Gold is having a standout year.
The yellow metal is up more than 21% on the year, and touched a new record high of $2,531 per ounce in late August.
The flip side is, large gold miners have not seen a commensurate rise.
A few reasons for this is the margin pressure from inflation makes it more expensive to pull gold out of the ground. You’ve also had labor constraints baked into that inflation as well.
There’s also a loose relationship between the current interest rates set by the Fed and the price of gold. There have been three other times the Fed has cut rates in the history of modern markets:
If gold really gets going and starts a parabolic move, then the gold miners will start playing catchup as their financial projections improve – and a flood of speculative liquidity comes pouring into the space.
Barrick Gold (ABX) is one of the largest gold producers with a market cap of $48 billion. While it can be a great trader, you’re not going to get massive upside from its current prices – it’s simply too big and well covered.
We don’t typically see a ton of insider buying in the precious metals space. The executives are already well compensated in cash and equity, and they tend to be net sellers.
But I have found one with a history of insider buying.
The twist is that it’s an exploration company, meaning they haven’t fully proven out their reserves. So it’s a speculative play… but I believe the upside is well worth it.
The company has had a healthy appetite for insider buying ever since the stock was listed on the NYSE:
It’s been using equity financing to fund operations, which has been diluting the stock. This past year, they tapped their ATM offering capacity, as well as a Registered Direct Offering.
Yet we continue to see insider buying into that dilution.
The largest shareholder, a co-chairman, bought three times in February for a total of $65,000. That was a drop in the bucket, and doesn’t exactly signal conviction.
Same with the COO, who made a minor purchase toward the beginning of the year.
But what really perks my ears is the VP of Exploration. Back in June, he bought 20,000 shares for a total cost of $50,000. That’s a sizeable amount given the size of the company and how speculative it is.
In other words… the insider who’s the expert in exploration just put on a big conviction buy.
If the company announces a find, coupled with gold hitting all-time highs, coupled with the liquidity flood we could see in gold miners as they play catchup… then you’ve got multiple catalysts on a company that no one is paying attention to.
I’ve already sent the full trade information to my paid members, including the ticker symbol, buy price, stop loss, and upside target.
So if you’d like to learn more about how we follow these insiders to under-the-radar stock opportunities – and see three more stocks we’re tracking right now – click here to watch our free training video.
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