It’s Halloween and there’s something spooky going on in precious metals: Gold and miners are being sold off going into the U.S. election. It’s scary in the short term. But I have three treats for you.
The main reason gold is slumping is because any more fiscal stimulus has been put off until AFTER the election. Less government spending boosts the U.S. dollar and since gold is priced in dollars, when the dollar goes up, gold tends to go down.
We’re riding this short-term correction in Gold & Silver Trader. We grabbed fistfuls of gains and I even added an inverse fund — Direxion Daily Gold Miners Index Bear 2X Shares (NYSE: DUST, Rated D-) — as a short-term trade to protect us against more downside. But what about AFTER the election? What then?
While I don’t have a crystal ball, it seems likely that Washington will return to its free-spending ways. That will send the dollar lower again, and gold higher. And that means we are fast coming to a buying opportunity in miners. And when it’s time to buy, you’ll want to buy strength.
Here are three of the STRONGEST gold miners according to my system:
New Gold Inc. (NYSE: NGD, Rated D)
This Canadian company has two mines, Rainy River and New Afton. It’s a turn-around story, and the real payoff — and profit potential — comes next year.
By that, I mean New Gold lost seven cents a share last year and is on track to lose five cents a share this year. But the consensus is the company will turn a profit of 17 cents a share next year.
The coming good news is already being priced into the stock. Indeed, New Gold is a position in Gold & Silver Trader, and we just banked 32.9% gains on HALF the position, while holding it for less than two months.
Since the March liquidity event — which sent gold miners swooning lower along with the rest of the market — New Gold has stepped higher along its 50-day moving average. It’s about to test this support again, and that will probably be a platform for its next big move. I’m glad my subscribers are onboard.
Coeur Mining, Inc. (NYSE: CDE, Rated D+)
Couer is known as a silver producer. It produces gold as well. It has operations in Mexico, British Columbia, Nevada, South Dakota and Alaska. This week it reported revenue jumped 15.1% year-over-year, blowing away estimates. Earnings beat estimates like a drum, too.
Full-year 2020 gold production is expected to be slightly higher at 100,000 to 110,000 ounces, while silver production outlook is unchanged at 6 million to 7 million ounces.
We owned Couer in another one of my publications, Supercycle Investor. And we banked gains of 21.8% in September. Since then, it has pulled back quite a bit …
The good news is that Couer is finding support at the 50% retracement of its big rally from May to July. This is an excellent place for a bounce. And I’ll be taking another look at Couer, and soon.
Eldorado Gold Corp. (NYSE: EGO, Rated C)
Eldorado is a pick I added to Gold & Silver Trader in October — just before gold and miners fell down the stairs. That’ll teach me, eh? But man, this is poised for a big recovery.
Eldorado has four producing mines located in Canada, Turkey and Greece, with several development projects in Romania and Brazil. For the year, it is guiding for production of 520,000-550,000 ounces at $850-$950 all-in-sustaining costs.
The company recently reported third-quarter results. The numbers were excellent. Production came in at 136,672 ounces of gold, a 35% increase year-over-year in that same quarter. The great news sent the stock higher. But then gold started correcting, and Eldorado got dragged down with everybody else.
You can see that Eldorado Gold’s recent pullback doesn’t amount to much compared to its bigger uptrend. So, this is a buying opportunity.
So, there are three treats for you on this Halloween. You should be making shopping lists in precious metals anyway. Take a closer look at these names and see if they work for you.
All the best,