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 (
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.
A favorite among gold stock traders (
) 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 (
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 (
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
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.
Buying gold in a brokerage account
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