Barrick Gold, Goldcorp Making a Stand

This morning marks a small victory for those who own gold for its defensive characteristics.

Iain Butler

Chief Investment Advisor, Motley Fool Canada Fool since November 2012 Iain Butler is Lead Advisor for Stock Advisor Canada. He is also the Chief Investment Advisor for Motley Fool Canada. Before joining the Fool, Iain was a “buy-side” analyst and through this experience is well-versed in the idiosyncratic ways of the Canadian market. His investing interests are centred on scouring the market for interesting businesses that trade at reasonable prices and offer an appealing risk/reward relationship. Since joining the Fool in 2012, Iain dedicates each day to spreading Foolishness throughout this great country!

Published May 23, 2013 10:08 am EDT

It’s still early in this hiccup of a day for the markets but for those of us who own some exposure to gold, it’s nice to see it behaving as it’s supposed to.

Weak Chinese PMI data and Fed comments yesterday that indicated they may soon retract from their open market actions have sent a ripple through global markets. Japan’s Nikkei 225 index fell by more than 7% in Thursday trading, European markets are down more than 2% across the board, the U.S is off by close to 1%, WTI oil has declined by 2.1% and COMEX copper has taken a 3% hit, at the moment.

With much of the day still in front of us though, gold and gold stocks offer a rare glimpse of green in this sea of red. The commodity is sitting 1.6% above yesterday’s spot close and companies like Barrick Gold (TSX:ABX,NYSE:ABX), Goldcorp (TSX:G,NYSE:GG) and Yamana (TSX: YRI) are up 1.5%, 1.5%, and 1.7% respectively.

This is in stark contrast to the last time there was a surprisingly bad economic number out of China and the price of gold, and all of the stocks that are tied to it, fell dramatically. This occurred back in the middle of April.

The Foolish Bottom Line

The theory and practicality of gold remains, and always will remain, open to debate. If you own gold or gold related equities for the theoretical safety that they provide, feel free to claim this morning’s stock action as a small victory. I am!

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Fool contributor Iain Butler is short $32 July puts on Goldcorp, short $14 July puts on Yamana, and long Barrick Gold shares. The Motley Fool doesn’t own shares in any of the companies mentioned.