how to buy gold stocks

Why Now Could Be The Best Time To Search For Gold Stocks To Buy

Knowing what world events and economic data to watch for when investing in gold stocks is one of the keys to investing. Gold has always been known as a safe haven when the markets pull back or during global crises. Right now, we have multiple world events and economic data that are showing that the markets may pull back at any time.

So we need to start looking into certain gold stocks to take advantage of this possible move. I’m going to go over these events and how they can affect gold which could push gold stocks up.  We are going to talk about gold being near decade highs, then about the inverted yield curve and then about the Coronavirus that is shaking up China’s economy.

Gold Stocks Higher As Prices Near 10-Year Highs

Let’s start off keeping it easy, with Gold near decade-highs, we are seeing better earnings numbers coming out of the mining sector. Why is this? That is because gold is at near-decade highs. The gold they are pulling out of the ground is worth more money and the gold they are holding is only going up in price.

Because of this, we saw some earnings last quarter where gold companies were moving their guidance forward. We were also seeing mines that were losing money in the past, generating revenue one again.  This may only continue if the price of gold keeps this trend.  Just look at the major gold ETFs and you can clearly see the rise in gold stocks over the last year. These include SPDR Gold ETF (GLD), VanEck Gold Mingers (GDX), VanEck Junior Gold Miners (GDXJ), and even leading gold stocks like Barrick Gold (GOLD)

gold futures

Gold Stocks & The Yield Curve

Next, let’s talk about the Inverted yield curve: What is an Inverted yield curve? It’s when long term debt instruments have lower yields than short-term debt instruments. For the second time, the 10-year bond has dropped below the 3-month bond. It happened in late 2019 and then again on 01-28-2020.

So, when the 10-year bond drops below the 3-month bond it is showing that the 3-month bond is worth more than holding the 10-year bond. This is one of the early signs of a recession.

Read More

Most of the time after this event the markets go into a recession within the next 18 months. This why some people are calling this the black swan market. The third and final topic that is affecting gold now is the Coronavirus.

yield curve gold

Gold Stocks & The Coronavirus

With China as the largest growing economy on lockdown due to the Coronavirus, how will this affect gold stocks?  Like we talked about above that gold is a safe haven when there is a possible economic crisis. Since the Virus has shut down large portions of the county no one knows the amount of time it’s going to take to recover.

[Read More] Gold Stocks Surge Again After New Coronavirus Data Emerges

Some are talking about 6 months to have a vaccine.  Since the news has come out about this virus, we have seen Bitcoin rise and have also seen offshore investors move their money over to gold and the Australian dollar.  We don’t know how long this will last but if it’s anything like SARS we could see more troubles ahead for the Chinese economy.  This could keep increasing the demand for gold and keep the price heading up.

China GDP gold stocks

Closing Thoughts On Gold Stocks

When Investing in a sector I like to have at least 3 reasons. Above are 3 great reasons to start looking for some gold stocks to watch. First, we have gold prices near decade-highs which means we could start to see better numbers coming out at earnings for the sector.

Also, with the gold they are holding gaining in value, we could see higher valuations as well. Second, is the inverted yield curve, which has been seen 2 times now since 2019. Finally, number 3, we have China with the Coronavirus which we can only guess how long this will be affecting their economy. 

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like