E Equinox Gold Warrants - Another Play In A Rising Gold Environment

With gold rising, there are many ways to play the precious metals market.  Currently, I like warrants as it gives me leverage to the increasing share price of the underlying company. 

There aren’t though many tradable precious metals warrants on US Exchanges.  The warrants that I like most at the moment are Equinox Gold.  Equinox Gold has 80.5 million warrants and they are tradeable on the OTC Markets under the symbol EQXWF.  To purchase one full Equinox Gold share, warrant holders will need to exercise five warrants and pay C$15 to Equinox Gold before October 6, 2021. That gives these warrants just over 16 months of life left which isn’t a ton of time.  Ideally you’d want 2+ years before warrant expiry so you have time for the underlying stock to appreciate.  Note, I’m playing the appreciation in price on the warrants and not the exercising of the warrants. If you do go the route of purchasing tradeable warrants, a limit order is a must as the bid/ask spread can be quite large.

If the gold prices rally strongly in the second half of 2020 and Equinox Gold stock rallies, the percent increase of the warrants should outpace that of the underlying stock.  Leverage though works both ways so if you feel the Equinox Gold shares will decline, purchasing tradeable warrants can compound your losses.

Authors Note: I have a position in the warrants mentioned in this article.

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Andrew Armstrong 2 days ago Member's comment

Screaming buy today those warrants.