Gold Hits a Record High Price; Is It Time to Buy Northern Dynasty Minerals?
Smashing through the $2,000 per-ounce threshold for the first time since August 2020, the price of gold proceeded to hit a record high of $2.078.80 per ounce in today’s trading session. With the yellow stuff skyrocketing in price, investors are digging into mining stocks for ways to add some sheen to their portfolios.
One of the usual suspects when it comes to gold stocks is Northern Dynasty Minerals ( NAK 12.50% ), a pre-revenue gold producer whose core asset is the Pebble Project, located in Alaska. Unsurprisingly, shares of Northern Dynasty Minerals soared today, leaving some investors to wonder if there’s still room for this gold stock to run.
Trading for less than one dollar per share, Northern Dynasty Minerals’ stock may seem enticing to investors who are looking to grow their gold exposure on the cheap. Experienced investors, however, know that it’s foolhardy at best to predicate buying stock based on this reasoning. Penny stocks, like Northern Dynasty Minerals, are oftentimes fraught with risks, and investing in them is more akin to gambling — not prudent investing.
Besides a low share price, investors are drawn to the company because of its potential avenue to explosive growth: The company owns the self-proclaimed “largest undeveloped copper and gold resource.” Of the copper and gold measured and indicated reserves, the Pebble deposit holds about 57 billion pounds of copper and 71 million ounces of gold. But there’s more than just copper and gold there; measured and indicated reserves for molybdenum and silver total 3.4 billion pounds and 345 million ounces, respectively.
The problem with the Pebble Project, however, is that it’s road to fruition is far from a certainty. For years, opponents have presented legal challenges against the advancement of the project, and there’s no guarantee that the company will succeed in securing all the necessary permits. Moreover, construction of a mineral-producing asset such as this is far from an overnight affair. It will take years before the project starts producing gold — if it does so at all. Despite the stock’s low price, gold-interested investors would be better served to consider one of the many other gold stocks instead of picking up shares of Northern Dynasty Minerals.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.