Gold Mining Stocks

[orty53]

There is an active thread Gold Price - Where is it heading?, and an inactive thread "gold stocks", but I would like to discuss gold mining stocks. I know we discuss gold mining stocks a bit in the Gold Price thread but maybe they need their own thread.

At the moment I am holding MML and SLR. I bought both on the 8 March and currently am up 5% on MML and down 3.8% on SLR. I have NST on my watch list. I generally try and buy stocks which I feel are undervalued and which I think have sound fundamentals. Thus these three stocks meet my criteria. I try and buy on momentum. With these gold stocks though, I am looking to ride what might be either a relief rally (short lived???) or a turnaround. Time will tell. So I am speculating.

NCM is now producing gold at a price above gold's market value. So the price of will continue to fall until NCM announces a capital raising.

 

[notting]

Gold stocks did not collapse as much as they normally do against a 1% drop in the gold price and taper start.
May be time to go fishing.

 

[notting]

Gold was clobbered even harder last night and once again the US listed gold stocks reaction was relatively tame, when I saw what gold did I was expecting a blood bath.
Not so.
It's as if mothballing is priced in.

 

[mr. jeff]

I read an interesting article over the weekend about the taper being bullish for gold.
The theory was: The US is starting to taper due to the economy picking up.
If the economy is picking up there is growth. If the growth gets a bit too strong it may give rise to inflation.
With all that extra money sloshing around from the Bernanke this could make (unpredictable?) inflation the next issue which would be very bullish for gold. Support for the argument was given with some charts of money volume and the gold price/volume. It appears that gold volume has massively increased over the past 6-12 months.
Whether it has been smart money buying the gold - who knows.

If this theory proves accurate then now, when all the great producers are about 1/5th their previous prices would be the time to get in.
So if you have goldies that are worth following, please post them so that we can have a bit of a look and look for the signs of a return of buying by some of the insto's.

It will be seen by volume and rallies back to previous support levels with little wavering.

NST
RED
BDR
PVM
?
?

 

[So_Cynical]

I read an interesting article over the weekend about the taper being bullish for gold.
The theory was: The US is starting to taper due to the economy picking up.
If the economy is picking up there is growth. If the growth gets a bit too strong it may give rise to inflation.
With all that extra money sloshing around from the Bernanke this could make (unpredictable?) inflation the next issue which would be very bullish for gold.

They (Euro & US) have to inflate away the debt, its inevitable and there is no way to get around it.

The bottom for the Aussie miners must be close now, TRY at near GFC lows with Gold at a 70% higher price than the GFC POG low.

 

[my irish roots]

Look at NMI. It has been flying...

There is an active thread Gold Price - Where is it heading?, and an inactive thread "gold stocks", but I would like to discuss gold mining stocks. I know we discuss gold mining stocks a bit in the Gold Price thread but maybe they need their own thread.

At the moment I am holding MML and SLR. I bought both on the 8 March and currently am up 5% on MML and down 3.8% on SLR. I have NST on my watch list. I generally try and buy stocks which I feel are undervalued and which I think have sound fundamentals. Thus these three stocks meet my criteria. I try and buy on momentum. With these gold stocks though, I am looking to ride what might be either a relief rally (short lived???) or a turnaround. Time will tell. So I am speculating.

 

[my irish roots]

Take a look at Northern Mining NMI, the chaps behind the company seem like serious players. Share price have been flying...

RRL is the most likely candidate to give a decent bounce, it is favoured by the larger money and is sitting above a key level at 4.25 - based on the pattern I am seeing of large gold stock buying late last week it may be that there is a change taking place in the sector. Could easily be wrong. Perhaps it may be prompted by the movement of uncertain money in Europe which may get more headlines over the coming week.

Other stocks of gold - BDR has fantastic grades and costs. NST has low reserves but is a successful driller, AQG has large resources and has been hammered, SLR as mentioned -> more to come.

 

[Porper]

Take a look at Northern Mining NMI, the chaps behind the company seem like serious players. Share price have been flying...

Why do you say the "Chaps" are serious players ???????????? How do you come to this conclusion? Please explain or is it just a ramp?

Down 16.0% (sixteen) percent today.

