Gold Stocks Look Good - Our Top Picks


Assuming that prices for gold continue to improve in the short term we could see gold stocks really take off. However, this can also be a tricky industry for stock buyers. Fundamentals are typically poor and volatility can be very high. Also, many gold stocks are located outside the U.S. which means that even though you can trade them on U.S. exchanges you are exposing yourself to some currency risk. However, in spite of the risks we think there may be some interesting opportunities in this industry over the short term and the next four picks are our technical favorites.

Aurizon Mines ( AZK ):
Located in Canada, AZK is breaking above short term resistance levels. The stock is volatile but sales growth is high and with gross margins over 50% there seems to be some nice potential.

Randgold ( GOLD ):
A favorite among gold stock traders ( GOLD ) is sitting at long term support of $85. We would forecast prices at $90 in the short term and could see June's highs on a break of the $90 resistance level. Sales and profit growth this year has also been strong.

Gold Fields ( GFI )
This stock has been struggling at resistance of $14 a share since first quarter of this year. Buying a breakout woudl be the play to profit here. The firm took a big hit to profits this year but would be expected to perform very well on a rise in gold prices.

Royal Gold ( RGLD ):
This is the only U.S. based firm in the list today. The stock is sitting at resistance of $47 but buying the breakout targets the bottom of June's gap at $50 in the short term. If the gap is filled we could easy see prices in the $54 range by 4th quarter of this year.

Gold stocks are volatile and tend to look poor from a fundamental perspective when compared to other industries. For these reasons, risk control is very important. We recommend keeping your position sizes small and staying diversified if you are going to add gold stocks to your portfolio.

STRATEGY Buying gold in a brokerage account

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Stocks

Referenced Stocks: AZK , GFI , GOLD , RGLD

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