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danielosborne
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I am an investment professional currently working for the amazing Wall Street Bad Boys.
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  • Commodity Review: Is It Not Too Late To Get In On The Gold Rally? 0 comments
    Jun 4, 2012 10:57 AM | about stocks: GDX, GDXJ, UGL, GLL

    Gold mining stocks were surging on Friday as gold sparkled in the wake of yet another dismal jobs report causing rampant speculation of another round of quantitative easing. The following gold mining stocks were among the best performing stocks for the sector and produced some extraordinary gains:

    • Great Basin Gold (GBG) 16.50%
    • Kimber Resources (KBX) 14.93%
    • International Tower Hill Mines (THM) 12.35%
    • Exeter Resource (XRA) 12.09%
    • Alexco Resource (AXU) 11.09%
    • Royal Gold (RGLD) 10.51%
    • Mag Silver (MVG) 10.39%
    • Randgold Resources (GOLD) 9.97%
    • Keegan Resources (KGN) 9.76%
    • Brigus Gold (BRD) 9.63%
    • Golden Star Resources (GSS) 9.43%
    • IAMGOLD Corporation (IAG) 9.18%
    • Minco Gold Corporation (MGH) 9.13%
    • Goldcorp (GG) 8.75%
    • Coeur d'Alene Mines Corporation (CDE) 8.58%
    • New Gold (NGD) 8.22%
    • Endeavour Silver (EXK) 8.18%

    Its worth noting that Eric Sprott, the CEO of Sprott Asset Management, was recently quoted as saying a surge in gold is overdue given the unsustainable leverage among financial institutions along with the severe bank run that Spain is now facing. Moreover, Sprott added that Friday's dismal job numbers has finally convinced those "fooled by good weather" earlier in the year that the US economy is simply not recovering but he is very optimistic about gold stocks.

    It's also worth noting that RBC Capital Markets believes that all of the "catalysts" are still in place to sustain a gold rally, including:

    • Central bank buying.
    • Investor fears surrounding the European debt crisis.
    • Expectations of a QE3 stimulus package in the USA.

    So how should you trade or invest in a gold rally? Besides individual gold mining stocks like those mentioned earlier, traders and investors alike should consider the Market Vectors ETF Trust (GDX), which follows the NYSE Arca Gold Miners Index (GDM) containing small, medium and large cap gold mining stocks or the Market Vectors Junior Gold Miners ETF (GDXJ) which follows the Market Vectors Junior Gold Miners Index consisting of small and mid-cap gold mining stocks.

    On Friday, the Market Vectors ETF Trust (GDX) rose 6.58% to $46.66 (GDX has a 52 week trading range of $39.08 to $66.97 a share) is down 9.3% since the start of the year, down 17.4% over the past year and up 16.5% over the past five years while the Market Vectors Junior Gold Miners ETF (GDXJ) rose 6.83% to $20.64 (GDXJ has a 52 week trading range of $17.38 to $39.49 a share) plus the ETF is down 16.4% since the start of the year, down 42.8% over the past year and down 18.8% since late 2009.

    Likewise, there are other ways to gain exposure to gold without investing in physical gold or gold mining stocks. Specifically, the ProShares Ultra Gold ETF (UGL) seeks daily investment results that correspond to twice (200%) the daily performance of gold. On Friday, the ProShares Ultra Gold ETF (UGL) rose 7.86% to $82.63 (UGL has a 52 week trading range of $73.50 to $122.13 a share) plus the ETF is up 4.58% since the start of the year, up 1.4% over the past year and up 247.5% since late 2008.

    On the other hand and should the economy turn a corner or the crisis in Europe finally resolve itself (neither appear to be happening any time soon) and gold starts to head the other direction, the ProShares UltraShort Gold ETF (GLL) seeks a daily return that corresponds to twice (200%) the inverse (opposite) of the daily performance of gold bullion. Hence and on Friday, the ProShares UltraShort Gold ETF (GLL) fell 7.5% to $17.39 (GLL has a 52 week trading range of $14.30 to $24.52) plus the ETF down 12.2% since the start of the year, down 24.1% over the past year and down 71.9% since late 2008.

    Nevertheless, it looks like a gold rally is here to stay but there will no doubt be a few peaks and valleys for traders to make money on. Hence, be sure to keep an eye on both gold ETFs and gold mining stocks with NextCandle.com. In fact, you might want to keep an eye on your favorite gold ETFs and gold mining stocks by using NextCandle.com's My Portfolio page.

    NOTE: THIS PIECE WAS JUST POSTED ON THE NEXTCANDLE.COM BLOG.

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