 

[Porper]

Is Gold ready to make a serious move? Well, some stocks could be leading the way...SBM & EVN have broken out already. SBM has a nice "Rounding Bottom" in place on the weekly chart. Similar to a cup and handle but shows at lows. EVN has broken through resistance and has retested already...positive. ASL should break out of as pennant today...I think this is also in Tech A's thread. The XGD (Gold sub sector) has been making a basing pattern since mid 2013. It has yet to break out though. if it does...watch out!

If you want higher risk then DCN is worth a look. I like TRY too...that is definitely high risk/high reward though.

I am not a fundamentalist but there is a strong case for higher gold prices.

First of all the Chinese, India & Russia have been buying more gold than is being produced. Simple economics - supply & demand.

Gold is a natural hedge should world economies sink despite many analysts suggesting the correlation between the two has changed in modern times...doubt it.

 

[sinner]

Is Gold ready to make a serious move? Well, some stocks could be leading the way...SBM & EVN have broken out already. SBM has a nice "Rounding Bottom" in place on the weekly chart. Similar to a cup and handle but shows at lows. EVN has broken through resistance and has retested already...positive. ASL should break out of as pennant today...I think this is also in Tech A's thread. The XGD (Gold sub sector) has been making a basing pattern since mid 2013. It has yet to break out though. if it does...watch out!

If you want higher risk then DCN is worth a look. I like TRY too...that is definitely high risk/high reward though.

I am not a fundamentalist but there is a strong case for higher gold prices.

First of all the Chinese, India & Russia have been buying more gold than is being produced. Simple economics - supply & demand.

Gold is a natural hedge should world economies sink despite many analysts suggesting the correlation between the two has changed in modern times...doubt it.

Hi Porper,

Good charts, I especially like the rising volume MA in the third one. A few names you mention I recall from the good old days of buying cashed up miners after the GFC like TRY (which I did like but I stopped following after the IAU deal) and SBM (which was always a bit of a dog at the time).

The name I wish everyone had told me back then was MML, as AFAIK they were the lowest cost producer in AU, not sure if it still holds true.

These days I treat gold mining stocks essentially like utilities stocks, inspired by the work of John Hussman who holds both gold miners and utilities in his total return fund (benchmark is US Gov Bonds) and treats them similarly.

Here's some backtesting from him in one of his invaluable Weekly Market Comments (and also highlights his ensemble techniques which are heavily inspired by computer science research):
http://www.hussmanfunds.com/html/gold.htm

If you want to define a useful "trend" in gold stocks, you just don't get much useful information by looking at gold stock prices themselves. Since 1975, when the XAU has been above its level of 6 months earlier, it has continued to advance at an annual rate of 0.65%. When the XAU has been below its level of 6 months earlier, it has advanced at an annual rate of 0.73%. That's as close as you can get to an indicator being perfectly uninformative.

Gold bullion prices have somewhat better information. When the price of gold is higher than 6 months earlier, the XAU has followed by advancing at a 6.87% annual rate, on average. When the price of gold is lower than 6 months earlier, the XAU has declined at a -4.31% annual rate. While that seems like a big performance difference, it is statistically insignificant because gold stock prices are wildly volatile. These average performances are just overwhelmed by that volatility to be of any practical use.

Ditto for inflation trends. When the rate of inflation has been higher than 6 months earlier, the XAU has advanced at an 8.18% annualized rate, compared to a -5.02% annualized loss when the rate of inflation has been lower than 6 months earlier. As a "tendency" this information is useful, but as a guide to investing, the volatility still overwhelms this predictable component of price movements.

The trend of long term interest rates is actually more important than the trend of inflation. When the 30 year Treasury yield has been below its level of 6 months earlier, the XAU has advanced at an annualized rate of 19.17%, compared to an annualized loss of -17.51% when Treasury yields have been rising. Since economic weakness tends to produce falling real interest rates, we also get a strong difference in performance based on whether the economy is expanding or contracting. When the NAPM Purchasing Managers Index has been below 50, indicating a contracting economy, the XAU has surged at an annualized rate of 23.48%, compared to an annualized loss of -9.66% when the PMI has been above 50. On the valuation front, when the ratio of gold prices ($/ounce) to the XAU has been above 4.0, the XAU has advanced at an average annualized rate of 24.82%, compared to a -13.34% annualized loss when the Gold/XAU ratio has been below 4.0. That means that you generally want to buy gold stocks when they are lagging the price of the metal. And given the fact that trends in the XAU itself are uninformative about future returns, it also means that you are better off buying gold stocks on dips than to buy upside "breakouts".

