Precious Metals

Gold Investing

Gold prices have steadied following the Brexit vote last week, but the yellow metal is still sitting at its highest since July 2014, and gold stocks have held onto gains following the referendum.

Gold prices dipped slightly this week following last week’s spike due to Britain’s vote to leave the EU. But the metal is still sitting around two-year highs, and gold stocks have held onto their gains following the referendum.
Spot gold was down 0.95 percent on Tuesday to $1,311.50 per ounce. That’s down from as high as $1,339.20 per ounce right after the Brexit vote, but still up 8 percent over the past month and 23 percent year-to-date. The last time gold prices were trading above $1,300 per ounce for a sustained period of time was in July 2014.
George Gero, managing director at RBC Capital Markets, told the Wall Street Journal that there was definitely profit taking happening in the wake of last week’s gold price jump. “These big spikes in gold rarely last,” he said.
Gold stocks also saw a muted performance early this week, but have held onto advances in the wake of last week’s spike. The Market Vectors Gold Miners ETF (NYSEARCA:GDX) was still up 3.14 percent over a five day period at close of day on Tuesday, while the Market Vectors Junior Gold Miners ETF (NYSEARCA:GDXJ) was up four percent. Both indices lost just under two percent on Tuesday.
More interestingly, the GDXJ is up 113 percent year-to-date, while the GDX is up 93 percent. Clearly, gold’s rise has been kind to gold miners and investors, and while the markets have calmed following Brexit, with the US election on the horizon, there are plenty more catalysts for investors to watch for.
“There are significant questions to be answered and it will be very difficult to provide all the clarity the market wants,” said Xiao Fu, head of commodity markets strategy at BOCI Global Commodities, told the Journal. “From where we are now there’s still upside for gold.”
Examples of a few gold companies that gained following the Brexit vote include:

  • Pretium Resources (TSXV:PVG); up 7.82 percent to $13.23 per share
  • Integra Gold (TSXV:ICG); up 5.63 percent to $0.75 per share
  • Continental Gold (TSX:CNL); up 4.76 percent to $3.30 per share
  • Kaminak Gold (TSXV:KAM); up 3.19 percent to $2.59 per share
  • Angkor Gold (TSXV:ANK); up 2.27 percent to $0.45 per share

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Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.

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