outperforming the stock market for the past 18 months now. It’s easy to forget that, because at the moment people are talking about NVDA and the AI meme around it, because shares of NVDA and half a dozen other big cap tech stocks have been getting all of the media attention for the past eight weeks. But gold remains firm, trading in the $1900-2000 price zone, as we go through the last inning of this interest rate tightening cycle. A “pause” is in the works for next week’s Federal Reserve FOMC meeting.
My top stock pick of the month provides a good way to get into gold mining production on the cheap. It’s Inca One Gold Corp, which trades as INCA on the TSXV and INCAF on the US OTC.
As you can see, the stock has been trading in a nice basing range with support around 16 cents and resistance in the 20-22 cents zone. It’s kinda trading in this range at the same time that gold has been trading in its range and I expect both will eventually breakout to the upside. At some point the Federal Reserve will lower rates. There is no more than one possible rate hike priced into the Fed Funds future market (and it’s just 50/50), so it is only a matter of time that the Federal Reserve lowers rates. It could happen due to more banking troubles or simple recession before the end of this year.
Shares of Inca One Gold are near the support area of its trading range, so I believe they are a good buy now. But there is more than the chart that enables me to tell you that this is a cheap entry point. The stock has a market cap less than $5 million USD and generated gold sales of over $51 million last year. That means you are basically paying a P/S ratio of 0.10 for the stock right here!
Inca One is a Canadian-based mineral resource company and mineral processing company with two gold milling facilities in Peru, servicing government-permitted small-scale miners. A highly mineral-rich country, Peru is one of the world’s top producers of gold, silver, copper, lead and zinc, with substantial production coming from artisanal and small-scale miners who need government permitted milling facilities to process their gold bearing material. Inca One operates two such milling facilities.
Here is picture of its Kori One facility:
Koricancha is a custom built, fully operational, industrial gold ore processing facility, featuring a carbon-in-leach gold circuit, strategically situated in the Arequipa region of Peru.It is located at sea level, fully serviced by excellent infrastructure just 10 minutes from the Pan American Highway, within the Nazca-Ocona gold belt in Southern Peru. It is built out and permitted for 350 TPD and has been operating at an average of approximately 135 TPD since January 2018. It has been servicing the small-scale mining sector of Peru for three years and has a stockpile of material currently being processed.
And here is a picture of its Chalo One facility.
Last year Inca One produced 24,579 ounces of gold from these two facilities and sold them on the world market for $51.6 million.
It did this with an average gold price of $1,806.
With gold prices already higher than that the revenue and earnings for Inca One are set to grow this year and the more gold prices go up the more this will happen. They have also done financing to increase production to full capacity.
It’s a setup to buy gold production on the cheap NOW with the chance to truly benefit when gold prices do breakout to new highs and rise again.
Here is a summary fact sheet put out by the company.
Note that the market cap listed in the fact sheet is in CAD and not USD terms.
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-Mike
Disclosure: Mike Swanson is the author of this article. Because Inca One Gold Corp. 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 (06/08/2023). 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 Gold Corp. This third party paid Timingwallstreet Inc., $6,500 to produce and disseminate this and other similar articles and send traffic to them through paid advertising campaigns for 30-days from the date of 06/08/2023. 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.
