Commodities & Metals

Gold Bugs Have to Be Happy With This

Gold is making a great case for itself this year, bumping back up against $1,750 per ounce, and gold bugs have to be happy about that. While there has been a serious level of resistance on the chart at this level, more investors are growing optimistic.

Looking at a 10-year chart, and when there are wider periods, the gold chart turns into a “red magic marker” as traders fight it out. A brief look at the trading history would show that explosive moves have been witnessed in these times. The question is whether that next explosive move is higher or lower has yet to be determined.

With trillions of dollars in newly minted stimulus money by the Federal Reserve and trillions elsewhere from central banks, it is probably an easy bet to guess which direction the so-called gold bugs are expecting. As for the downside, if the economic recovery is going to continue and if better income and safety sources are abundant, then gold may lose some of its luster.

One issue that drove gold higher on Monday was that the strategists at JPMorgan gave a bullish view on gold ahead. Their views are supported by massive central bank activity to add liquidity and capital into the economy, U.S. dollar weakness, and hedging against risks around inflation and deflation.

SPDR Gold Shares (NYSEARCA: GLD) seeks to reflect the performance of the price of gold bullion. Many investors believe that this is a cost-effective investment vehicle for gold. The exchange-traded fund (ETF) was up about 0.5% at $164.93 on Monday, within its 52-week range of $130.55 to $165.73. It has $62.4 billion in net assets.

Newmont Corp. (NYSE: NEM) is now the largest gold miner by market cap. Just a week ago, Deutsche Bank reiterated its Buy rating while raising its target to $74 from $70, and Jim Cramer recently hosted a CEO interview on Mad Money, talking about how much higher gold prices will help its cash flow and what is available for a higher dividend payment ahead. Newmont stock was last seen up about 2.5% at $58.36, in a 52-week range of $33.00 to $69.13. The consensus price target is $73.17. It has a market cap of roughly $44.5 billion.

Barrick Gold Corp. (NYSE: GOLD) is still in a close second-place for the market cap race among gold miners after its big merger. Barrick saw two positive analyst calls in the last week. While Deutsche Bank reiterated its Buy rating and raised its target to $35 from $34, Raymond James reiterated its Outperform rating and a $32 price target. Shares of Barrick were last seen up almost 4% at $25.43. The stock has a 52-week range of $12.65 to $28.50 and a consensus price target of $29.84. Its market cap is nearly $43 billion.

Franco-Nevada Corp. (NYSE: FNV) is a gold stock to which more analysts are starting to come around. Some are pointing to its long-term growth trajectory, which is only bolstered by its portfolio of streaming and royalty agreements. Franco-Nevada stock was last seen up about 3% at $135.52, in a 52-week range of $77.18 to $152.70. It has a consensus price target of $81.27 and a market cap of $25 billion.

Agnico Eagle Mines Ltd. (NYSE: AEM) has properties across Canada, Mexico and Finland. Even though it is not the largest gold miner out of the group, with a market cap of about $14 billion, it still can run with the big dogs. Shares of Agnico Eagle Mines recently traded up about 3% at $61.14. The stock has a consensus price target of $69.97 and a 52-week range of $31.00 to $69.66.

Gold Fields Ltd. (NYSE: GFI) was up over 5% at $8.56 on Monday after JPMorgan raised its rating to Overweight from Neutral and assigned an $11.30 price target. The stock has a consensus price target of $9.51 and a 52-week range of $3.79 to $8.73. Its market cap is nearly $7 billion.

Royal Gold Inc. (NASDAQ: RGLD) is still handily off of its highs, and this company is effectively a financial player buying streams (royalties) in precious metals with countless gold and precious metals miners. It has interests in close to 200 properties in countries all around the globe. Shares of Royal Gold were last seen up about 2% at $117.81, with a 52-week range of $59.78 to $139.63. The consensus price target is $131.85. The company has a market cap of over $7 billion.

VanEck Vectors Gold Miners ETF (NYSEARCA: GDX) is primarily comprised of publicly traded companies in the mining for gold and silver, and it is representative of the NYSE’s Gold Miners Index. Some of its biggest holdings include Newmont, Barrick, Franco-Nevada and Wheaton. The Gold Miners ETF was up about 3% at $34.65 on Monday, in its 52-week range of $16.18 to $327.49. Net assets under management are $14.8 billion.