KL - Gold Stocks Rally On Latest Economic Data
Latest Jobs Numbers Trigger Sell-Off In S&P; Gold Stocks Rally
If you’re just tuning in and wondering why gold stocks are higher, you’re probably pleasantly surprised. Gold prices rallied on Thursday thanks to worse than expected jobless claims. Some 6.6 million or so Americans joined unemployment lines; a record figure.
To put it in perspective, the U.S. hasn’t lost more than 1.4 million jobs within a 2-week stretch like this, in history. While the market dipped during the early morning session, stocks, including gold stocks, finished the day on a high note. This was similar to the market reaction to the last jobless claims.
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As far as the jobs numbers go, this was to be expected as the entire economy has come to a standstill. But as investors gasp the size and scope of this situation, it could be time to watch and see if safe-haven are seeing accumulation.
This would at least determine the temperature of investor sentiment right now. So this having been said, we think it’s time to give gold stocks a closer look.
Should Investors Be Nervous?
We do want to point out that it has been a wild ride for precious metals prices over the last few weeks. If you remember from early March stocks and gold all pulled back. This is a time where investors sold everything to race into cash and prepare for the unknown.
At the time, the price of gold dipped from 7-year highs to just above $1,450 an ounce. Since that time, the precious metal has climbed back above $1,600 once again with prices reaching highs of $1,640 on April 2. This momentum has also helped drive gold stocks higher.
This has been the burning question since the last time gold prices surged. But if you look at some of the recent trends in gold stocks, you’ll probably see that many are heading back to previous levels from before the March sell-off.
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Are Gold Stocks Ready For A Bigger Move?
Barrick Gold stock (NYSE:GOLD)(TSX:ABX) for example, reached highs of $20.63 on April 2. This is less than $2 shy of its 52-week high of $22.57. Newmont gold stock reached a high of $49.75 on Thursday morning. That’s less than $3 shy of its 2020 high. On top of that, even some small-cap gold stocks are getting into the mix of bullish gold prices.
After finalizing its latest acquisition, IMC International Mining (CSE:IMCX)(OTC:IMIMF) reached highs of $0.495CAD which is 50 cents shy of its all-time high. In the U.S. shares of its OTC listed IMIMF came within 7% of trading levels not seen since early March. And there are countless other examples of other gold stocks that saw some of their biggest single-session rallies in recent weeks.
Coeur Mining (NYSE:CDE) rallied 25%, Kinross gold stock (NYSE:KGC) jumped 11%, and even Kirkland Lake gold stocks (NYSE:KL) squeezed out a near 10% run on April 2.
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The Next Step For Gold Stocks
So what’s next? The time to prepare for the unknown is here. The latest jobless figures are just the tip of the iceberg as we’ll see non-farm payrolls coming up next. And while the fear-factor may be lessened right now, it hasn’t come close to extinguishing the fact that investors are still looking for a hedge against this market uncertainty.
One gold analyst, George Milling-Stanley thinks gold is just getting warmed up. He explained in an interview that he is “expecting gold to continue to make strides. Gold jewelry demand may drop, but I am expecting a large increase in investment. This is what happened in 2008: Jewelry demand dropped but gold investment increased. If you look at flows into GLD, we saw significant inflows — just shy of $1 billion in the last week. We have had $3.8 billion in inflows year to date.”
Considering the fact that coronavirus is going to continue to be a concern and Brexit is still an issue, these are just a small sum of the parts that may contribute to gold’s next move. He continued to say, “In my view, gold is a hedge against the unexpected, whether it is a hedge against macroeconomics, or geopolitical like wars or pestilence. It has always been protection against the unexpected, whatever that might be. Gold tends to perform whenever anything unexpected happens.”
With this in mind, are you buying gold stocks right now? Feel free to leave a comment below.
Disclaimer: Pursuant to an agreement between Midam Ventures LLC and IMC International Mining Corp. (CSE: IMCX) (IMIMF), Midam has been paid $200,000 for a period from January 7, 2020, to February 14, 2020. Midam has been paid an additional $200,000 and extended its period of coverage to March 14, 2020. Midam has been paid an additional $200,000 and extended its period of coverage to April 30, 2020. We may buy or sell additional shares of IMC International Mining Corp.(CSE: IMCX) (IMIMF) in the open market at any time, including before, during or after the Website and Information, to provide public dissemination of favorable Information about IMC International Mining Corp. (CSE: IMCX) (IMIMF). Full disclaimer here.