In a sign that gold’s rally is starting to break through, one analyst reckon gold miners are a better bet than behemoth tech plays — and come up with his own basket to prove it.
Speaking on CNBC’s Squawk Box program overnight, technical analyst with Wolfe Research John Roque said he believed a supportive environment made gold stocks better bets than the tech stocks in the FAANG index — being Facebook, Apple, Amazon, Netflix and Google.
“We like the fact that gold broke out of a six and a half year base, we like the fact that central banks keep on debasing currencies, and we think excessively low interest rates are a good environment for gold,” he said.
He said the BAANG stocks — made up of Barrick Gold, AngloGold, Agnico Eagle Mines, Franco-Nevada, and Gold Fields — would be a better bet than FAANG stocks as the latter have seemingly lost steam while gold continues to be one of the breakout stories of 2019.
That basket of gold stocks is up 42 percent since May 10 — with gold up 13 percent in that time.
Roque also said that there was no reason that the precious metal couldn’t rise further to go closer to its all-time market high of around $US1,900 ($A2,701) per ounce.
“What we find really interesting is that while even gold has been over-bought on a daily basis it’s not close on a weekly or monthly basis so we think there’s more for both [BAANG stocks and gold price],” he said.
He noted that gold was getting support from an environment where interest rate cuts were the order of the day.
“We think the trend is going to be for lower yields or for continued low yields,” Roque said.
The BAANG index’s performance relative to gold is an example of how well-chosen gold stocks can beat the underlying commodity, while the underlying commodity focuses investor attention on them.
Luckily for ASX investors, the market offers lots of opportunities to invest in producers and explorers alike.
For example, Great Southern Mining (ASX:GSN) is actively exploring for both gold and silver in WA and Queensland, and therefore has exposure to both metals at a time when the Australian price has largely followed the US’ lead.
It’s had a great July, with its price almost doubling from 3c to 5.7c in the month — although past gains do not increase the chance of future gains.
This content is produced by Star Investing in commercial partnership with Great Southern Mining. This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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