Gold is considered a safe-haven asset, but gold prices plunged last week amid high inflation and a rebound in the U.S. dollar index. According to a CNBC report, inflation notched a new 30-year high recently. Moreover, a hawkish Bank of Canada announcement and mixed economic data contributed to the yellow metal’s price decline.

Because the Federal Reserve’s asset tapering activity is expected to begin this month, it could lead to a further decline in gold prices. According to Citigroup Inc. (C), ‘short gold’ is an appropriate pain trade over the medium-term. In addition to C, several other Wall Street analysts have turned negative on gold’s price performance this week.

Given the bearish market sentiment around gold, we think it could be wise to short gold mining stocks NovaGold Resources Inc. (NG), Equinox Gold Corp (EQX), and Osisko Gold Royalties Ltd. (OR).

Click here to check out our Gold and Silver Industry Report for 2021

NovaGold Resources Inc. (NG)

Based in Vancouver, Canada, NG explores for and develops gold mineral properties in the United States. It owns a 50% interest in the Donlin Gold project, which consists of 493 mining claims covering an area of 71,420 acres located in the Kuskokwim region of southwestern Alaska.

For its fiscal third quarter, ended August 31, 2021, NG’s loss from operations increased 6.7% year-over-year to $11.60 million. The company’s net loss came in at $11.80 million compared to $12.7 million in the year-ago period. Also, its loss per share remained flat at $0.04.

Analysts expect NG’s EPS to decline 8.3% and remain negative in its fiscal year 2022. Over the past year, the stock has declined more than 28% in price to close Friday’s trading session at $7.31.

NG’s weak prospects are apparent in its POWR ratings. The stock has an overall D rating, which equates to a Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

NG has an F grade for Value, and a D grade for Growth, Momentum, and Sentiment. In the 31-stock, F-rated Miners-Gold industry, it is ranked #30. To see the additional ratings for Stability and Quality for NG, click here.

Equinox Gold Corp. (EQX)

Headquartered in Vancouver, Canada, EQX acquires, explores for, and develops mineral deposits. The company primarily explores for gold and silver deposits. Also, it currently has seven operating gold mines.

EQX’s operating expenses increased 23.7% year-over-year to $139.80 million for the second quarter, ended June 30, 2021. The company’s income from operations decreased 76.3% year-over-year to $18.20 million. In addition, its current liabilities increased 20.2% sequentially to $267.60 million. Over the past year, the stock has declined more than 30% in price to close Friday’s trading session at $7.43.

It’s no surprise that EQX has an overall D rating, which equates to Sell in our POWR Rating system. The stock has an F grade for Sentiment, and a D grade for Growth and Momentum. It is ranked #28 in the Miners-Gold. Click here to see EQX’s additional POWR ratings for Value, Stability, and Quality.

Osisko Gold Royalties Ltd. (OR)

OR acquires and manages precious metal and other royalties, streams, and offtake, and other interests internationally. The company, which is based in Montreal, Canada, also explores for, evaluates, and develops mining projects.

In March 2021, ore processing commenced at OR’s Bonanza Ledge Phase 2 project. However, due to operational challenges during the second quarter of 2021, it was found that the total capital and production costs would be higher than initially expected.

For the second quarter, ended June 30, 2021, OR’s operating expenses increased 48.7% year-over-year to CAD11.10 million ($8.90 million). Its cash flow from financing activities for the quarter was negative CAD5.20 million ($4.20 million) compared to a positive cash flow of CAD76.50 million ($61.70 million) in the year-ago period. Its current liabilities increased 2.2% sequentially to CAD568.50 million ($458.80 million).

For its fiscal year 2022, analysts expect OR’s EPS to decrease 16.2% year-over-year to $0.31. Over the past three months, the stock has declined more than 6.9% in price to close Friday’s trading session at $12.63.

OR’s weak prospects are apparent in its POWR ratings. The stock has a D rating, which equates to Sell in our proprietary rating system. It has a D grade for Value, Momentum, and Quality. It is ranked #26 in the Miners-Gold Industry. To check the additional ratings of OR for Growth, Stability, and Sentiment, click here.

Click here to check out our Gold and Silver Industry Report for 2021

NG shares were trading at $7.27 per share on Monday afternoon, down $0.04 (-0.55%). Year-to-date, NG has declined -24.82%, versus a 24.25% rise in the benchmark S&P 500 index during the same period.

About the Author: Dipanjan Banchur

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets. More...

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