Shares of NovaGold Resources Inc. (USA) (NYSEMKT:NG) surged more than 12% at one point in afternoon trading on March 19. They cooled off a bit but had retained a 9% gain on the day by around 4 p.m. EDT. So far in 2018, NovaGold stock is up almost 13%, but it's been a volatile year for the gold producer's share price, which was down more than 6% at one point in mid-February.
For many investors, today's move may be frustrating, since there's a lack of any material news behind the big jump. NovaGold hasn't issued a press release or Securities and Exchange Commission filing, and the company doesn't have an earnings report around the corner, having reported its 2017 results in late January.
While there isn't any news about the company or its operations behind today's big move, it has been an exceptionally heavy trading day for its shares. At this writing, with the market still open for trading for another half-hour, nearly 5 million shares have traded hands -- nearly triple the average daily volume -- heavily driven by buyers bidding up the price.
It may seem enticing to try to take advantage of this momentum and make a quick profit, but one of the most difficult ways to make money in stocks is to speculate on short-term price movements. For instance, NovaGold's shares are on track to finish today's trading up about 8%, but will be down about 5% from the peak early this afternoon. The risk of losses is further punctuated with a stock like NovaGold, since the company is still in the development phase of its mining assets, and hasn't actually started making any money yet.
If you're interested in investing in a gold producer like NovaGold, a better start than trading shares on speculation and daily price movement would be to invest the time to learn about the company and its prospects, as well as the people making the capital allocation decisions. NovaGold's Donlin Gold project -- and to a lesser extent its stake in the Galore Creek copper mine -- could pay off big for investors in the years to come. But at present, this development-phase company will make for a very volatile and unpredictable investment. And like we saw today, that volatility can often come without any specific news to explain it.