The below post is a copy of a publication on the 18th of October. Since making the post, gold stocks have performed well and we now look to trim the gains and rotate into oversold industrial & REIT names.
Vaneck Vectors Gold Miners is under Algo Engine buy conditions following the entry condition earlier this year at $30. It is a current holding in our ALL ASX ETF model portfolio.
GDX ETF has corrected from $45 to $38 over the past 8 weeks. We feel buying support will now begin to increase.
Individual names are also now appearing on the radar, such as Newcrest Mining Northern Star Resources, Evolution Mining, OceanaGold and Gold Road Resources.
Northern Star Resources is under Algo Engine buy conditions and is a current holding in our US S&P100 model portfolio.
Gold remains under pressure as US yields push higher during the current “risk on” phase in the market. We are also experiencing selling in the “yield sensitive” securities such as consumer staples, utilities, infrastructure and REITs.
We now forecast price support developing in NST near $8.00.
As the gold price finds buying support our basket of preferred names, Northern Star Resources, Evolution Mining, Newcrest Mining and Vaneck Vectors Gold Miners are among the best percentage performers today.
We continue to like Northern Star Resources as our main gold play.
Northern Star Resources is under Algo Engine buy conditions and is a current holding in our ASX 100 model portfolio.
We see buying support building near the $10 range.
Northern Star Resources is under Algo Engine buy conditions and a current holding in the ASX 100 model portfolio.
The stock has recently retraced from $14.00 back down to $11.50. We expect to see buying support increase for Northern Star and other gold produces.
Also, review EVN & GOR.
Long-term graph of the gold price.
Newcrest Mining will pay US$807m to Canadian listed Imperial Metals for the proposed acquisition of 70% of the Red Chris mine.
The opportunity provides for operational improvements and possible long-term exploration upside.
We continue to view Newcrest as expensive and prefer Evolution Mining, OceanaGold and Northern Star Resources as our gold exposure.
Gold has sold off in recent trading sessions, following the strength in the US dollar. The sell off has now created Algo Engine buy conditions in Evolution Mining, St Barbara, OceanaGold & Northern Star Resources, all of which are current holdings in the ASX 100 model.
Newcrest Mining is still in the early stages of forming a higher low and may take another few days before we see an Algo Engine buy signal appear.
Daily price volatility in Gold has reached a 7-month high as investors weigh the impact of equity market uncertainty to higher interest rates in the USA.
Since trading as low as $1160.00 in mid-August, the yellow metal rallied close to 10% to post an intraday high of $1243.00 on October 26th.
From a technical perspective, we consider the wider intraday trading ranges as an opportunity for investors to profit from the increased activity in the local mining shares.
Both EVN and NST are currently in our ASX Top 100 model portfolio.
We will update specific entry levels in those names as Gold finds traction above support at $1190.00
After reaching an intra-day high just under $1370.00 in mid-April, the price of Spot Gold has dropped over 12% and matched a 1-year low of $1210.00 last week.
The recent strength in the USD, weakness in the Yuan and uncertainty over global trade tariffs are some the reasons used to explain the slide in the yellow metal over the last 2 months.
What is clear is that the technical picture in Gold is deeply oversold and due for a material correction higher.
As illustrated in the chart below, the last 8 times that Gold fell more than $90.00 over a 3-month period, the rally that followed averaged close to $150.00, or just under 13%.
Despite the recent weakness in Spot Gold, local Gold miners have performed reasonable well and have expanded production both domestically and abroad.
Our ALGO engine is now showing buy signals for NCM, SBM, NST, OGC, SAR and EVN.
In addition, NST, EVN and NCM are included in our ASX Top 100 model portfolio.
We currently see the $1235.00 area in Spot Gold as an inflexion point which could drive the price higher and would be a net positive for these local Gold names.
Our ALGO engine triggered a buy signal on NST on May 24th at $6.16.
At the time, we referred to the company’s recent production forecast of 600,000 ounces of Gold for 2018 as a net positive.
However, a recent research note from UBS has upgraded their production to 690,000 ounces and set a 12-month target on the stock at $7.50.
Considering the recent weakness in Spot Gold, we expect NST to continue to trade higher as the Spot market improves. Northern Star