Gold has been in a persistent decline since late 2011, which is when investors last really felt a tinge of panic amid the U.S. credit rating downgrade and the thought that maybe, just maybe, the U.S. Treasury would default.
Four years, billions in Federal Reserve bond buying stimulus, and steady climbs in the stock market and the U.S. dollar later … and the yellow metal and gold stocks have fallen out of favor with investors. After falling below $1,200 an ounce in 2013, gold prices traded in a meandering sideways channel until breaking down to a low of $1,072 last month on expectations the Fed will start as soon as September on its first rate-hike campaign since 2004.
But on Monday, the SPDR Gold Shares (GLD) broke above their 20-day moving average for the first time since June and look ready to exit a five-week basing pattern. Gold and silver stocks are on the move as well, with the Market Vectors Gold Miners ETF (GDX) rising 4.7% in its best one-day gain since the beginning of April.
A number of factors are driving the move — most importantly, the renewed weakness in the U.S. dollar on a slight cooling of September rate liftoff expectations and the overnight currency devaluation by Chinese authorities, raising the specter of a global currency war.
In response, I have recommended a batch of gold stocks to my Edge Letter subscribers, including these three winners:
Gold Stocks to Buy: Kinross Gold (KGC)
Kinross Gold (KGC) is the world’s fifth-most-productive gold company as of 2014, with operations around the world. Last year, the company posted proven and probable mineral reserves of 34.4 million ounces of gold and 44 million ounces of silver. On July 29, the company reported inline quarterly results and guided fiscal 2015 production to the high end of previous forecasts.
Shares are up 21% for Edge subscribers since recommended on Aug. 3.
Gold Stocks to Buy: Barrick Gold (ABX)
Barrick Gold (ABX) is the world’s largest gold miner with operations throughout the world, including Saudi Arabia and Papua New Guinea. At the end of 2014, the company had proven and probable reserves of 93 million ounces of gold and 9.6 billion pounds of copper.
On Aug. 7, ABX stock was upgraded to “equal weight” by analysts at Barclays on anticipated asset sales and debt repayments. Since then, shares have rebounded some 9%.
Shares are up 12% for Edge subscribers since recommended on Aug. 3.
Gold Stocks to Buy: Goldcorp (GG)
Goldcorp (GG) is the world’s fourth-largest producer of gold with operations through the Americas.
The company, along with its industry peers, benefited from bullish over-the-weekend coverage by Barron’s that asked if it was “Time to Buy Commodities” as sentiment “may be nearing capitulation.”
Shares are up 9.8% for Edge subscribers since recommended on Aug. 3.
Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
