Timmins Gold Corp (NYSE:TGD)
When looking across the market over the past few trading sessions, you'll find that very few stocks have seen nearly as much momentous growth as Timmins Gold Corp. It seems as though every day, we're seeing a push to go a bit higher.
Today, that movement is continuing with the stock trading at double digit gains in early afternoon. Now, the big question is, “Will gains continue?” Today, we'll talk about what causes movement in the stock, why we've seen such strong upward movement as of late, and what we can expect to see from TGD moving forward.
What Causes Movement In TGD
When it comes to any stock, there are going to be particular factors that tend to lead to growth or losses. To figure out what those factors are, one of the first places we want to look is at the company's product. In the case of Timmins Gold Corp, the company's flagship product, as its name would suggest is gold.
As a result, the company is heavily dependent on the price of the precious metal. When the value of gold edges upward, the profits that TGD sees from operations climb as it can sell its product for a higher cost. Adversely, when the price of gold falls, the company loses money as it can't demand the same, higher price.
So, when gold is up in value, we can expect to see gains in the stock. Adversely, declines in gold will generally lead to declines in the stock.
Why We've Seen Gains In The Stock Recently
As mentioned above, TGD has had a relatively strong upward run in the market as of late, with today's gains being in the double digits. So, what's causing the price of the stock to skyrocket? The answer is gold. Think about it, this year has been a tremendous year for the precious metal. As economic and market concerns spread around the world, we've seen increasing safe-haven demand leading to massive gains in the price of gold.
In fact, just over the past few trading sessions, we've seen economic updates that led to increased safe haven demand and gains in the price of gold. For example, late last week, US GDP data was released. Unfortunately, GDP growth proved to miss the mark in a big way. This has led many to start throwing the word recession around.
On top of that, the Bank of Japan disappointed with regard to stimulus and concerns in the UK and Europe reared their heads up once again. All of this is leading to increasing demand for gold as investors look for ways to protect the value of their assets. As a result, Timmins Gold Corp has been enjoying the benefits of higher gold prices leading to higher stock prices.
Will The Gains Continue?
This is the big question, and to be quite frank about it, no one knows the future. However, with global economic and market concerns, I do believe that there is a strong chance that TGD will continue climbing. Ultimately, the value of the stock is heavily dependent on the value of gold. As economies around the world continue to show troubling times, and for some reason the market continues to climb into even more dangerous territory, risks associated with investing grow larger.
With that said, I believe that investors will be increasingly using gold to balance their portfolios throughout at least the rest of the year. The increased demand will likely lead to gains in the price of gold, and ultimately, gains for TGD.