Golds, Resources and Investing in the "New Normal"

03/25/2020 5:00 am EST

Focus: STRATEGIES

Omar Ayales

Editor, Gold Charts R Us

The moves in the financial markets have been gut-wrenching. However, I’m an optimist and I do believe in the ascent of man. Humanity will prevail, asserts Omar Ayales, editor of Gold Charts R Us.

Gold is poised to outperform most asset classes moving forward. Lower rates and economic uncertainty due to perceived excessive stimulus will continue fueling gold’s underlying strength.

As the world supply chains shut down in reaction to the fears over a spreading virus, downside pressure on prices across the board will remain.

However,  the current situation is allowing for great opportunities. Price action in gold shares is showing stability and we're adding at the extreme low area in select miners.

Price action is suggesting Agnico-Eagle Mines (AEM) could start a renewed rise to the recent highs mid $60s. Buy some at market, ideally below $40.

In similar fashion, Kirkland Lake Gold (KL) also fell hard; but it also had a key reversal day, showing that momentum could be shifting to the upside. KL is in a great position moving forward, and it's a steal below $30.

NovaGold (NG) also showed a key reversal day when it fell below $5 and then quickly jumped back above $8. The move didn’t allow us to buy at the lower levels. I recommend buying some more at market, ideally below the $8 level.

Hecla Mining (HL) is moving more like a gold share than a silver mine. That’s probably because of its increased gold operations since a couple of years ago. The stock is bouncing up with strength on higher than average volume. It also showed a key reversal day earlier this week. Buy some at market, ideally below $2.

Silvercorp Metals (SVM) is also on fire. Since the intraday low on Monday to yesterday’s close, SVM rose nearly 100%. It’s showing lots of support and it’s nearly regaining the $3 handle. We have a full position at a higher level. However, if you’re looking for exposure, it’s a great buy below $3.

Virus or not, society continues to demand goods and services. That will not end. The global supply chain will have to restart. And once it does, it could catch on and quickly return to pre-virus levels.

I’m buying a bit of Shopify (SHOP), which allows you to get exposure to online shopping in the US. The company  could be destined to thrive in the new contact-averse "new normal". The company has had a great year. It beat estimates recently and it’s quickly becoming a relevant player in the online industry.

Technically, SHOP held at the May uptrend & support level showing impressive strength. The stock could be one of many tech companies that leads the stocks upward. I’m buying some SHOP at market, ideally below $350.

AT&T (T) is another one of those great companies that has lots of exposure to the post-virus-contact-averse era. It’s a leading telecom company with a solid base of users that will likely increase online or phone line interaction.

AT&T was among the least affected during the collapse. It’s also rebounding with strength, almost back at our original entry levels. Keep your positions.

Novartis (NVS) is another company that is poised to thrive in the post-virus-contact-averse new normal. As conscious over health care and preservation expands, so will the need for healthcare items from all sorts.

NVS, together with other big pharma companies and health care companies are poised to thrive. We have small exposure, but could increase if the narrative described picks up steam.

Exxon Mobil (XOM) is in the pits, but the company is solid, with stable and diverse global operations — and one of the most sophisticated management teams in the world.

Whenever the global economic machine is ready to start up, this company will be at the forefront of investors’ minds. Upside potential could be exponential. XOM has a dividend yield that is a dream for savers, traders and investors.

It allows for handsome capital gain potential while earning a dividend yield that helps me sleep at night and weather the storm. The company is a safe haven and is worth keeping during a decline.

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