The announcement of new stimulus measures by the European Central Bank has sent buyers into gold and silver, as well as the related miners, in a way that hasn’t been seen since early May. If it continues, it could mark a significant change in trend for silver and gold stocks, which have been under pressure since March.
A combination of diminished geopolitical concerns (the Ukraine situation has largely dropped off the radar for most investors), a drop in stock market volatility, and a steady decrease in inflation expectations have all played a role.
But now, some of this is starting to shift.
Inflation expectations are creeping up as the U.S. Consumer Price Index hits 2% while the ECB’s actions confirm its willingness to respond to the very real threat of deflation in the eurozone. And while stocks keep powering higher, I am starting to see some volatility in the currency markets.
All of this is causing gold and silver to perk up — and sending buyers into the following three gold stocks:
Gold Stocks on the Move: New Gold (NGD)
Click to Enlarge New Gold (NGD), with operations in the United States, Canada, Australia and Chile, saw its shares drop 25% between March and April to test lows set last December.
The company’s fundamentals remain solid, beating earnings estimates back on April 30 on a low all-in cash cost of $674 per ounce — resulting in strong free cash flow.
At the very least, I’m looking for a retest of the February-March highs, which would be worth a 16% gain from here. I’m adding NGD to my Edge Sample Portfolio.
Gold Stocks on the Move: NovaGold (NG)
Click to Enlarge NovaGold (NG) is a on a roll, punching through both its 50-day moving average as well as its upper Bollinger Band in a show of strength.
There has been some unusual call option activity in the stock ahead of the company’s annual general meeting today. The company is a exploration-level company focused on the Donlin Gold project in Alaska.
I’m adding NG to my Edge Sample Portfolio.
Gold Stocks on the Move: Royal Gold (RGLD)
Click to Enlarge Royal Gold (RGLD), with its main operations in the United States, Canada, Chile, Mexico and Spain, has enjoyed a more stable share price performance over the last few months.
Shares are down only about 10% from their March high thanks to a solid earnings beat on May 1 due to stable production and favorable analyst coverage — including an initiation with a “buy” rating by Morgan Stanley on May 29.
I’m adding RGLD to my Edge 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.