Precious metals and gold stocks are once again on the move, helped by both brewing tensions in Ukraine as well as volatility in the currency markets.
Russian troops and material are amassing on the Ukrainian border, either in a show of force or a prelude to an incursion into the eastern, pro-Russian area of the country. Moscow apparently has Crimea locked up heading into a popular referendum vote on independence scheduled for Sunday. Despite protests from the West, it doesn’t look like anyone can prevent the annexation of the historically Russian peninsula back into the fold.
Currencies are being rattled by a breakdown in the carry trade as the yen strengthens and the euro drops. Catalysts for these moves include a lack of new stimulus hints from the Bank of Japan after its monetary policy meeting this week and hints by the European Central Bank that new, extraordinary easing measures are being prepared.
In the global game of currency devaluation, driven by whoever abuses their currency the most, the balance of power could be shifting from Japan to Europe. And that means that hedge fund types are scrambling to unwind pair trade positions involving short yen/long euro bets.
Amid the chaos, safe haven assets like gold (GLD) are perking up in a big way — bringing buyers back into a sector that I think will continue to be a big performer throughout 2014. Here are three gold stocks to buy that are currently on the move:
Breakout Gold Stocks to Buy: Compania de Minas Buenaventura (BVN)
Compania de Minas Buenaventura (BVN) is a Peruvian gold and silver miner with operations throughout the country. Its output makes it the world’s third-largest producer of silver.
Shares have been rangebound since last summer, mired in a consolidation range near $12.50 a share. On Thursday, BVN stock surged above its 200-day moving average for the first time since September 2012.
The company was upgraded by Morgan Stanley analysts back in January with a price target of $15.80 — which would be worth a 16%-plus gain from here.
I’ve added shares of BVN to my Edge Letter Sample Portfolio.
Breakout Gold Stocks to Buy: Banro (BAA)
Click to Enlarge Banro (BAA) is a gold mining outfit with operations in the Democratic Republic of the Congo. The company recently announced a 15% increase in gold production in the fourth quarter thanks to expansion and efficiency gains at its Twangiza facility.
Shares are down a whopping 88% from their 2012 high, but look ready for big upside potential as shares challenge their 200-day moving average for the first time since August 2012.
I’ve added shares of BAA to my Edge Letter Sample Portfolio.
Breakout Gold Stocks to Buy: Timmins Gold (TGD)
Click to Enlarge Timmins Gold (TGD), like the other two gold stocks, is also challenging its 200-day moving average as buyers pour capital into a sector that had been left for dead. An upside breakout here would be the first since early 2013.
Timmins Gold is coming off a record Q4, which helped the company add $8.7 million to the company’s cash balance.
I’ve added shares of TGD to my Edge Letter Sample Portfolio.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters, as well as Mirhaydari Capital Management, a registered investment advisory firm. As of this writing, he had recommended BAA, TGD and BVN to his clients.