Accelerate Your Precious Metal Holdings with U.S. Gold Corp.

The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

After years of mediocre returns and frustrating sideways consolidation, gold bullion had a strong year in 2019 delivering approximately 19% profits for stakeholders. However, 2020 saw the yellow metal hit new heights in the late summer as uncertainty over the novel coronavirus pandemic sent jitters throughout the markets. While gold remains a worthy safe haven with many investors looking to Barrick Gold GOLD and Newmont NEM, those interested in outstanding performance potential should consider mining firm U.S. Gold Corp. USAU.

Why consider USAU? While physical ownership of precious metals gives you direct exposure to this market, this process can be inconvenient. Also, you must contend with safety concerns. USAU stock is highly correlated with the movement of gold prices yet offers much higher upside potential. As the gold spot price increased roughly 24% last year, for instance, USAU nearly doubled in value — and that's including the severe drop in March 2020 when the COVID-19 crisis first struck the U.S. nationwide.

Both the broader fundamentals as well as the specific attributes associated with U.S. Gold Corp. will likely drive USAU stock higher in the months and years ahead.

Monetary Dynamics that Bolster Gold-Based Investments

One of the peculiarities of this so-called new normal is the dichotomy between soaring valuations on Wall Street and the gut-wrenching pain on Main Street. But the narrative goes beyond stocks and bonds. Just check out the red-hot housing market. Everywhere you look in popular destination cities, prices keep moving higher and higher.

What in the world is going on? It's easy if you understand simple monetary principles.

Currently, benchmark interest rates are at multi-year lows. This disincentivizes savings as holding cash nets you next to nothing. To put your money to work, you've got to seek "risk-on" assets: Stocks are the most popular option because of their easy access, but real estate is also attractive. Indeed, the wealthy expanded their real estate portfolio because of the sudden cheapness of money.

Astute investors of all income levels should consider gold-based investments such as USAU stock. The reason? Throughout human history, people have looked to gold as the ultimate safe-haven asset. Plus, an investment in USAU is far more accessible than tying up most of your savings in real estate acquisitions.

But there's another reason why precious metals stand out in this health and economic crisis. What many people may not realize is that real interest rates — the benchmark rate with inflation backed out — are actually negative.

This unusual situation means that instead of your cash holdings yielding next-to-nothing, you are penalized for it. In other words, you pay the bank to hold your money while the bank pays you to take out a loan. No wonder why the affluent have run to real estate!

However, this circumstance arguably benefits gold the most. While negative rates will drive up speculation for stocks and real estate, eventually, the economic fundamentals must justify these rich premiums. When they can't, you may see a crash.

But with gold, you're talking about a universally recognized asset class with thousands of years of history. Combine that with the outsized potential of USAU stock and you can see why many gold bulls are excited about this opportunity.

Distinct Catalysts to Lift USAU Stock

Of course, not all gold mining firms are equal. Frankly, the sector has a not-so-wonderful reputation as a risky speculative platform. Nevertheless, the distinct attributes of U.S. Gold Corp. warrant a closer look.

First off, USAU stock features a tight share structure and low float (only 6.7 million shares are outstanding). This is one of the lowest floats of any publicly traded gold company, which is significant because many of USAU's competitors dilute their shares to fund their mining projects.

The second point of why USAU stock stands out: With a current market capitalization of nearly $66 million and over $15 million in cash with 0 long-term debt obligations, not only is U.S. Gold Corp. undervalued, it has enough resources to operate for the next 24 months.

Third, the company exclusively operates in the U.S. This is huge because it supports American jobs and businesses. In addition, USAU stock is spared from the geopolitical risks of operating in less stable parts of the world — a common dilemma for other gold miners.

Finally, the projects themselves are incredibly compelling:

• CK Gold: Analysts estimate that the net present value (NPV) of this project is $321 million at a $1,600 gold price. With the potential for gold to move higher, this amounts to a high multiple of U.S. Gold Corp.'s present market cap.
• Keystone and Maggie Creek: Considered district-scale mining operations due to their enormous size, these sites have massive upside potential, in part because they are located next to the mining sites of Barrick Gold GOLD and Newmont NEM.
• Challis Gold: As a historic 300,000-ounce gold resource, Challis could be a surprise hit, representing a possibly lucrative bonus atop USAU's other mining projects.

A Golden Opportunity in the Making

When people have concerns about the economy, they turn to the rich history and intrinsic value of gold. Today, gold miners offer profitability of several multiples higher than the underlying asset. Most importantly, USAU stock features strong attributes while being greatly undervalued relative to its fundamentals.

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.