Are Gold Stocks Undervalued Right Now? 4 Gold Mining Stocks to Watch

by birtanpublished on October 2, 2020

given the strength that we've seen this
year uh
in the price of gold there has of course
been a corresponding amount of interest
and uplift in gold mining shares so i
thought in this video
let's take a look at four uh gold mining
shares out there see if they're any good
and see if there are opportunities uh
for us to try and profit
here's the price of gold it's a market
we cover uh regularly
on the channel we've seen that the
clearly the big move off the lows
uh the march low was down at 14.50
recently if we take this chart out
moving out to its best ever levels so uh
pushing through the old highs from
2011 but we've also seen clearly plenty
of gold mining stocks
get lifted as well as there's the price
of gold moves higher clearly companies
involved
in this business get lifted we did do a
gold mining video
uh a while ago we do have a couple of
gold miners shares let's take a look at
those
so we've got a few trades running on
gold as usual but we do have
poly metal the uk listed company that we
talked about last time around in there
also this etf that i'm going to talk
about a bit more this time around as
well
and some new shares to consider so um
i'm going to talk a bit more about these
companies then we'll come back
onto the chart look at things in more
detail and see where the opportunity is
hello i'm david jones from capital.com
and i thought we'd do an update on
some of the the more interesting gold
mining shares out there so as usual in
this video
i'll talk a bit about four different
shares
we'll jump onto the platform backwards
and forwards see what the opportunities
might be have a look at any existing
positions we've got
and see if there are new ones uh to do
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right let's talk about gold mining
stocks we've seen a lot of interest in
this sector
uh over recent months not surprisingly
given the moves we've seen in the price
of gold
so in august the price of gold hit its
highest
levels ever so all-time highs trading up
around
2075 announced that sort of level it's
backed off a bit since then
uh but it's still up about 25
year-to-date the gold price we've talked
to len from the past uh about what's
been driving this it's been a
combination of
us dollar weakness we've seen the dollar
get hit pretty hard
uh since march uh falling us dollar
lifts the price
of gold usually uh and of course still
economic uncertainty
we've been through various lockdowns
around the world
economies have come out of those uh in
recent months um but we're still
not quite sure what the global economy
is going to look like so gold has played
its part i think
as a safe haven asset here and the
rising gold price
makes other assets uh interesting which
is why i think we've seen
interest in plenty of gold miners shares
so let's start off talking about the
first one of these
so barrick gold um lots of press
coverage recently and i'll come to why
in a second
so it's listed on the new york stock
exchange the share price
is up year to date by about 60 percent
and it's business it's a global
gold and copper mining business so
clearly as the price of these underlying
assets
uh or commodities has risen uh this year
we've seen that the price of gold miners
such as barrick gold benefit as well but
one of the reasons or the main reason
he's been getting a lot of press
over the last couple of weeks is because
legendary investor
warren buffett um has taken a stake in
the company so
uh ended up buying i think about 21
million shares
uh in barrick gold which represents
about one percent
of the company so of course he did this
uh through his uh
investment business um berkshire
berkshire hathaway depending on which
side
of the atlantic uh you're on and this
makes um that company
the largest and the 11th largest
investor in barrick gold
and the reason this got a lot of press
is is over the years warren buffett
has been quite um dismissive and
outspoken
about the value of gold out to investors
of course just to make it clear he's not
actually buying gold
he's buying into a gold mining company
um but let's take a look at the
chart for barrett gold see if there's an
opportunity there
here's the chart of um barrett gold we
don't actually cover this yet on our
platform
i'm sure we'll be getting it added in
because it is proving to be a popular
stock so i thought i'd go over to a
third-party uh charting platform to take
a look at it
so you can see the barrick gold price um
clearly pretty much following what's
been going on with the price of gold
traded as high
as 56 dollars uh in 2011 that previous
all-time high for the price of gold but
for me it's probably um you know what's
gone on i think as with the price of
