Why Hycroft Mining Stock Soared 57% Last Month

Shares of Hycroft Mining (NASDAQ: HYMC) rocketed 57% higher successful January, according to information from S&P Global Market Intelligence. The company, which owns projected golden and metallic mines but does not really excavation today, is seeing a booming banal terms amid the resurgence of metals prices. The institution besides outlined a ample metallic attraction precocious successful December, which could beryllium profitable.

However, with golden and metallic prices collapsing to commencement February, Hycroft Mining banal has rapidly retraced 23% from caller highs. Here's wherefore the banal was rising successful January, and whether present is simply a bully clip to bargain the dip connected this golden and metallic miner.

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The mining concern is casual to understand. If you tin nutrient refined metallic astatine a terms beneath the existent selling price, the concern volition marque a profit, meaning the higher the price, the better. With golden and metallic some up astir 100% successful the past year, investors turned Hycroft Mining into a momentum stock. It is up implicit 1,000% successful the past 12 months based connected assumptions for operating leverage erstwhile it begins to excavation for golden and silver.

It adjacent announced a precocious metallic attraction astatine 1 of its locations successful December, which, combined with a rapidly rising metallic price, sent Hycroft Mining banal into overdrive.

There is conscionable 1 occupation with Hycroft Mining: it does not really excavation metallic today. It volition beryllium a fewer years -- if not longer -- earlier the institution plans to really bring golden and metallic to market. This means it cannot instrumentality vantage of the caller terms surge and indispensable anticipation that rising metallic prices are durable for the remainder of this decade. It volition besides outgo the institution galore hundreds of millions, if not implicit a cardinal dollars, to start-up operations.

Looking astatine the past of golden and metallic prices, the metals thin to travel a boom-and-bust cycle. Enthusiasm whitethorn instrumentality astir for a twelvemonth (or three), but past prices travel crashing down to earth. These are highly volatile assets that tin determination rapidly with economical sentiment, arsenic seen successful aboriginal February erstwhile prices collapsed.

At the aforesaid time, Hycroft Mining is not prepared to bring metallic retired of the crushed anytime soon. With a marketplace headdress of $3.4 billion, nary revenue, and ample start-up costs, this is simply a precarious stake that golden and/or metallic prices volition enactment elevated for years. Call maine skeptical. Stay distant from Hycroft Mining stock. This is simply a risky banal to bargain today.