3 Mining Stocks Poised for a Golden Recovery

What started as a golden opportunity for mining stocks this year has quickly turned into yet another disappointment.

Click to Enlarge
Source: OptionsAnalytix

The Market Vectors Gold Miners ETF (GDX) kicked off 2015 with a bang, surging more than 20% in January. Rallying alongside prices were the hopes of so many gold bugs underwater in their beloved gold mining stocks.

Unfortunately, the foundation for the long-awaited gold recovery laid at the beginning of the year has all but crumbled. GDX is now down 2% on the year.

But all is not lost in the land of the yellow metal. The recent descent has brought GDX and its cohort of mining stocks down to a pivotal support level that may well spur a rebound in the coming weeks. In the past the bulls have fought tooth and nail to defend the $17 zone and I suspect they’ll win the day yet again.

Here are three oversold gold mining stocks primed for at least a short-term recovery:

3 Mining Stocks Poised for a Golden Recovery: Barrick Gold (ABX)

Click to Enlarge
Source: OptionsAnalytix

Of the three gold mining stocks we’ll highlight Barrick Gold (ABX), which holds one of the largest weightings within the GDX ETF. You’ll find it unsurprising, then, that the price chart of ABX stock closely resembles GDX.

Barrick Gold has traded in a sideways range for the entire year with major resistance at $13.50 and support at $10.25. Its slide over the past two months has been relentless bringing the ailing gold miner back down to the lower end of its range.

It’s put up or shut up time for the bulls here. If they succeed like the past few support tests, ABX stock should be in for a nice rebound in the coming weeks. Even just rallying back to the 50-day moving average will result in a 14% gain from current levels.

Buy the ABX Aug $10 call options for 90 cents to capitalize on the ascent.

3 Mining Stocks Poised for a Golden Recovery: Newmont Mining (NEM)

NEM stock
Click to Enlarge
Source: OptionsAnalytix

Newmont Mining (NEM) is the healthiest mining stock of the bunch, and also is one of the largest holdings in the GDX ETF. It remains well off its lows and has maintained the bulk of its gains during the January surge.

It, too, has suffered amid the recent downturn in the gold space, but has been able to maintain its weekly uptrend. Take note of the series of higher pivot lows highlighted in the accompanying chart (green dotted lines).

Further buttressing the bullish view of NEM stock is the slowing momentum seen during its latest downturn. While the stock was forming a lower pivot low on its daily chart the RSI indicator carved out a higher swing low, suggesting sellers are running out of steam.

NEM stock was one of the best performing gold miners on Thursday, jumping a respectable 2.3%. If you think it continues to lead the pack, bullish trades are worth a shot.

Buy the NEM Aug $23 call options.

3 Mining Stocks Poised for a Golden Recovery: Silver Wheaton (SLW)

SLW stock
Click to Enlarge
Source: OptionsAnalytix

Silver Wheaton (SLW) rounds out our trio of gold mining plays.

Last year’s early November test of the $17 level resulted in an epic 42% rebound in the stock. While the recovery didn’t stick, it sure was profitable for tactical bulls who jumped aboard the counter-trend move.

SLW stock has once again returned to the scene of the crime falling to $17 just last week. The stock is oversold by virtually every measure, suggesting some type of bounce is overdue.

If nothing else, SLW stock is offering a low risk entry if you simply place your stop loss below the $16.50 support pivot from November. Should SLW breach the floor you’re out quick, losing little.

Buy the SLW Aug $17 calls for $1.

At the time of this writing Tyler Craig had no positions on any of the aforementioned securities.

More From InvestorPlace

Article printed from InvestorPlace Media, https://investorplace.com/2015/07/3-mining-stocks-poised-golden-recovery-abx-nem-slw/.

©2022 InvestorPlace Media, LLC