gold what's going on
this year that's of more interest we are
trading
ahead of the market open around 30 uh
a share let's just zoom in and have a
look at some of the levels to watch
so clearly some excitement uh with mr
buffett
uh buying in but as we've seen the price
of gold
stall somewhat uh in recent recent weeks
not too much really in terms of setting
new highs
or anything like that you know we've got
a clear trend in place off those lows in
march as we have with the price of gold
but clearly i think so much here is
gonna depend on the price of gold
breaking out once more you know looking
at the trend point of view if we did see
any weakness from from current prices
down to the sort of 26 area that's been
good support uh on the way up and i
think it's only if we start to lose
26 dollars a share does it start to look
as if um perhaps um the trend in barrack
is running
out of steam so a little bit dull over
the last month um as the price of gold
has slowed down
and we've seen it stuck in something of
the trading range um i think if we can
break if gold starts to break out
again and we can see perhaps some more
opportunities here so uh that trend
still up a little bit unexciting but
still looks to be
a by the dip for this one for me
one we covered last time around uh was
an exchange traded fund
van eck vector's goal miners fund so if
you're familiar with trading and
investing you know the ets exchange
traded funds
um look to track or mimic the
performance of various assets whether
it's an exchange-traded fund
on the s p an exchange traded fund
tracking oil
this is the whole purpose to try and
give you exposure
to that part of the market and what this
etf does
it aims to replicate um the price
movements the
the percentage changes and any dividend
income from the
new york stock exchange gold miners
index so it's a simple way
through etfs of gaining exposure to a
broad
cross-section of stocks within that same
sector
without having to pick individual stocks
so you're spreading your risk because
you're not putting it all in one company
so from that point of view you're
mitigating perhaps some of the downside
risk but of course you're also
missing out on buying that one stellar
performer that goes up tenfold
because of the rise in the gold price
and and all the coverage we've seen
around that
exchange traded funds such as this one
have seen uh plenty of inflows
from investors uh in recent months
plenty of investor interest
and not surprisingly uh if we have an
etf that's tracking
the gold miners index we've seen it rise
this year the van eck vectors
etf has risen by about 40 we did buy
this last time round so um
let's take a look on the charts and see
if there's an opportunity to add to that
position
so here's the existing position uh in
the van eck
vectors uh gold miners etf so bought
back 11th of august
um buying 43 at 39 they've moved ahead a
couple of dollars
so we're up slightly on that trade but
but not enough to justify
moving the stop let's take a look at the
chart so i think we'll see a similar
pattern
um in lots of these gold miners clearly
the strength since march when we saw the
price of gold really pick up
and then as uh momentum has faded over
uh the last month or so
um not too much exciting going on when
it comes to the chart
it has fallen out of the trend but for
me just because the trend line breaks
doesn't necessarily mean we're going to
see a reversal
straight away it can just mean that
trend is going to carry on
but it's something of a slower pace i
think we've got lots of good support
down here at 36. it was the previous
high
in may so breaks through comes back and
test it
so for me um any weakness sub 40
still looks like a buying opportunity
with stops the other side
of 36. so i'm quite happy to continue to
run
that etf position uh for now but we need
goal to start
clearly you know picking up some
momentum to make the gold miners etf
start to look interesting
again but happy to stick with that and
looking to see if we can regain 46 and
break out
and perhaps start targeting 50 next
so let's take a look at another new show
now kirkland lake
gold again listed on the new york stock
exchange in the us
and the performance so far the shares
are up about 20
year today it's been a pretty volatile
year actually but we'll see that on the
chart in a second
so not surprisingly it's a gold mining
share and it's a gold miner with
operations
in both canada and australia looking
back to
2019 it produced um 975
000 ounces of gold back then and it
stated its target this year
is to increase that by 50 if not more so
clearly you'd think a writer continued
rising gold price if we see that
is going to help the company it does
seem to be on track so far
for that production target that
increased production target in the
latest quarter it produced
