Welcome!

News Feed Item

Zacks Investment Ideas feature highlights: SPDR Gold Shares, iShares Silver Trust, Rio Tinto, Stillwater Mining and Franco Nevada

CHICAGO, Feb. 11, 2014 /PRNewswire/ -- Today, Zacks Investment Ideas feature highlights Features: SPDR Gold Shares (AMEX:GLD-Free Report), iShares Silver Trust (AMEX:SLV-Free Report), Rio Tinto PLC (NYSE:RIO-Free Report), Stillwater Mining Co (NYSE:SWC-Free Report) and Franco Nevada Corp (NYSE:FNV-Free Report).

(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)

Pay Mind to the Miners

Sorry King Midas, but nobody cares about what you touch anymore. That shimmery stuff you melt down to make rings and things has lost its luster. Gold was the talk of the town around $1,900 an ounce but since the collapse in prices now it's an afterthought. Which to me is baffling. I think that the real reason gold prices are not that high is the same reason people think that gold should be high. It's all the "worthless" fiat currencies of the world. Globally we are printing money and devaluing currency. So the only thing on Earth that should be worth any money is a hard asset like gold, right? Sounds good in theory. But who are the major players in the gold market? Who buys the most gold? Central banks do. So now if your currency has depreciated then guess what you can't do? Buy as much gold as you used to. And the cycle continues...

Downward Channels

I am not bold nor crazy enough to come out and say that the tough times are behind us for the precious metals. I do, however, offer up a couple of charts that may change a few minds. First take a look at the gold chart using the exchange traded fund SPDR Gold Shares (AMEX:GLD-Free Report). From the October 2012 relative high near $175 we can draw a trend line channel across the first few tops. This trend was broken to the downside in April 2013, rendering these trend lines obsolete for the time being. Just for giggles though, let's extend these through today. More on this later.

Now let's fast forward to price action since September 2013.  We can draw another channel coming down across the tops through January 2014 only to be violated at the beginning of February by continued bullish price action. This technical picture looks a lot different given this new set of circumstances. The chart changes from a downward death spiral to dead cat bounce with a side of optimism. Price sits above the 25x5 SMA and, more importantly, above the most recent downward price channel. To quote the great Jim Carey, "So you're saying there's a chance!" The next resistance sits at the extension of the downward trend line from the October 2012 high.

You can't talk gold without mentioning its hard-working, industrious, albeit less glamorous and attractive brother silver. On the charts silver and gold have a very high correlation. Economically this never really made sense to me as they have to very different sets of supply and demand determinants. Silver has industrial uses far above and beyond what gold has. Gold pretty much gets mined, shined, and showed off or buried. Silver is used to make all sorts parts from light switches to soldering applications to water purification. Regardless of what theory suggests, the chart moves pretty much in step with gold. As such, the silver chart has nearly the same pattern as gold but has not had the breakout yet from the major trend line resistance. Here we use the iShares Silver Trust (AMEX:SLV-Free Report) and can see it trading in the $19 handle down from an October 2012 high in the low $30s and a far cry from the all-time highs seen in April of 2011 in the $48 range.

Gold has a relatively high correlation with many metals, not just silver. My thinking is that if we see a recovery in gold prices it will spill over to silver, platinum, copper, aluminum and a host of other metals to a certain degree.

What if?

Entertain my wild ideas for a minute here. What if the pundits screaming "Gold is dead" are wrong? What if gold has seen the worst of its decline? What if the recent price action is the beginning of a gradual recovery in prices and not a dead cat bounce? What if there was a way to profit from this crazy notion other than buying GLD or SLV?

If you have never paid any mind to the miners then you might like what you're about to hear. By investing in a diversified mining operation we stand to make profits on a recovery in gold and silver prices but will still be insulated by exposure to other metals so it is not a "make or break" proposition. Further, we can use the Zacks Rank to uncover mining companies that have had the most positive earnings estimate revisions. Given the fact that miners have been relatively beat up during last year's market rally we have the chance to find a few real bargains.

Rio Tinto PLC (NYSE:RIO-Free Report) is an international mining company with interests in mining for gold, silver, copper, coal, iron ore, uranium, zinc and a host of other metals. Fundamentally it's a Zacks #2 Rank. A quick look at the price and consensus chart gives me hope for the future. You can see the price tracked the consensus estimates and revisions relatively closely for the past four years. Estimates have slid along with prices for gold and silver since Q2 2011 and the stock sold off as a result. The recent consensus estimates have seen a bounce off the bottom as prices appear to be stabilizing. Should this trend continue it is very bullish for shares of RIO.

