Gold Charts R Us: A Golden Trio

02/25/2020 5:00 am EST

Focus: COMMODITIES

Omar Ayales

Editor, Gold Charts R Us

Gold recently rose to a new high near $1700 showing impressive strength. It’s at a clear new high in euro terms too. For the first time this year, gold shares are rising together with the metal, notes Omar Ayales, editor of Gold Charts R Us.

Most impressively, gold is shining even as the dollar flexes its muscles. Their relationship is ongoing and both could remain strong, at least as long as concerns over the spreading virus remain a driver. In addition, silver is showing momentum shifting to the upside.

We recently began picking up some gold shares during weakness. Here's a look at the three current buys in our portfolio.

Hecla Mining (HL) has become a great recovery story that’s gaining even more steam. HL’s recent investment upgrade and commitment to pay off its debt is positioning HL to benefit greatly from gold’s secular rise.

The stock is showing strong support at its 15-week moving average near $2.90. Yesterday’s bounce up confirms support and shows strength. HL could rise further, to its next intermediate resistance, the January highs near $3.50. A break above this level reconfirms strength, while failing to do so could expose weakness.

Another one of our positions, Agnico Eagle Mines (AEM) dropped nearly 20% recently even though the company posted a strong quarter, with record gold production, keeping production guidelines pretty much the same.

The company is also hoarding lots of cash. It ended the year with over 300 million in cash (up about 20% from a year earlier). It is looking to pay down debt while staying liquid. Agnico Eagle recently acquired an interest in Rupert Resources Ltd. which could be pushing AEM lower, temporarily.

However, Agnico Eagle Mines has lots going for it as a leader in an industry that’s in a secular bull market. We recommend buying additional shares at prices below $50.

My last long position is Silvercorp Metals (SVM). This is a great low cost silver company operating with great profit margins. The stock continues to show support above its 200-day moving average, now near $3.90. However, I have my stop a bit lower and will allow some leeway until a bottom is clearly identified.

I was building up my position before the recent collapse but will wait for further price action to confirm support before adding more at the lower levels. Silvercorp Metals is poised to perform well during gold and silver’s secular bull market.

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