something like 330 ounces of gold and
that was up 50
on the same period from last year let's
take a look at the chart and see if
there's a new opportunity
for us with this one
so here's kirkland lake gold you can see
it's been it's pretty volatile 12 months
uh
about a year ago september last year was
trading around 51
and then um sold off down to what 2022
in march of this year and has bounced
back and it's more than doubled off
those lows
i think there could be an opportunity
here let's zoom in on what's been going
on since march
so what's interesting here if i pick up
on on the uh the trend line
that maybe looks like a bit of a crazy
day march the 16th where it gapped lower
and pushed pushed back in
so i've picked up on the lows a couple
of days after that
what we've seen over the last few few
days has been almost a re-test of this
trend line so good support from the
trend line coming in at 48
also the previous low from the 11th of
august
around um just ahead of 47. so i'm
actually i'm quite tempted to be a buyer
here to add to my gold
exposure um i think for me when it comes
to a stop loss the closest i'd want a
stop loss
is probably the other side of um 47 but
what i'm going to do i'm going to go
back to these
mid july lows so they came in about 43
30. so what i'll do for a stop i'll go
with 42
for a stop here i'm going to buy in um
at the moment
i think the market's closed i'm
recording this just ahead of the market
open
so i'm going to say 42 for a stop loss
and i'll put an order in
to buy basically if the price gets
knocked back to where it was
um a couple of days ago so 51.50 if it
drops back to that i want to be a buyer
buy into this trend with a stop in at
42. let's set that up
so i'm ready to go i want to buy 34
shares clearly i'm trading contracts for
difference so i'm trading using leverage
here
i want to buy if the price drifts back
to 51.50 it closed at
52.87 yesterday so i'll put an order in
if you get a bit of a squeeze lower
and if that order gets filled put a stop
in at 42
and that's for our usual risk our usual
new risk i should say
of about 250 pounds that market is
closed but i can place the limit order
that will just sit there
and if it does trade down to 5150 i'll
be in
so the order's in um we'll see how that
one works out i think it's interesting
that it is still
uh in that trend we'll come back to it
perhaps a month's time
the final show we're going to look at
are we going to bring things a bit back
closer to home for me uh so poly metal
listed uh here in the uk on the london
stock exchange
it's a russian business with a market
cap uh of around
nine billion pounds which puts it in the
ftse 100 so that the largest uh uk
companies
uh listed on the or the largest
companies listed on the uk market it is
in fact a russian company
so it's about halfway down that ftse 100
index
it's not just involved in gold
exploration it's also involved in silver
as well although silver only accounts
for a smaller
portion of its revenues 85 of poly
metals revenues do come from gold
latest quarterly revenues were up um 30
compared to the same time last year
again of course as we're seeing the
price
of the asset increasing this is going to
boost should boost plenty of gold miners
uh quarterly and annual figures but
let's take a look at the chart
look at the existing trade and see if
there's anything new to do
so just as a reminder here's the poly
metal position so buying 46
at 19 pounds 31 because it's a uk uk
share
uh it's currently 19 pounds 84 so we've
made a bit little bit on that nothing
too drastic
so we're up about 24 pounds so again not
enough to justify moving the stop
this is where i bought in you can see on
the chart um towards the end of july
it has punched a little bit higher as
the price of gold
moved higher but with gold being flat
we're seeing fairly flat trading from
this one as well
but that trend is still chugging along
like the the trend for gold
off the march lows is still uh chugging
along trend line coming in
ahead of 18 pounds a share which should
be you know you think could be pretty
good support
it was near the previous highs from
april and may this year but as with a
lot
of these gold miners or gold exposed
stocks at the moment with gold being
somewhat
uh boring i think over the last month
we're seeing these consolidate but for
now for poly metal that trend still
appears to be up
so i'm happy to uh continue to sit with
a position and see if gold
sparks back into life again that's it
for our update on some gold miners we
looked at before and also some new ones
we'll see how things pan out pardon the
pun over the next month or so
i will come back and take another look
but for now from me davidjones
and capital.com good luck with your
trading
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