When Barron's ran "Gold Is Regaining Its Glow" over the weekend, they probably made the weekend over every concerned and disheartened gold bug in the world. After all, how can central banks print up a historically mind-numbing amount of currency around the globe and it not support a high price of gold? Throw in silver too while you are at it. What is surprising is that gold's one-day bounce is making up a rather large portion of the bounce that Barron's predicted. The good news is that may have just saved the gold mining stocks.
What Barron's was predicting was that gold had been unnecessarily sold off from almost $1,900 per ounce to where $1,200 was becoming a concern. By predicting a 20% rise to $1,550 per ounce, fundamental and technical investors alike are likely to think that the gold trade may have just been given a very hard floor under the metal. Some investors will even hinge on the notion that it is becoming safer and safer to reconsider legging back into the gold sector on any weakness.
When Barron's signaled that traders were getting as bullish on gold as they were back when gold was under $300 it pretty much solidified the move higher for Monday.
Barrick Gold Corporation (ABX) is up 7% at $17.70 against a 52-week range of $13.43 to $43.19. While this is up 33% from a recent low, it is still less than half its peak. This also has what we would consider to be an accidentally high yield now at 5% because its stock has been bruised so hard.
Newmont Mining Corporation (NEM) is up 5.7% at $30.32. This one is up even less than others from its lows and still barely half of its peak as the 52-week range is $26.47 to $57.93, Newmont has also found itself to be in the accidentally high dividend crowd at a 5% yield.
Silver Wheaton Corp. (SLW) was also given a huge bounce for its silver and newer gold efforts. Shares were up 6.5% at $22.83 against a year range of $17.75 to $41.30. Again, a big bounce has been missed for new investors, but it is barely half of its peak.
We are seeing renewed optimism in Royal Gold, Inc. (RGLD) as well. After a 6.8% gain to $48.80 in late-Monday trading, its 52-week range of $38.63 to $100.84 shows that it is also still down at just under half its peak. This matters because it is a royalty player rather than getting its own hands dirty in many questionable mining markets.
Gold investors, and silver investors alike, have to know that they are not likely facing a market which will only go uphill again. That would be rather silly to expect. If you doubt it, silver is called The Devil's Metal for a reason.
Gold is having its best single-day move higher in months with a sudden 4-week high and late-Monday trading has gold up around $1,335 per ounce. Silver is even back up around the $20.50 per ounce mark.