Aussie Gold Stocks on the Rise, Is Now the Time to Buy?

By

What’s happening to Aussie gold stocks today?

Aussie gold stocks are among the best performers on the ASX today. The gold price had a good session in US trading on Friday, and is up again in Asian trading today.

After initially selling off on Trump’s presidential victory, gold has moved back into favour in recent weeks. That’s thanks to Trump’s promise to build a wall along the Mexican border, his protectionist trade stance, and his comments suggesting the US dollar is overvalued.

As you can see in the chart below, after falling all the way to US$1,120 an ounce in mid-December, gold has rallied back to US$1,220 an ounce. That’s a positive. If it can hold above US$1,200 and move higher, it increases the odds that the worst might be over for gold.

Aussie Gold Stocks Gold Futures USD

Source: Optuma

A rising gold price is, of course, good for gold producers. And Aussie gold stocks are doing well today. Many of the top performers are gold stocks.

What now for Aussie gold stocks?

The good news is that most Aussie gold stocks are financially-sound companies. They have little to no debt and lots of cash, thanks to a strong Aussie dollar gold price, which translates into strong cash flows.
Moreover, these stocks are not expensive. For example, one of the best gold companies on the ASX, Northern Star Resources Ltd [ASX:NST], trades on a price-to-earnings ratio of just 12 times, below the market average of around 14.5 times.

If the gold price holds up or heads higher, NST and other gold stocks look good from here.

However, I never assess a stock’s fundamentals without looking at the chart too. Combining fundamental analysis with charting can yield powerful results.

Using NST as an example, I’ll show you what I mean. Have a look at the chart below:

Aussie Gold Stock Northern Star Resources

Source: BigCharts

NST has suffered a decent correction since peaking in July last year. In fact, in December, the share price was in big trouble. But it rebounded with the share price, and is now looking much healthier.
However, before becoming more bullish, I want to see the moving averages (the yellow and blue lines) cross over to the upside. That improves the odds that upward momentum is returning to the share price.
NST is nearly there. But not quite.

The upshot is that it’s looking good for Aussie gold stocks. But you want to see a little more positive price action to confirm the solid fundamentals before buying into the sector or adding to your position.
If you’d like to know more, click here.

Greg Canavan
Editor, Money Morning

Tags:

Greg Canavan is a Feature Editor at Money Morning and Head of Research at Port Phillip Publishing.

He likes to promote a seemingly weird investment philosophy based on the old adage that ‘ignorance is bliss’.

That is, investing in the Information Age means you have all the information you need at your fingertips. But how useful is this information? Much of it is noise and serves to confuse, rather than inform, investors.

And, through the process of confirmation bias, you tend to read what you already agree with. As a result, you often only think you know that you know what is going on. But, the fact is, you really don’t know. No one does. The world is far too complex to understand.

When you accept this, your newfound ignorance becomes a formidable investment weapon. That’s because you’re not a slave to your emotions and biases.

Greg puts this philosophy into action as the Editor of Crisis & Opportunity. As the name suggests, Greg sees opportunity in a crisis. To find the opportunities, he uses a process called the ‘Fusion Method’, which combines traditional valuation techniques with charting analysis.

Read correctly, a chart contains all the information you need. It contains no opinions or emotion. Combine that with traditional stock analysis and you have a robust stock-selection strategy.

With Greg’s help, you can implement a long-term wealth-building strategy into your financial planning, be better prepared for the financial challenges ahead, and stop making the basic, costly mistakes that most private investors do every time they buy a stock.

To find out more about Greg’s investing style and his financial worldview, take out a free subscription to Money Morning here.

And to discover more about Greg’s ‘ignorance is bliss’ investment strategy and the Fusion Method of investing, take out a 30-day trial to his value investing service Crisis & Opportunity here.

Official websites and financial e-letters Greg writes for:

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *

Money Morning Australia