In the last weeks, we have been writing about the mixed picture in the gold market. On the one hand, investors have been bidding up safe haven assets lately, including the U.S. Dollar, U.S. long term bonds, and gold. On the other hand, the COMEX market structure showed a strong increase in the short positions of commercials, which never bodes well for the short to mid-term gold price.
It appears COMEX is driving the gold price yet again, as evidenced by the weak gold market in the last two weeks, after a stellar start of the year.
When a rally stalls, it is always worth looking at the performance of miners. The ones with the best performance are good candidates for a portfolio when the next rally starts. Investors must be patient though, and not make a mistake to buy too fast.
This article picks out three of the miners on our watchlist with a good track record. There are surely many others worht considering. As a disclaimer, please mind that there is no guarantee that they will be outperformers in the future.
The first miner on our list is Detour Gold. We are not looking into company data, gold reserves, debt and cash situation. That is the type of research we leave up to readers that are willing to consider a position. We focus on the chart pattern as we believe it reflects all investment decisions by the market.
Detour Gold has bottomed in December 2013. Mind how the share price has made higher highs when gold made major bottoms in June 2014 and November 2014. Also, look at the rising volume trend in the last months of 2014. The share price has tested the 13 to 15 CAD area three times, which means there is a good chance that it will pierce through it at the next attempt (whenever the next rally will take place).
The second miner is Paramount Gold And Silver. The share price has held up quite well since the gold price crash of June 2013. However, it broke down in October / November 2014 but rebouded very quickly. Since then, the stock is on a steady upward trajectory on good volume. It is currently still rising, it is way above it’s key moving averages, although most other miners and the gold price are correcting for two weeks.
The third miner is Claude Resources, a junior miner involved in exploration work, carrying a much higher risk. Similar to the share price of Detour Gold, this company has bottomed in December 2013, and has made higher lows since then. Mind how the stock was rising when gold made an important low in November 2014. Also, look at the huge increase in volume since then.
We are no financial advisors, so these three miners should not be bought right away because we believe they have performed well. They do deserve to be on your watchlist, and be evaluated when they become oversold in the coming months.