London listed gold explorer Greatland Gold (LSE:GGP) has enjoyed a spectacular five years. In step with the rise in the value of gold in that time, the GGP share price has risen a staggering 8,863%. The bulk of that rise took place in 2020. At the turn of the year, the GGP share price was trading under 2p. Now it is hovering around 12p.
The price of gold has been rising over the past few years, and the pandemic has given investors more reason than ever to run to the safety of the shimmering yellow metal.
Can the GGP share price continue its meteoric rise?
So, is gold really the haven we deem it to be, and can the GGP share price continue its impressive success? Gold has enjoyed its safe-haven status for decades now because it holds its value and serves as an insurance against economic turmoil. However, investing in gold producers is not such a straightforward bet. Although the underlying asset is valuable, getting it out of the ground is an expensive and difficult process.
GGP has been listed on the AIM stock exchange since July 2006. It explores for various natural resources, including copper and nickel, but its core focus is on gold. It is advancing its Havieron asset in Paterson, Western Australia, which has enjoyed great drilling success. This is being funded by Newcrest Mining, a well-known miner in Australia. Havieron is a large gold-copper deposit and has brought a great deal of positive shareholder sentiment to GGP this year. This has given a big boost to confidence in the GGP share price.
GGP is now worth £450m and is in a robust financial position with approximately £6m in cash at the end of June. It has also confirmed its financing will allow it to conduct all planned activities throughout the coming year. It has also just been awarded a new licence to expand its Paterson landholding for further exploration of gold-copper deposits.
Gold is good
Gold is thriving on global uncertainty and geopolitical tension, so if things calm down and harmony is restored, then the price of gold will fall back. However, the pandemic is making this look less and less likely. Combined with the US-China trade war and oil price pressures, it looks to me like the price of gold will remain high for some time.
While I do not see it enjoying another thousand-fold rise, I think GGP looks a robust company for now. However, mining is one of the most volatile sectors of the stock market and not an advisable place for beginners to stock market investing to put their cash. I will continue to steer clear of mining stocks, including the tempting lows of the Glencore share price. I prefer FTSE 100 constituents and will avoid the GGP share price too.
Kirsteen has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.