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)
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)
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)
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.