I’m not exactly sure what’s going on. That’s because I don’t read news headlines.
Let me back up. The journalists who write news articles and headlines don’t know what causes prices to change in the financial markets. Even investment experts rarely know without the benefit of hindsight (and even then!) what causes shifts in markets. So I ignore the news. I don’t really care WHY prices are moving, I just want to take advantage of opportunities.
What I’m seeing is that the price of gold isn’t moving much. Over the past 14 months, it has remained around $13.25, give or take $0.75. I do not believe that the price of gold is currently trending up or down. Having said that, the stock price of gold producers is trending upward.
Currently, among the TSX60, three of the top five stocks (based on momentum) are gold producers: IAMGOLD (IMG), Agnico Eagle (AEM) and Eldorado Gold (ELD). I don’t know whether the market is predicting a downturn by moving to the relative safety of gold (by proxy of the producers), whether margins on production of improved or whether it’s what all the cool investors are doing. I don’t really care why, I just see that there appears to be opportunity in investing in gold producers.
Full disclosure: I’m not buying. I’d rather see both the price of the commodity and the stock price of the producers moving up.