#Gold Stocks: Focus on Leadership

Focus on Leadership Within the Gold Industry from Paradigm Capital 

Highlighting leadership names within the gold industry. Common characteristics include price above the 200-day moving average, relative uptrend versus the TSX Global Gold Index, and 50-day moving average > 200-day moving average. With Gold coming into converging resistance along the 2017 highs and 2011 downtrend, we continue to recommend sticking with leadership names.

 

 

Intermediate Producers:

-          Agnico-Eagle Mines Ltd.

-          Centerra Gold Corp.

-          IAMGold Corp.

-          Kirkland Lake Gold Ltd.

-          OceanaGold Corp.

 

Junior Producers:

-          Alio Gold Inc.

-          Wesdome Gold Mines Ltd.

 

Royalty Co's:

-          Franco-Nevada Corp.

-          Aurico Metals Inc.

 

Developers:

-          Sabina Gold & Silver Corp.

-          Victoria Gold Corp.

 

 

 

Agnico-Eagle Mines Ltd.:

 

 

 

 

Centerra Gold Inc.:

 

 

 

 

IAMGold Corp.:

 

 

 

 

Kirkland Lake Gold Ltd.:

 

 

 

 

OceanaGold Corp.:

 

 

 

 

Alio Gold Inc.:

 

 

 

 

Wesdome Gold Mines Ltd.:

 

 

 

 

Franco-Nevada Corp.:

 

 

 

 

AuRico Metals Inc.:

 

 

 

 

Sabina Gold & Silver Corp.:

 

 

 

 

Victoria Gold Corp.:

 

 

#Gold & #Silver #COT

Net Commitments of gold futures traders indicate that large speculators (hedge funds and money managers) increased slightly their long positions. Net commercial gold traders extended slightly their short exposure. Nothing special to read into these figures

(attachment 1).

 

The Gold Barometers reveal that gold stocks are not overbought and physical gold and silver is in neutral territory as it is already for weeks (attachment 2).

 

The KITCO Gold Survey shows that Wall Street is outright bullish for this week with nobody bearish. The graphic for Retail Investors (Main Street) has not been published due to technical problems (attachment 3).

 

Net Commitments of silver futures trades show large speculators added to their long positions and net commercial silver dealers increased their short positions. Yes, they have now expanded for three weeks but the outstanding positions are not at an extreme (attachment 4).

 

The gold hourly chart indicates gold had a good week as it closed on Friday in New York 4:00 p.m. at US$ 1'278 per ounce for a weekly gain of US$ 21 (attachment 5). Almost all the gain was due to a weak (relative to expectations) U. S. employment report last Friday (attachment 6).

 

The Arca Gold Bugs Index (HUI) (attachment 7) indicates that this index, which is composed mostly of larger gold stocks, lost 1.7% to 191.51 percent last week.

 

The 2-year HUI chart (attachment 8+9) shows that

gold stocks are still far away from a top in August 2016 when investors were extremely bullish and the index reached 286 points. HUI is now trading around 33% lower from that top. We remember that period very well because we were calling gold stocks at that time extremely overbought.

 

 

Rebalancing in $GDXJ $GDX brought big moves to all the stocks involved! Junior #Gold ETF (GDXJ) -

The share price of many gold companies declined between 25% to 30% - And this during a period gold prices were slightly up.

The VanEck Vectors Gold Miners ETF (GDXJ) tracks a market-cap-weighted index in global gold- and silver mining firms, focusing on small-capitalization companies.

 

GDXJ became so popular that holdings of some companies were bumping up against 20% ownership. Faced with these problems, GDXJ chose to dramatically alter the composition of the underlying index that GDXJ is supposed to track. In early April 2017, VanEck Vectors Junior Gold ETF announced to modify its rules to include larger companies on or around June 17, 2017.

 

Attachment 1 shows the potential reductions. One column states the estimated Index weight change and the next column the estimated new Index weight. Attachment 2 shows the additions to the Index.

 

The massive reshuffling meant that many of the

forecasted index flows represent 10+days of average

volume for some stocks, hence huge! Traders have been beaten the stocks coming out of the index with an ugly stick. One of Toronto-Dominion Bank (TD) Index specialist described the rebalance as "the single greatest wealth destruction event in index history".

 

Attachment 3 shows on average stock additions lost 3.3%, reductions -15.7% and GDXJ -16.1%. Attachment 4 shows how investors dumped the GDXJ ETF. The real picture, however, looks even worse. The last column of Table 9 shows the price changes from April 12 (date of the announcement of index changes to May 31st, 2017). As can be seen the share price of many gold companies declined between 25% to 30% (last column - Price Change). And this during a period gold prices were slightly up.