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Gold Miners Better Than Gold

By City Index (Fiona Cincotta)CommoditiesMar 27, 2020 10:50AM ET
www.investing.com/analysis/gold-miners-better-than-gold-200519603
Gold Miners Better Than Gold
By City Index (Fiona Cincotta)   |  Mar 27, 2020 10:50AM ET
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Gold
-0.32%
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GOLD
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+4.85%
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The price of gold has soared over 8% so far this week versus the U.S. dollar. The precious metal has recovered the lost ground from earlier in the month when investors sold out of gold to cover losses elsewhere or to hold cash in a worst-case-scenario mentality.

The number of coronavirus cases are continuing to escalate and the data coming through is starting to reveal the initial impact of coronavirus on the economy. It ain’t pretty.

However, following a “whatever it takes” mentality from global central banks and $2 trillion in stimulus in the U.S., the selling of gold has eased off and buyers are returning to the traditional safe haven. Month to date Gold is trading +2% higher.

Gold & Oil Benefits

Rising gold prices are beneficial for those firms that mine and produce gold. Rock bottom oil prices are also an important part of the equation here, reducing input costs. Higher gold prices and lower fuel prices mean wider margins.

The benefit of gold stocks over physical gold right now it the additional benefit to margins from the lower oil prices. Both gold and gold stocks benefit from the rising price in gold, whereas only gold stocks offer the combined benefit of wider margins.

Workforce and the coronavirus outbreak is clearly an issue, these firms will need to take precautionary measures against the spread of coronavirus at their operations but for those that can continue production and development work, now is a good time to do so.

While the precious metal miners plunged on the back of falling gold prices last week, traders have been quick to jump in on the rebound.

Stocks to watch

Barrick Gold Corp (NYSE:GOLD) is already up 12% so far this month outperforming the broader UK market, which is down 15% so far this month. However, the stock is also up 25% from a six-month low struck last week.

Barrick is by no means alone. Polymetal International PLC (LON:POLYP) share price has soared by 33% after plunging to a six-month low on March 19.

Polymetal Int. Levels To Watch

Polymetal trades above its 50, 100 and 200 sma on the daily chart, a bullish chart which is a rarity in this market!

Immediate support can be seen at 1272p today’s low, prior to 1255p (50sma) and 1222p (100 sma).

Resistance is at 1330p (today’s high) prior to 1346p (yesterday’s high) and 1392p (high March 24).

Gold Miners Better Than Gold
 

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Gold Miners Better Than Gold

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Comments (14)
Sanjay Kumar
Sanjay Kumar Mar 30, 2020 7:19AM ET
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Please tell me crudeoil price ?
Exa Decima
Exa Decima Mar 28, 2020 7:45PM ET
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gold is going down to 1000's
Brent He
Brent He Mar 28, 2020 5:47PM ET
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I bought JNUG and NUGT yesterday all of the fear mongering over gold miners will reverse. Bunch of weak hands.
Max Dividend
MaxDividend Mar 28, 2020 3:33PM ET
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Gold mining stocks are awful. The best way to invest in gold is buying cast bars
Kristof Naessens
Kristof Naessens Mar 28, 2020 3:33PM ET
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Except when they are not. The last 10 years were awful, but the last 20 years the sector performed better than the indexes.
Gershom Zvi
Gershom Zvi Mar 28, 2020 3:33PM ET
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It is not so easy to sell cast bars
Amr balbaa
Amr balbaa Mar 28, 2020 3:33PM ET
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Arvind Ganotra
Arvind Ganotra Mar 28, 2020 2:17PM ET
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miners are shutting their mines due to pandemic. Be careful about such articles.
Rodolfo Jara Muñoz
Rodolfo Jara Muñoz Mar 28, 2020 2:17PM ET
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yeah, except that's generate shortage that up the price plus the demand of gold now that the interest rate is almost 0.. so the companies start selling gold futures of mineral they havent mined yet.
Rana Saeed
Rana Saeed Mar 28, 2020 12:45PM ET
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selling
Ken Ham
Ken Ham Mar 28, 2020 10:14AM ET
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Then why is JNUG trading at $4.61?
cran Vivid
cran Vivid Mar 28, 2020 9:37AM ET
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All od a sudden I see lots of article about the miners last few days in number of investing website...reminds me the rush to gold late february before the big dump...time will tell
Alex Malmstrom
BrassTacks1 Mar 28, 2020 8:36AM ET
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Large specs are still well below 300'000, despite a minor uptick this week. I still think the end of April/ May will be the best time to enter new long positions.
Jan Buyle
Jan Buyle Mar 28, 2020 8:36AM ET
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I also think gold and the miners will go down before going up again.
Sandeep Manchanda
Sandeep Manchanda Mar 28, 2020 7:52AM ET
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They can still sell in futures and deliver later when lockdown subsides. No one else is capable to sell gold in future other than gold miners.
Rodolfo Jara Muñoz
Rodolfo Jara Muñoz Mar 28, 2020 7:52AM ET
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yeah...im impressed that people that invest in futures don´t know the companies can create future contracts of gold that is still underground,  if the future end is far in the future enough they can sell the contract without the presence of the mineral.... it´s risky if this situation continue for years, but if a contract from 2 or 5 years ends and they haven´t restarted production... then the price of gold is the least of your troubles.
 
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