Gold Reached A New Milestone But What Happens Now?
This is something investors haven’t seen in 9 years: a new gold all-time high price. Earlier on July 27th, the price of gold hit a brand new high never reached before. Clocking in at $1,941.90, this new price shattered the previous record from 2011. But now that “we’re here” what happens next? If you’re old enough to have been an investor in 2011, you’ll remember that gold reached its all-time high back then and that was basically it.
Gold prices didn’t “tread water” above $1,900 for any meaningful amount of time. Even on the day of its last all-time high, gold couldn’t manage to put in an all-time closing high. That came weeks previous (8/22/2011).
In fact, on September 6, 2011, gold briefly hit a high of $1,923.70 then almost immediately pulled back, which would then end up starting the avalanche of selling during the weeks to follow. If you open up your charting platform, you’ll see that from September 6, 2011, to September 26, 2011, the price of gold went from all-time highs to a low of $1,535. Gold prices traded between $1,600 and $1,750 until 2013 when the bigger slide took place.
Everyone is ecstatic about today’s historic milestone. But I’m sure there are many other investors out there who remember what happened last time. Now, this isn’t to say that history will repeat itself in the same way. It is important to not let emotion cloud your strategy, though. Regardless of this, the trend has remained strong for most of the session on Monday.
Gold All-Time High Sparks Momentum For Gold Stocks
If you’re looking beyond bullion, gold stocks are on fire. A number of them have reached new 52-week highs as well as fresh all-time highs. The VanEck Vectors Gold Miners ETF (GDX Free Report) hit a high of $44.46 during the early morning session on Monday. The ETF hasn’t traded this high since 2013.
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Some of its top holdings include Newmont Corporation (NEM Stock Report), Barrick Gold (GOLD Stock Report), and Franco-Nevada Corp. (FNV Stock Report). All three reached fresh 52-week highs with Franco-Nevada etching a new all-time high on its stock chart.
The junior miners counterpart, VanEck Vectors Junior Gold Miners ETF (GDXJ Free Report) hit a high of $63.31 on Monday morning. Similar to GDX, GDXJ hadn’t traded this high since 2013. Some of its top holdings include Gold Fields Ltd. (GFI Stock Report), Kinross Gold Corp. (KGC Stock Report), and Pan American Silver Corp. (PAAS Stock Report). All of these stocks also reached new 52 week levels on Monday.
There’s absolutely no doubt that the gold bug has bitten investors this year. Even with the massive sell-off in markets during the 1st quarter, gold and precious metals have done more than weather the storm. Mining stocks are testing levels not seen in years and in some cases, in history. The biggest question right now is can this continue higher still?
Gold Stocks To Watch Heading Into August
During times of gold rallies, the smaller gold stocks tend to perform better than the larger ones. Simply based on price alone, gold stocks under a certain threshold benefit from small moves in price. If NEM stock were to climb $1, it wouldn’t mean much but if KGC or GFI stock made the same move, it would mean a 7%-12.5% move in the share price.
Shares of AngloGold Ashanti (AU Stock Report) hit a new 52-week high on Monday. This seems like it’s becoming an old story to tell. But the simple fact that the gold all-time high price was reached, makes it relatively obvious as to why that could be.
At the end of June, the company was in the news after some updates came from Harmony Gold Mining (HMY Stock Report). The company said it intended to raise $200 million to part-finance the agreement between Harmony and AngloGold to acquire the latter’s South African assets.
AngloGold said on Monday it expects a jump in first-half headline earnings per share. This was helped by an increase in gold price, weaker local currencies, higher foreign exchange gains as well as gains from its Kibali joint venture.
[Read More] Where Do Gold Stocks Go From Here?
The gold miner said it expects earnings to be between 94 cents and 99 cents for the six months ended June 30. That would be compared to 29 cents a year earlier. AngloGold expects the first-half production to be 1.469 million ounces, compared with 1.554 million ounces a year earlier.
Similar to many of the other gold stocks mentioned, B2Gold (BTG Stock Report) made a new 52-week high on Monday. At $6.90, this also marked a new all-time high for the gold stock. Most recently, B2Gold announced a contribution of $2 million to assist the Namibian government’s COVID-19 relief program.
This represents one of the largest private-sector contributions to the government’s relief fund. All dollar figures are in United States dollars unless otherwise indicated. Earlier this month the company announced its gold production and gold revenue for the second quarter and first half of 2020:
- Consolidated gold production of 239,574 ounces, above budget by 3% (7,327 ounces) and a significant increase of 15% (30,684 ounces) over the second quarter of 2019 (excluding discontinued operations of El Limon and La Libertad)
- Total gold production of 241,593 ounces (including 2,019 ounces of attributable production from Calibre Mining Corp. (“Calibre”))
- Record quarterly consolidated gold revenue from the Company’s three operating mines of $442 million, a significant increase of 65% ($175 million) over the second quarter of 2019 (excluding discontinued operations)
- No lost time injury (“LTI”) incidents at the Company’s operating mines during the second quarter; the Otjikoto and Masbate Mines continued their remarkable safety performance extending the number of days without a LTI to 826 days (well over 2 years) for Otjikoto and 592 days (well over 1.5 years) for Masbate as at June 30, 2020
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