A Golden Opportunity For Gold Stocks Amid Consolidation?
As they say, what goes up must come down. Yet when it comes to gold stocks and gold prices, the “must come down” part of that statement hasn’t been dramatic during consolidation periods. In fact, while broader markets point toward higher levels, gold has only pulled back slightly.
On Monday, gold prices came even closer to breaking above that $1,600 mark. This has acted as a relatively consistent resistance level for a while now. On February 3, prices broke above $1,598 for the first time in early January. Even with this being the case, there’ve been many opportunities along the way to take advantage of dips in gold prices. Could this be yet another example of that?
Gold Stocks Holding 2020 Gains
With such a scenario it’s still important to look at technical levels. That’s especially true considering many of the top gold stocks have already reported preliminary production results. What this suggests is that the intermediate “catalyst” may have more to do with the price of gold apart from anything else right now.
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Barrick Gold (GOLD – Stock Report), for example, saw shares pull back at the start of the week. Though GOLD stock price dipped compared to previous 2020 highs, it still maintains a level well-above its 2020 lows. Things like the increasing coronavirus epidemic mixed with the Presidential Impeachment in the US have helped keep safe-haven stocks in focus for the time being.
This week, the CDC confirmed 11 coronavirus cases in the US. However, without any new, major headlines, this seems to have subsided as a concern in the market. Regardless we still have to consider the longer-term ramifications of China basically shutting down its industry for a prolonged period.
Based on this, market leaders like Barrick have remained a key focus for investors. This is also in consideration of the fact that GOLD stock is one of the top gold stocks in major gold ETFs. VanEck Gold Miners ETF (GDX – ETF Report) for example, has more than 20% of its assets weighted in 2 gold stocks, one of these two is Barrick Gold.
Mining & Gold Stocks On The Rebound
However, just because the broader sector is consolidating, it doesn’t mean there aren’t other gold stocks on the rise. Freeport McMoRan (FCX – Stock Report) is one of these. Last week saw the mining stock tread water but ultimately finish in the red. Shares dipped to lows of $10.90 on Friday. At the start of February, FCX gold stock has jumped to highs of $11.50.
Recent disclosure statements show that Freeport has benefited from some insider buying activity. Last week, Director John Stephens picked up 45,000 shares of stock. The average price per share was right around $11.19 and valued the trade at just over $503,000. Earlier this year, Freeport saw buying by both Stephens and director, Gerald Ford. However, Stephens was the largest for 2020 so far.
Similarly, Cleveland-Cliffs (CLF – Stock Report) bounced back from last week’s lows of $6.88. Just after the lunch hour on Monday, CLF jumped to highs of $7.31. Furthermore, late last week, Cleveland-Cliffs disclosure statements show a slew of insider trading activity. Much of the excitement and anticipation has been due to the company’s pending merger with AK Steel (AKS – Stock Report). The deal was initially agreed to back in December with CLF being the acquiring company in the transaction.