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This morning, I am recommending a bullish trade on Barrick Gold Corporation (NYSE:GOLD), the gold, silver and copper miner.
My indicators are giving buy signals this week, unchanged from last week’s bullish signals. And with the S&P 500 setting a new all-time closing high on Thursday, I am personally leaning towards the bullish camp again.
The Federal Open Market Committee (FOMC) did not cut the target range for the federal funds rate on Wednesday, but Fed Chairman Jerome Powell said in his subsequent press conference that the FOMC will “closely monitor” new information as it is available and “will act as appropriate to sustain the expansion.”
The market took this as a dovish sign that the FOMC will be willing to cut rates two or maybe even three times later this year. And that is showing up in the federal funds futures market.
That sent the S&P 500 soaring in intraday trading on Wednesday, and that bullishness carried over into Thursday’s session to push the index to new all-time highs.
Even with the market hitting new highs, traders are continuing to push gold and bond prices higher, which sets us up for a trade on GOLD.
Pushing $1,400 per Ounce
As you can see in the chart below, the price of gold is still above the key $1,300 per ounce level. I mentioned this in a trade recommendation earlier this week, when gold was down slightly. Now it’s pushing $1,400 per ounce.
The push higher in gold prices, along with the bullish action in bonds, tells me investors are seeking safe-haven investments. It also means investors have concerns about global growth.
For now, it’s important to remember our two main trading mantras: Don’t buck the Fed, and don’t buck the tape, or the market’s price action.
If we want to remain bullish while accounting for the concerns about growth, a trade on GOLD is the perfect play.
GOLD Shows no Signs of Stopping
If you look at the daily chart below, you can see that GOLD gapped higher yesterday. Since retesting support at the $11.50 level in late May, the stock has risen dramatically.
Ordinarily, such a sharp rise might be a cause for concern, but I believe GOLD is rising with the prices of gold and other precious metals. As long as investors are looking for safety in gold, this stock should benefit. That’s why I’m recommending a bullish call option on GOLD this morning.
Buy to open the Barrick Gold Corporation (GOLD) Sept. 20th $16 Calls (GOLD190920C00016000) at $0.75 or lower.
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InvestorPlace advisor Ken Trester brings you Power Options Weekly, which delivers 5 new options trades and his latest trading advice to you each Friday. Trester has been trading options since the first exchanges opened in 1973 with a winning streak that goes back to 1984 with money-doubling average annual profits since 1990.