Gold equities reversing a 10 month underperforming trend- BMO

From BMO Capital Markets, a buy signal for gold shares.

 

FIRST MESSAGE: Gold shares are reversing a 10 month downtrend against the S&P 500.

 

1-      STOCKS IN A CONSISTENT OUTPERFORMING TREND ARE: Franco-Nevada and Agnico-Eagle

2-      STOCKS REVERSING AN UNDERPERFORMING TREND ARE: Yamana, Randgold, Goldcorp, NewGold, Newmont and Iamgold ( see second last link below).

 

SECOND MESSAGE:  those looking for sources of funds to buy golds should consider energy. See figure 2 below.

Buy Golds, Sell S&P 500

Gold shares are reversing a 10-month downtrend against the S&P 500 – Figure 1.

·         Gold is now trending slightly higher in Aussie dollars, a currency whoseinterest rate advantage has slipped dramatically.  

·         Those looking for sources of funds to buy golds should consider energy –Figure 2.

 There are a few gold shares that are already consistent outperformers versus broad equity markets, like Goro Resources – Figure 3. 

·         We advise against bottom fishing amongst the laggards – Figure 4.

·         Price trends on gold shares are found at this link.

·         Relative strength trends of gold shares in the MSCI World index are found here.

·         Relative strength trends of gold shares in the S&P/TSX Composite Index are found here

Figure 1: Gold Miners vs S&P 500 ETF (Mind The Inflection Pt)

Figure 2: Gold vs Oil (Sell Oil or Energy Shares to Fund)

Figure 3: Goro Resource vs. ACWI (one of a few outperformers)

 Figure 4: Kinross vs. Gold Miners (Don't Dumpster Dive)

 

Source: BMO Capital Markets, Bloomberg, Thomson, Markit