The technical chart on RIO reads bullish as well. The recent range from $51 to $57 looks to me like a consolidation after a big move from the low $40s. A break above $57 with volume would be a very bullish breakout. Failure to breakout would not be a sell signal but rather a chance to get in near the bottom of the recent consolidation range from $51-$53. A breakdown below $51 means you look for another stock to buy.

There is something about the name of this stock that soothes my nerves. Stillwater Mining Co (NYSE:SWC-Free Report) is engaged in mining operations in the Stillwater Complex in southern Montana. The area contains gold, copper, nickel, chromium, platinum and palladium. SWC is a Zacks #1 Rank and its last earning surprise was a whopping 425%. I want to show the price and consensus chart because it shares an important characteristic with RIO. Recent earnings revisions have seen upwards momentum for the first time since gold and silver began their decline. I think that a pattern is beginning to develop amongst analysts which only further supports the idea that gold may have already bottomed.

The price chart is temporarily bearish but that could change in a few days. I like the fact that the stochastics are oversold and awaiting a buy signal. I like the pull back and support at $12. What I don't like is the speed of the fall from mid-January to today and I don't like seeing the stock below the 25x5. This trade set up could take a couple weeks. I would need to see the stock get above the 25x5, pull back to it, then see a stochastic buy before I got on board. This is a perfect case of great fundamentals but I'll pass on the technicals right now. In mid-December the stock set up perfectly for a buy around $11 which took the stock near $14. But it is not mid-December, it's February so I would be patient for better technical timing.

If the first two examples were dipping your toes in the water on a possible gold rebound then this next stock is a cannonball from the high board. Franco Nevada Corp (NYSE:FNV-Free Report) is a gold focused royalty and stream company with some interests in platinum group metals. While this does not make it a 100% pure gold play, it does give it added risk to price movements in the base metal. The price and consensus chart looks the way you think it would given the other two examples. However, FNV has only been around since late 2011 so the chart is not as impactful. Being a newer operation, the analysts haven't quite figured things out and the estimates have been all over the place historically. Recently, upwards revisions of some magnitude have helped push FNV into a Zacks #2 Rank.

On my chart I like what I see. The stock pushed above resistance at $48 and had been consolidating. It rested firmly above the 25x5 while the 25x5 had a very positive slope. Stochastics were beginning to come down from overbought levels as the stock consolidated between $48 and $50. I would buy today's break out above $50. If you missed it, that's alright too, a better opportunity will come with a pull back to the 25x5 coupled by confirmation from the stochastics.

The bottom line is if you believe in a possible recovery in gold prices these three stocks are all good ideas. With a little bit of patience you can find favorable entry points that will offer up the best risk versus reward scenarios. If gold continues to unwind, hopefully the diversification in the first two stocks will cushion any downside and a wisely set stop loss will protect you on FNV. With the chart set up on gold and the earnings revisions by analysts I think there is a relatively strong case for at least a consolidation in gold prices if not a reversal of the long term down trend. 

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros.  In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros.

Get the full Report on GLD – FREE 
Get the full Report on SLV – FREE 
Get the full Report on RIO – FREE 
Get the full Report on SWC – FREE 
Get the full Report on FNV – FREE

Follow us on Twitter:  http://twitter.com/ZacksResearch

Join us on Facebook:  http://www.facebook.com/ZacksInvestmentResearch

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
[email protected]
http://www.zacks.com

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.

SOURCE Zacks Investment Research, Inc.

