KGC - Are Gold Stocks & Bitcoin Pointing At A New Bull Trend?
Gold Miner Stocks & Bitcoin Are Trending This Week; Are They On Your List Right Now?
Whether you’re for or against it, bitcoin is getting thrown into the discussion about gold stocks right now. In an update this week, Mike McGlone, Senior Commodity Strategist of Bloomberg Intelligence dropped some knowledge.
“Among the few assets up in this tumultuous year, gold and bitcoin are building foundations for further price appreciation. The metal and the crypto remain our top candidates to advance in 2020, with added rally fuel from Covid-19.”
Say what you will but while gold stocks have maintained a sideways trend in the short term, Bitcoin has been on the move. Similarly, while bitcoin stagnated below $9,000 gold was making headway. Overall, however, both “commodities” are enjoying a noticable uptrend over the last few months. Since mid-March, both gold stocks and the price of Bitcoin have been heading higher. March 16th marked the recent bottom for gold. Meanwhile, Bitcoin saw a pullback to 2020 lows a few days prior.
Needless to say, since then, the bulls have taken control, in general. McGlone thinks that “if the stock market rolls over, gold and Bitcoin should gain buoyancy” and that could mean another leg in the works. “Gold should be a primary beneficiary of more aggressive fiscal and monetary stimulus…Until central banks can boost economic growth, gold should outperform silver.”
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Considering this as the case, gold stocks and bitcoin will likely be a focus for investors. This not only takes into account fiscal measures but the slowing/uncertain economic conditions the world is currently in.
Gold Stocks Recover This Week
In spite of the broader markets turning around, the gold trade has upheld its strength. Albeit we’ve seen some consolidation over the last few weeks, this doesn’t necessarily have longs running for the hills. If you look at most gold stocks, they have either traded along or above major moving averages. Kinross Gold stock (KGC Stock Report), for instance, hasn’t tested its nearest, 50-Day moving average since early April. KGC stock came close on June 2nd. But managed to hold support above $6.20 so far this week.
If you look at gold prices today, you’ll see a similar trend. This is why I’ll continue to stand behind the idea that gold stocks are moving with gold prices more closely than anything else. In sectors like tech, health care, etc. you can find stocks moving on their own accord and not with the sector trend. Gold has been much different.
For the most part, the top gold stocks in the market have been in lock-step with gold prices today and for the last few weeks. On Tuesday, gold reached an early high of $1,757 before falling back to levels below $1,730. By the late afternoon, however, a bounce triggered gold futures to jump back above $1,735. Similarly, you can see that the 50-day moving average has acted as a safety net for the second quarter so far.
Other gold stocks like Osisko Gold Royalties stock (OR Stock Report) have used the 200-Day moving average this month. As you can see, it was a previous level of resistance in April but was able to break out above this level in May. Since then, Osisko Gold Royalties stock has simply tested this level but hasn’t broken below it. Even on June 2, OR stock consolidated but never broke below this level.
What About Bitcoin?
Bitcoin prices have been volatile, sure. But in general, the trend has been bullish and in step with gold prices. On top of that, we’re seeing banks like JPMorgan turn bullish on the currency. Blockforce Capital CEO, Eric Ervin, recently said, “We are seeing more institutional interest. I think this would be true regardless of the halving or the QE taking place, even more so given the unprecedented fiscal and monetary global stimulus.”
This shouldn’t take away or add to the gold trade in my opinion. Rather, the correlation between sluggish dollar price movement has stoked interest in alternatives to the greenback. Right now, both Bitcoin and gold prices are apparently capitalizing on the current scenario. It will be interesting to see where the prices end up by the end of the month. Leave us a comment and let us know if you think gold and/or bitcoin will be higher or lower than where it is right now.