Gold Stocks Surging Higher

Feeling lucky? Gold miners are on a tear.

| More on:
The Motley Fool
You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

If you believe in the long-term prospects of gold, you’ve been provided with a fantastic play book in recent weeks as to how best to invest in this thesis.  Simply, small/mid-cap mining names.

After being absolutely decimated through the first half of the year, many gold mining stocks, and especially the small/mid-cap names, have had a significant July bounce.  In fact, the top 8 performing stocks in the Canadian market thus far in the back half of the year are gold mining stocks.  Shoppers Drug Mart checks in at number 9, and then the run of gold stocks continues.

Leading the charge is Centerra Gold (TSX:CG) and its 41.3% return.  Granted, the stock is still down 50% on the year, but those who bought in just a few weeks ago are likely giving themselves a nice pat on the back.

Part of this contingent of happy investors are none other than the company’s leadership group.  Key members of the executive and board were buying Centerra’s shares through June when the stock was down as much as 68% from the beginning of the year.  According to Capital IQ, this collection of insiders purchased more than 55,000 shares in June.

Other names that have put in big moves include B2Gold (TSX:BTO), Detour Gold (TSX:DGC), and NovaGold (TSX:NG) with respective climbs of 39.7%, 39.3%, and 31.6% each.  Like Centerra, all three had reasonable amounts of insider buying activity through the May/June period.

Also like Centerra, nothing company specific appears to have occurred to push these stocks so dramatically higher.  That leaves but one explanation.

It’s the commodity…

Since the end of June, gold, the physical commodity, has not only made a move higher, but also has experienced a shift in sentiment.  Gold finished June below $1,200/oz and currently sits close to $1,330/oz.  More importantly however, over this period, the market has shifted its thoughts as to when the U.S. Fed will become less accommodative with its monetary policy.

A month or two ago, the brake lights were going to be seen at some point this year.  Now, thanks to several Bernanke testimonials, participants aren’t so sure.  A continuation of easy monetary policy is good for gold.

The Foolish Bottom Line

We Fools aren’t in the business of predicting monetary policy or where the price of gold might be at the end of today, tomorrow or in 5 years from now.  What is clear however is that if gold has found a bottom and is setting the stage for a move higher, expected returns from stocks in this space will be significant.  And those who focus their attention on the small/mid-cap portion of this sector are likely to reap the largest rewards.

While the gold sector may be poised for a bounce, one resource that is potentially on the verge of a major move higher is uranium – the key ingredient for nuclear power.  Click here now to download our special FREE report “Fuel Your Portfolio With This Energetic Commodity”.  We think you’ll be surprised at how bright the future is for uranium, how far these 2 stocks have fallen, and how quickly they could rebound.  Click here now for the nuclear ride of your life!

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.

Follow us on Twitter and Facebook for the latest in Foolish investing.

Fool contributor Iain Butler has no position in any of the stocks mentioned at this time.  The Motley Fool does not own any stocks mentioned at this time.     

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

More on Investing

growing plant shoots on stacked coins
Dividend Stocks

2 Oversold TSX Dividend Stocks to Buy Now and Own for 25 Years

These top TSX dividend stocks look oversold and now offer attractive yields for TFSA and RRSP investors.

Read more »

money cash dividends
Investing

Passive-Income Power: How to Make $105/Week TAX FREE in a Bear Market

Investors may want to pursue a passive-income strategy in this bear market by snagging dividend stocks like Freehold Royalties Ltd.…

Read more »

Money growing in soil , Business success concept.
Energy Stocks

3 Growth Stocks up +30% in 2022

These three growth stocks are up over 30% in 2022 alone but have come down in the last few weeks…

Read more »

Oil pumps against sunset
Energy Stocks

2 Energy Stocks That Jumped Over 60% This Year

Consider investing in these two energy stocks amid the recent pullback after putting up stellar gains earlier this year.

Read more »

Profit dial turned up to maximum
Dividend Stocks

RRSP Investors: 2 Undervalued TSX Stocks to Buy Now for Total Returns

Top TSX dividend stocks are now on sale for RRSP investors seeking attractive total returns.

Read more »

TFSA and coins
Dividend Stocks

2 Beaten-Down Stocks to Buy for Your TFSA

Two beaten-down, but high-yield TSX stocks are profitable options for TFSA investors.

Read more »

Volatile market, stock volatility
Stocks for Beginners

3 Top TSX Stocks to Buy in Volatile Markets

Sitting on cash? Consider these three TSX stocks for the long term.

Read more »

Hand writing Time for Action concept with red marker on transparent wipe board.
Dividend Stocks

Inflation Soars to 7.7%: 1 Dividend Stock to Buy Now

Enbridge (TSX:ENB)(NYSE:ENB) stock looks like a magnificent dividend stock to help Canadians deal with inflation at 7.7%.

Read more »