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
To get the most out of their data, successful companies are not focusing on queries and data lakes, they are actively integrating analytics into their operations with a data-first application development approach. Real-time adjustments to improve revenues, reduce costs, or mitigate risk rely on applications that minimize latency on a variety of data sources. In his session at @BigDataExpo, Jack Norris, Senior Vice President, Data and Applications at MapR Technologies, reviewed best practices to ...
DevOps promotes continuous improvement through a culture of collaboration. But in real terms, how do you: Integrate activities across diverse teams and services? Make objective decisions with system-wide visibility? Use feedback loops to enable learning and improvement? With technology insights and real-world examples, in his general session at @DevOpsSummit, at 21st Cloud Expo, Andi Mann, Chief Technology Advocate at Splunk, explored how leading organizations use data-driven DevOps to close th...
"Digital transformation - what we knew about it in the past has been redefined. Automation is going to play such a huge role in that because the culture, the technology, and the business operations are being shifted now," stated Brian Boeggeman, VP of Alliances & Partnerships at Ayehu, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
The past few years have brought a sea change in the way applications are architected, developed, and consumed—increasing both the complexity of testing and the business impact of software failures. How can software testing professionals keep pace with modern application delivery, given the trends that impact both architectures (cloud, microservices, and APIs) and processes (DevOps, agile, and continuous delivery)? This is where continuous testing comes in. D
"Evatronix provides design services to companies that need to integrate the IoT technology in their products but they don't necessarily have the expertise, knowledge and design team to do so," explained Adam Morawiec, VP of Business Development at Evatronix, in this SYS-CON.tv interview at @ThingsExpo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
"WineSOFT is a software company making proxy server software, which is widely used in the telecommunication industry or the content delivery networks or e-commerce," explained Jonathan Ahn, COO of WineSOFT, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.
Smart cities have the potential to change our lives at so many levels for citizens: less pollution, reduced parking obstacles, better health, education and more energy savings. Real-time data streaming and the Internet of Things (IoT) possess the power to turn this vision into a reality. However, most organizations today are building their data infrastructure to focus solely on addressing immediate business needs vs. a platform capable of quickly adapting emerging technologies to address future ...
Mobile device usage has increased exponentially during the past several years, as consumers rely on handhelds for everything from news and weather to banking and purchases. What can we expect in the next few years? The way in which we interact with our devices will fundamentally change, as businesses leverage Artificial Intelligence. We already see this taking shape as businesses leverage AI for cost savings and customer responsiveness. This trend will continue, as AI is used for more sophistica...
There is a huge demand for responsive, real-time mobile and web experiences, but current architectural patterns do not easily accommodate applications that respond to events in real time. Common solutions using message queues or HTTP long-polling quickly lead to resiliency, scalability and development velocity challenges. In his session at 21st Cloud Expo, Ryland Degnan, a Senior Software Engineer on the Netflix Edge Platform team, will discuss how by leveraging a reactive stream-based protocol,...
In his Opening Keynote at 21st Cloud Expo, John Considine, General Manager of IBM Cloud Infrastructure, led attendees through the exciting evolution of the cloud. He looked at this major disruption from the perspective of technology, business models, and what this means for enterprises of all sizes. John Considine is General Manager of Cloud Infrastructure Services at IBM. In that role he is responsible for leading IBM’s public cloud infrastructure including strategy, development, and offering m...
Sanjeev Sharma Joins June 5-7, 2018 @DevOpsSummit at @Cloud Expo New York Faculty. Sanjeev Sharma is an internationally known DevOps and Cloud Transformation thought leader, technology executive, and author. Sanjeev's industry experience includes tenures as CTO, Technical Sales leader, and Cloud Architect leader. As an IBM Distinguished Engineer, Sanjeev is recognized at the highest levels of IBM's core of technical leaders.
Product connectivity goes hand and hand these days with increased use of personal data. New IoT devices are becoming more personalized than ever before. In his session at 22nd Cloud Expo | DXWorld Expo, Nicolas Fierro, CEO of MIMIR Blockchain Solutions, will discuss how in order to protect your data and privacy, IoT applications need to embrace Blockchain technology for a new level of product security never before seen - or needed.
The 22nd International Cloud Expo | 1st DXWorld Expo has announced that its Call for Papers is open. Cloud Expo | DXWorld Expo, to be held June 5-7, 2018, at the Javits Center in New York, NY, brings together Cloud Computing, Digital Transformation, Big Data, Internet of Things, DevOps, Machine Learning and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding busin...
Digital transformation is about embracing digital technologies into a company's culture to better connect with its customers, automate processes, create better tools, enter new markets, etc. Such a transformation requires continuous orchestration across teams and an environment based on open collaboration and daily experiments. In his session at 21st Cloud Expo, Alex Casalboni, Technical (Cloud) Evangelist at Cloud Academy, explored and discussed the most urgent unsolved challenges to achieve f...
SYS-CON Events announced today that Synametrics Technologies will exhibit at SYS-CON's 22nd International Cloud Expo®, which will take place on June 5-7, 2018, at the Javits Center in New York, NY. Synametrics Technologies is a privately held company based in Plainsboro, New Jersey that has been providing solutions for the developer community since 1997. Based on the success of its initial product offerings such as WinSQL, Xeams, SynaMan and Syncrify, Synametrics continues to create and hone inn...