ALGO Buy Signal In Evolution Mining

Posted on | by Todd

Our ALGO engine triggered a buy signal on Evolution mining into yesterday’s ASX close at $3.13.

The “higher low” price pattern is referenced to the intra-day low posted at $3.07 on May 21st.

In general, the junior mining stocks have been performing well even as the price of spot gold has traded lower. We expect a turnaround in the spot price would give the mining stocks a lift.

EVN has now been added to our ASX Top 100 Model portfolio. We see good chart support at $3.00 and initial resistance near the $3.60 area.

Evolution Mining

Will US “Stagflation” Be Bullish For Gold?

Posted on | by Todd | Leave a Comment on Will US “Stagflation” Be Bullish For Gold?

One of the main policy points from Wednesday’s FOMC meeting was that the US Central bank will accept an overshoot in inflation even if overall GDP growth starts to slow……..more commonly known as Stagflation.

Stagflation is an economic condition which is characterized by higher inflation and lower GDP and employment growth, which is not bullish for equity markets and not bearish for Gold.

Over the last 6-months, Gold has been trading in a broad pennant formation bound by $1365 on the topside and supported at $1300 at the lower end of the range.

Due to recent USD strength, the yellow metal is currently trading near the bottom end of the range near $1315.

If US inflation rates continue to probe higher, we expect the USD/Gold correlation to soften. In an inflationary environment, Gold and the USD usually move higher simultaneously.

As illustrated in the charts below, the local gold mining stocks have been showing divergence with SBM, EVN and SAR near all-time highs, while NCM is trading at $21.55, almost $3.00 below its 52-week high.

Our base case is that Gold will rise over the medium-term, which should be supportive for the local mining names.

For more information on investment strategies within the Gold sector, call our office at 1-300-614-002.

Santa Barbara Mines

Saracens Mineral

Evolution

Newcrest Mining

Can Spot Gold Break Above $1370.00?

Posted on | by Todd | Leave a Comment on Can Spot Gold Break Above $1370.00?

Over the last 6-months, the price of Spot Gold has been capped just below the $1370.00 level three times.

With the current price around $1350, the question now is: will Gold be capped again, or will it break over $1370 and head higher?

Looking at Friday’s Commitment of Traders report offers an interesting perspective. The numbers show that the speculators are long and the commercial accounts are very short.

As a rule, since the commercial accounts actually hold the Gold, they are more likely to cover their short exposure quickly.

As such, we see a growing likelihood that Spot Gold will trade back over $1370 for the first time since July 2016, over the medium-term.

This extension of the recent rally will lift local mining names such as NCM, SBM, EVN and SAR.

Newcrest Mining

Santa Barbara

Evolution Mining

 

 

Will Gold Get A Lift From The FOMC?

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The Price of Spot Gold slipped to a 3-week low of $1309.00 as the inverse correlation to the USD strength continues to influence price flows.

By the NY close, the yellow metal had found buyers into the weekend to settle at $1314.00.

With the FOMC expected to raise the FED Funds target on March 22nd, market commentators have noted that the price of Gold has rallied  after the last 5 rates hikes in this cycle.

As illustrated in the chart below, Spot Gold traded at $1240 when the FOMC last raised rates on December 13th. By January 25th, Gold had rallied almost 10% to reach $1350.

Some of the local mining names we are following into the buy zone include NCM, EVN, SBM and SAR.

In addition, investors looking for a “pure play” on Spot Gold can buy the BetaShare Gold ETF with the symbol: QAU

Spot Gold

BetaShare Gold ETF: QAU

 

ALGO UPDATE: Stay Long NCM

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After posting a low of $1238.00 on December 12th, Spot Gold has moved higher and reached $1270.00 in NY Trade last night.

The response of Newcrest shares has been relatively muted, but we expect a pick up over the near-term.

Our ALGO engine triggered a buy signal for NCM on December 15th at $21.75.

We still prefer the long side of NCM, along with the smaller producers SBM, SAR and EVN, and have an upside target near the November 29th high of $24.25.

