Last week was all about gold stocks and this week is no different! Well, we do have some Silver sprinkled in here and there you’ll notice. Overall, though, we think that gold stocks are very much being overlooked at the moment. Maybe the world has gotten so focused on NVIDIA that it’s temporarily forgotten about the Goldies? We haven’t though.
Gold
Let’s start with the actual gold price. As you can see here, it has pushed into record high territory. We’ll admit that it is starting to look a little overcooked now and might be due for a breather (aka. a retracement). That said, historically when the gold price pushes this hard, it goes around 10% in the space of three weeks. If you measure this move, that targets around $2260, with a week or so to go. Some consolidation is possible before another leg higher. We must also note that history doesn’t always repeat itself. Thus, we are not ruling out a correction or retracement here. We do think that weakness can be bought into. Also remember, this is not about the gold price, it is all about the gold stocks. Gold is just the natural starting point.
Barrick Gold Corporation (GOLD)
US listed Barrick Gold is looking very, very undervalued compared to the spot gold price. This chart compared Barrick Gold and the gold price. Both have been rebased to 100 at the start of the chart. We can see that Barrick Gold is down almost 40% while gold itself if up 22%. This is a massive gap! We really, and I mean really like Barrick Gold here. There is a huge gap to close! The last time gold was trading at $2100, Barrick Gold was at $26! Today it is still below $16. The world is obsessed with tech stocks while the gold stocks are deeply undervalued. This is such a strong buy.
AngloGold Ashanti (AU)
Please note that this is the US listing for AngloGold. We like the South African (JSE) listing too, obviously, but we thought we would chart the offshore one to make our own lives easier. Ok, explainer out the way, let’s look at the charts. The first chart shows the range break we pointed out a little while ago (in our previous blog post). This has gone well! We do think that there is plenty of upside left. The second chart shows a direct comparison between the two. Here again we can see that Gold has really pushed and AU has a lot of catching up to do. If you missed the breakout, it might be difficult chasing the stock here. You could put a 2-day low trailing stop loss on if you wanted to get in now and still have a favourable risk-reward. So even if you are late to the party here, we think there is still good money to be made.
Franco-Nevada Corporation (FNV)
FNV is another prime example of a high quality Gold miner that is trading below its 200-day moving average while Gold itself if making new highs. Again we’ve done the comparison between the stock and the Gold price to give you some idea of the scale of the opportunity here. We think the first stop here is the 200-day moving average and one that is cleared, back to the high for FNV.
Pan African Gold (PAN)
We have to show some love to JSE listing as well, and PAN stands out to us (As does DRD Gold, but we looked at that last week). PAN is breaking out of a long-term range. Consider that this is a weekly chart looking at 5 years’ worth of data. So, this price target will take a good long while to be reached and it certainly won’t happen in a straight line. That said, we really like this stock for the medium to longer-term. In ZAR terms, PAN (and DRD for that matter) is trading at a solid discount compared to the spot price of gold.
Junio Silver Miners ETF (SILJ)
Ok, ok, it’s a silver chart and this is meant to be all about gold stocks. But hey, we can’t help but wonder when Silver will be catching a bid? Also, this downtrend line is on the verge of breaking. Keep an eye on this one.
Hecla Mining Company (HL)
Hecla is trading as if Gold is trading at the lows. This is more of a silver play, but Hecla has gold exposure that is seemingly going unnoticed. Another hidden gem if you ask us.
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