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The price for an ounce of gold has increased by about 6% this year. While that may not be an eye-catching return, gold prices have outperformed both the S&P 500 and the Nasdaq 100 by a wide margin this year. Both indexes have handed investors negative returns this year of roughly -10%.
On Feb. 26, gold prices hit a five-year high of $2,043.94 per ounce. Based on a flurry of recent insider transactions from gold companies, future upside is certainly a possibility.
Insiders Are Buying Up Gold Stocks
On April 26, Augusta Investments, a 10% owner of Augusta Gold (OTCMKTS:AUGG), reported buying 22,500 shares of AUGG at prices between $1.11 and $1.18. Yesterday, Director Richard Warke reported buying $40,760 worth of AUGG stock.
Insiders at Allegiant Gold (OTCMKTS:AUXXF) have also been active. On April 26, Allegiant's CFO, Sean McGrath, purchased 15,000 shares at an average price of 33 cents per share. The previous day, Director Peter Gianulis purchased 62,500 shares at an average price of 35 cents.
Meanwhile, an insider at Osisko Mining (OTCMKTS:OBNNF) reported buying shares as well. On April 25, Director John Burzynski reported purchasing 5,000 shares at an average price of $3.05 per share. In total, the transaction amounted to $15,235.
On April 25, Director and 10% owner Lawrence Lepard purchased 216,500 shares of Rise Gold (OTCMKTS:RYES) at an average price of 51 cents per share. The shares were purchased indirectly by Sea View Investments, with which Lawrence is affiliated. After the purchase, Lawrence indirectly owns 2.87 million shares of RYES stock through investment funds. The director also owns 741,875 shares directly and 135,000 shares indirectly through his children.
A director at Dakota Gold (NYSEMKT:DC) has been busy buying as well. On April 13, director Robert Quartermain purchased 10,000 shares of DC stock at an average price of $4.99 per share. After the transaction, Quartermain owns a total of 7.3 million shares.
Gold as a Hedge Against Inflation
The prevalent insider buying in gold stocks speaks volumes as to where these insiders believe the price of gold is headed. Insiders only buy shares of their own companies for one reason: they believe the price will go up.
In addition, gold is seen as a hedge against inflation. Last month, the Consumer Price Index (CPI) rose by 8.5% year-over-year (YOY).This rate marked the highest 12-month pace in more than 40 years. Excluding food and energy, the CPI Index increased by 6.5% YOY.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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