We're in Good CompanyNUG isn't at its 52 week low, but it isn't far above it. NUG isn't alone.
Several analysts I follow have mentioned another weak mining stock in the GDX that has been holding GDX back. I am going to spend a little time on it, as it trades much more actively, and may offer clues about the market, and NUG, to the extent NUG follows the market. More importantly, if it breaks out, the GDX may as well.
One analyst has been watching it for bottoming signs, on a far more technical basis, and has been seeing some more positive developments over the last week, even though he hasn't confirmed a bottom being struck. Some of you may have heard of it. The stock is Barrick, ABX, the world's largest miner.
ABX closed at US$11.82 on volume, Its 52 week low is $11.07 and high is $20.37. NUG's 52 week range is $0.115 - 0.231, a bit of a coincidence separated by decimal points.
Barrick is trading at a lofty 6.35 PE (there are other calculations). Schwab has a pretty good equity rating model, and it puts Barrick at the 19th percentile, 18th last week. Relative risk on ABX is exceptionally low. It pays just over a 1% dividend.
In order to prove bullish intent, ABX needs to clear some overhead resistance around $12.30 and toward $13.00. In the meantime, ABX may drop one more time toward $11.00, and potentially just below.
ABX's daily chart shows a positive MACD crossing, a set up for a move up if we see one more drop down to the 10.80-11 region.
Momentum is improving, but ABX is below its 200 day moving average. The 20 day is $12.36; the 50 day is $13.63; and the 200 day is $15.29.
Another analyst, Adam Hamilton, linked below thinks gold stocks are cheap & forming a base. He covers a lot more than ABX. He mentions Barrick's all in sustaining costs are $750/oz, and that even at these levels gold prices are above last year's average. Every 10% increase in gold increases ABX profits by 25%. Yet Barrick's price is near the low, and barely half of last year's high. This bodes well for Barrick fundamentally. Barrick is predicting reduced output and higher short term costs.
https://www.321gold.com/editorials/hamilton/hamilton030918.html