Newcrest Mining

 

 

Newcrewst Mining Has Been Added To The Model Portfolio

Posted on | by Todd | Leave a Comment on Newcrewst Mining Has Been Added To The Model Portfolio

Our ALGO engine triggered a buy signal on Newcrest Mining at $21.90 yesterday.

Clients and subscribers were notified via email that NCM has been added to our ASX Top 50 portfolio listed in the Premium section of the blog.

The recent slide in Spot Gold prices has impacted domestic Gold producers unevenly. Shares of the smaller firms like SBM, EVN and SAR have held their value and even firmed over recent sessions relative to NCM.

We believe that NCM’s recent sale of its 89.9% stake in Bonikro mine in Cote d’Ivoire has caused some short-term pressure to the share price value investors will support the share price in the $21.80 area.

The current momentum indicators are in oversold territory and the ALGO engine flagged the “higher low” formation based on the October lows near $20.90.

As the price of Spot Gold moves back into the $1300 area, we expect NCM shares to move back into the high $24.00 handle.

Newcrest

 

 

Buy The Dip In Gold

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Over the last two weeks, the price of Gold has made two attempts at breaking through the $1300.00 mark.

On both occasions, the yellow metal dropped back to find support just above the $1270.00 level.

This technical pattern is known as a “pennant” formation and is a continuation pattern. In this case, the break out points for range extension are $1308 and $1263.

Fundamentally, the case for buying Gold remains compelling. The surge in volatility across global stock markets combined with heightened geopolitical uncertainty supports the logic for owning Gold or Gold mining shares.

We expect the price of Gold to break through the $1300 level over the near-term. Our preferred Gold mining shares are NCM, EVN, SBM and SAR.

Investors looking to profit from a rally in Gold can either buy these shares outright, or buy their CFDs listed on our SAXO Go platform.

Spot Gold

Newcrest Mining

Santa Barbara Mining

Evolution Mining

 

 

 

 

 

 

 

Buy The Dip In Spot Gold

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Spot Gold dropped over $10.00 on Friday after a 200,000 ounce sell order hit the market into the London close.

These types of large block trades (on both the buy and sell side) have become more frequent over the last few months as investors assess the impact of interest rate policies, currency movements and geopolitical risks.

However, with reported Q3 central bank Gold purchases of over 100 tons, we expect the $1270.00 support level to hold before the yellow metal makes another run at the $1300.00 area.

Our preferred names in the Gold area are NCM, EVN and NST.

NCM is currently trading at 30X trailing earnings and EVN and NST are at around 18X earnings.

As such, the correlation between the between the Spot price and these share prices will remain very positive.

Spot Gold

 

Gold Trades Higher After Golden Week

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A few weeks ago, we posted a report outlining the correlation between the Chinese Golden week holiday and the price of spot Gold.

Over the last four years, the price of Gold has dropped into, and during, Golden Week and then traded higher once the Chinese markets came back online.

As the chart below illustrates, spot Gold posted a low of $1262.00 last Friday and has since lifted by over $30.00.

We continue to look for Gold to trade higher into the end of the year and re-test the the $1350.00 level.

As such, we like long positions in NCM, EVN and SAR. 

Spot Gold

 

Newcrest Mining

Evolution

Saracen

Newcrest Goes Ex-Dividend Today

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Shares of Newcrest are trading lower in early trade as the company went ex-dividend today.

Shareholders will be paid a 9.5 cent dividend, fully-franked, which we expect to increase over the next 6-month period.

The share price has found good buying support in the $22.00 area in recent sessions and we consider the $21.80 to $22.00 levels a reasonable buy zone.

In addition, we have noticed a “higher low” pattern in Evolution Mining (EVN). Our ALGO engine has not yet triggered a buy signal and we will update when that happens.

With a positive base case for spot gold moving higher, we would look for the domestic gold mining sector to improve into year end.

Newcrest Mining

Evolution Mining