Since late 2018, I’ve been a big fan of gold and silver. Indeed, gold hit $2,000 an ounce last month before retreating, observes Mark Skousen, editor of Forecasts & Strategies.
Goldman Sachs has raised its 12-month gold price target to $2,300 an ounce and issued a warning about the durability of the dollar as the world’s reserve currency.
Van Eck International Investors Gold Fund’s favorite gold stock is also one of our portfolio recommendations -- B2Gold Corp. (BTG), a mid-tier Canadian mining company.
Last month, the gold miner announced record revenues and cash flow for the second quarter. Sales rose 65% from the previous year to $445 million for the quarter. B2Gold is still on track to produce over one million ounces of gold in 2020.
B2Gold is so successful that the company announced another doubling of its dividend to $0.04 a share, giving it a 1.3% yield, one of the highest dividends in the mining industry. The stock briefly went over $7 a share.
Then bad news hit. A coup occurred in the West African nation of Mali, where BTG’s Fekola mine is located. President Ibrahim Boubacar Keita resigned and dissolved parliament hours after soldiers detained him at gunpoint and seized power in a coup.
On the positive side, B2Gold officials stated that the company’s operations are continuing as normal, despite the deepening political crisis in that West African nation.
They said that no operational days had been lost at its Fekola mine, in which the Malian government holds a 20% stake, and all mine personnel were safe. Because the government is a major shareholder, I expect production to continue in Mali. But the political risk remains.
Investing in Africa is a reason for concern when investing in B2Gold. As mining analyst Vincent Rouget has stated, “In the longer term, there are more clouds for mining investors, as this is the second coup in eight years. It will add to an already very high-risk premium that people associate with Mali.”
B2Gold’s headquarters is in Vancouver, Canada, and it operates three major mines — the Fekola Mine in Mali, the Masbate Mine in the Philippines and the Otjikoto Mine in Namibia. The company also has an 81% interest in the Kiaka Project in Burkina Faso.
Political instability will create sharp sell-offs from time to time. I see this correction as an opportunity for subscribers to buy more shares. We are still ahead 40% in four months. However, I expect more volatility ahead. So, this stock is for speculators only.