Not surprisingly, the combination of all of these is rare but extremely powerful. In the rare instances when 1) The rate of inflation has been higher than 6 months earlier, 2) Treasury bond yields have been lower than 6 months earlier, 3) the NAPM Purchasing Managers Index has been below 50, and 4) the Gold/XAU ratio has been above 4.0, the XAU has soared at an astounding rate of 123.63% annualized. In contrast, when none of these have been true, the XAU has plunged at -53.21% annualized. That's a gaping difference.

CPI 6 month momentum: Up
30Y bond yields 6 month momentum: Up
NAPM PMI: 51.1 (August reading)
Gold:XAU ratio: 24.04 (lol wow)

Assuming the above conditions hold true for the future, we're still waiting on NAPM PMI to fall below 50 for the full signal. I think a 10-15% allocation in a total return portfolio on such a signal is appropriate (given the high volatility of gold equities relative to utilities stocks and the bond market in general), otherwise, 5% or less.

Keep in mind, the above are for US markets, but my initial testing showed essentially same stuff here.

 

[Porper]

Hi Porper,

These days I treat gold mining stocks essentially like utilities stocks, inspired by the work of John Hussman who holds both gold miners and utilities in his total return fund (benchmark is US Gov Bonds) and treats them similarly.

Here's some backtesting from him in one of his invaluable Weekly Market Comments (and also highlights his ensemble techniques which are heavily inspired by computer science research):
http://www.hussmanfunds.com/html/gold.htm

Nice link thanks sinner, makes for interesting reading. Not sure I understand some of it mind you...ensemble techniques especially.

 

[sinner]

Nice link thanks sinner, makes for interesting reading. Not sure I understand some of it mind you...ensemble techniques especially.

Basically you can use computers to classify stuff! That is how your spam filter works. It has a bunch of training data (preclassified spam and not spam emails) and then uses one form of classifier or another (based on the training data) to classify each incoming email as spam or not spam.

Ensemble learning is one of a whole bunch of different machine learning techniques, you can learn more about it here if you're interested

https://en.wikipedia.org/wiki/Ensemble_learning

In this case, it's really just taking the concept of backtesting to the next level, where you also allow the computer to make inferences (classifications ) based on the relationships, patterns, trends etc that it might uncover.

 

[greggles]

Found this research on ASX-listed gold miners on another forum and thought some here might find it useful.

 

[Knobby22]

Trump wants a gold bug to run the Treasury! She doesn't believe in fiat currencies and wants them tied back to gold.

Trump Nominates Gold Advocate Judy Shelton for the Fed

Imagine if she got through the process, heaven for all you goldbugs!

 

[noirua]

MEGADO
The Company is proposing to list on the ASX in Q4, CY2020 via an Initial Public Offering (IPO).
Megado has a portfolio of high-quality gold exploration assets in Southern and Western Ethiopia covering 800km² of existing or applied for tenements.
https://megadogold.com/
-
Megado Gold Ltd: Unlocking the mystery of Ethiopia
https://www.boardroom.media/article...e-mystery-of-Ethiopia-April-14th-2020-1-20-19

 

[noirua]

 

[fergee]

Watched this yesterday, good content imo.
Have to say Kitco gets really good hosts, they let their guests speak and ask them really good questions. ?

 

[noirua]

 

[noirua]

 

[finicky]

I pretty much made my mind up on gold and gold stocks years ago but when I am looking for a bit of general guidance this guy is good, he's quite cautious in his commentary and never lets hope sway his view.

Gold & Gold Stocks Grinding Out a Bottom

"History shows us that there are some instances in which Gold grinds out a bottom.

We compared the performance of Gold following interim peaks that we deemed similar to the August 2020 peak. That includes the peaks in 2003, 2004, 2006 and early 2009.
The analogs argue Gold could grind out a bottom over the coming weeks and work its way higher in the first half of 2021.



The takeaway is that a sustained rebound will require more time, which does not mean we should abandon our constructive views on the sector.
The weight of the evidence (technical, fundamental, sentiment) argues that the correction in Gold and gold stocks is nearly complete.
My guess is that GDX and GDXJ will form a double bottom over the days ahead.
It’s much easier to chase momentum and buy when everyone is doing it. It’s more difficult to buy at the end of a correction and even during a bull market. But that’s where we are.
The present is an opportunity to buy quality at a much better price and value than several months ago."