KGC - It's Time To Start Taking Gold Stocks Seriously
No matter your stance on it nor the fact that our namesake has “gold stocks” in it, you cannot avoid this conversation anymore. What am I talking about? I’m talking about the fact that gold and gold stocks need to be taken seriously right now. The doom and gloom of the market is obvious at this point and we’re almost certain to have a bumpy road ahead for the next few quarters at the very least. Now we have an environment that could be perfect for gold.
Slowing economies across the world, the massive inflow of government dollars (helicopter money), geopolitical unrest, low rates, these are all things that have historically helped gold prices to flourish. Right now, we’ve got them all and we’re also seeing historic levels in the price of gold. Earlier this week, gold futures tapped highs of $1,742.60. After pulling back to lows of $1,670.70 yesterday, the rally is back on.
While gold prices tend to diverge from the broader markets, right now, we’ve seen a lock-step type of move. This could be due, in part, to the fact that while the market is recovering, people are still hedging more strongly in case this is a false breakout. Taking advantage of the momentum, we’ve seen a surge of buying interest in a number of gold stocks lately.
One thing to note is that when it comes to compounding potential of a gold rally, the juniors tend to outperform the majors. While this is higher risk, so too can be the rewards. But depending on your style of trading, the larger-cap gold stocks may be more interesting….it doesn’t hurt to look at small-caps though.
Barrick Gold (GOLD)
Shares of Barrick gold stock rallied in a big way this week. After pulling back to lows of $19.86, the sentiment was a bit more dampened during the first half of this short week. However, as more data emerged, it became clear that Barrick gold stock could be one of the names to watch if gold were to jump. Hindsight being 20/20, gold prices surged and so has Barrick gold stock. As of the morning on April 9, shares reached highs of $21.94, which is now less than $1 away from its 52-week highs of $22.57.
Something else to note is that GOLD has managed to break above and hold above its 50DMA. This has been a relatively strong and consistent level of resistance or quite some time. But over the last 6 trading sessions, Barrick gold stock hasn’t broken below nor come near this level whatsoever. For most of March and early April, the 50DMA sat around $19. While Barrick gold stock managed to break above it a few times, it couldn’t manage to hold above it until this week.
Besides launching a $1.5 million initiative to help its mining communities deal with COVID-19, Barrick hasn’t released many new updates. The stock has a tendency to piggie-back off of the price of gold. This has gone in both bullish and bearish directions. For now, however, it seems as though Barrick gold stock has taken advantage of this latest move and could be one of the top gold stocks to watch this month if gold prices continue to soar. See the Barrick Gold Stock Analysis.
SPECIAL REPORT: WHAT ARE THE BEST GOLD STOCKS TO WATCH? START HERE
Yamana Gold (AUY)
Yamana gold stock also saw a big jump on Thursday. Shares of the gold miner reached highs of $3.69, testing its 50DMA for the first time since early March. Similar to Barrick gold stock, Yamana’s shares have seen a strong move over the last 6 trading periods. Yamana gold stock put in higher highs and higher lows. Now that it is right at the 50DMA, it will be important to see if this level of resistance can turn into a level of support.
I feel that a lot of that will be determined by the price of gold. Earlier this week the company reported its preliminary Q1 results for 2020. Total gold equivalent ounce production during the quarter came in at 221,746. It’s Jacobina, El Peñón, and Mineral Florida mines all had a strong showing for the quarter, exceeding production targets.
Jacobina, in particular, posted another consecutive quarter of record production with 43,938 ounces of gold. On top of everything, the company was able to keep costs in line with previously set targets. With regard to COVID-19, the company also explained that there were no suspected cases at any of its operations.See the Yamana Gold Stock Analysis
SPECIAL REPORT: WHAT ARE THE BEST GOLD STOCKS TO WATCH? START HERE
Kinross Gold (KGC)
Kinross gold stock was another one to watch this week. Similar to Barrick gold stock, Kinross had previously seen the 50DMA acting as a strong level of resistance on its chart. For most of March, Kinross gold stock couldn’t manage to break above this level, which sat around $5. Over the last 4 days, KGC stock hovered around the 50DMA, which acted as support. Finally, on Thursday, the gold stock managed to clearly break above the 50DMA. While Kinross gold stock is still about 12% shy of its 52-week high, trading volumes have increased on April 9.
Also, similar to Barrick, Kinross hasn’t released much in the way of new updates. Its lasts announcement came earlier in the month to provide a corporate update. This included an update on COVID-19 response and preventative actions taken. See the Kinross Gold Stock Analysis
“Kinross continues to maintain a strong financial position and liquidity. As a precautionary measure to protect against economic and business uncertainties caused by the pandemic and subsequent government actions, Kinross drew down $750 million from its $1.5 billion revolving credit facility on March 20, 2020.”
SPECIAL REPORT: WHAT ARE THE BEST GOLD STOCKS TO WATCH? START HERE
Newmont Corporation (NEM)
While the previously mentioned gold stocks are working back toward previous 52-week highs, Newmont gold stock has just set a new one. During the mid-morning session on Thursday, the company’s shares reached highs of $56.05, dethroning the previous 52-week highs of $52.50 from March.
Not only did this move come as the price of gold surged, but Newmont gold stock also received coverage initiated by JP Morgan. The bank gave Newmont an “Overweight” rating. It also announced a price target of $61 for the gold stock. This latest analyst rating comes as Newmont just announced its first-quarter earnings call would be on May 5th.
Overall the analyst community has been cautiously optimistic about Newmont. This is in spite of recent developments. BMO Capital recently cut its price target from $60 to $59. But it maintained an “Overweight” rating on Newmont gold stock. Deutsche Bank, on the other hand, lifted its price target to $54 and maintained a “Buy” rating. Previously the bank had set a target of $50 for Newmont gold stock. See the Newmont Gold Stock Analysis