EQX - Gold Tests 8-Year High; What's That Mean For Gold Stocks?
The Price Of Gold Is Back Above $1,785; Will We Witness History (again)
This is something we in the gold sector have been waiting for and planning on for weeks now. Gold just broke above $1,785 for the second time this year. Tuesday’s early high of $1,786.10 came within $2.70 of testing the new 8-year highs set back in April ($1,788.80). Why wouldn’t it? We have a glaring issue right now and that issue is China/U.S. trade talks. Let me explain.
[Special Report] This Junior Gold Stocks Could Be The Biggest Opportunity Of 2020
Late last night White House trade adviser Peter Navarro said that the U.S.-China trade pact was “over”. Later on, U.S. President Trump helped stoke volatility in markets already fueled by the coronavirus pandemic in contradicting Navarro, via Twitter:
When the market doesn’t know what to make of things, safe-havens are a major target. Thus we’ve seen a surge in the gold and mining sector on Tuesday. Major gold ETF’s like the SPDR Gold Miner’s ETF (NYSEARCA: GLD) as well as the Graniteshares Gold Trust (NYSEARCA: BAR) reached new 52-week highs of $166.31 and $17.6 respectively. We discussed earlier this month on several occasions how firms like Goldman Sachs, Citi, and even Bank Of America have been bullish on gold.
Goldman recently adjusted its expectations higher for the next 12 to 18 months. The firm now forecasts gold prices for the 3, 6, and 12-month outlook to reach $1,800, $1,900, and $2,000 respectively. That’s up considerably from the previous forecast of $1,600, $1,650 and $1,800. recently adjusted its expectations.
Will Gold Stocks Follow Suit?
When you talk about the price of gold climbing, you have to think gold stocks would follow. For many, that has become the trend this week. Yesterday we discussed a few gold stocks like B2Gold (NYSEAMERICAN: BTG) and NewGold (NYSEAMERICAN: NGD) reversing their bearish courses.
This week also saw other gold stocks like Gold Fields (NYSE: GFI) reach fresh 52-week highs. GFI stock hit $9.20 during Tuesday’s morning session. This is a level that Gold Fields stock hasn’t traded at since February of 2013. JP Morgan upgraded Gold Fields earlier this week to Overweight and announced a price target of $11.30.
“Synchronised central bank stimulus and unconventional monetary policy measures such as helicopter money are resulting in significant expansions of global government debt, increasing the risk to fiat currency valuations,” J.P. Morgan analyst Dominic O’Kane wrote. “Negative real rates for currently create an opportunity cost of NOT holding gold versus conventional safe haven government debt. Fiscal stimulus measures also increases long-term inflationary risks for economies.”
Sandstorm Gold (NYSE: SAND) also reached fresh 52-week levels on Tuesday. The gold stock jumped to highs of $9.48. Shares of Equinox Gold (NYSEAMERICAN: EQX) also hit that milestone 52-week level. At $11.25, Equinox solidified a new all-time high on June 23. Earlier this month, Neil Woodyer retired from the Company’s Board of Directors to pursue other interests. This came shortly after Equinox raised $145 million from warrants being excised.
Christian Milau, CEO of Equinox Gold, commented: “With a strong balance sheet and cash flow from a diversified portfolio of producing gold mines, Equinox Gold is well positioned to manage the COVID-19 pandemic and is fully funded to advance its pipeline of growth projects toward one million ounces of annual gold production.”