As we move forward into what many economists now see as a late-stage economic cycle, the typical outperformance area has historically been in commodities, with a particular emphasis on metals. As interest rates are pushed higher, central banks often face pressure to not “kill the cycle”, which can lead to them falling behind the curve as increased demand for labor pushes wages higher, and eventually sparks a jump in inflation.
Bond yields are already signaling that potential so far this year, and it’s possibly only a matter of time before the same concept begins to price into gold, silver, and copper, among other metals.
With that in mind, we want to take a look at a few ways for traders and investors to capture outsized gains as this process takes hold.
Newmont Mining Corp (NYSE:NEM), together with its subsidiaries, operates in the mining industry. The company primarily acquires, develops, explores for, and produces gold, copper, and silver. Its operations and/or assets are located in the United States, Australia, Peru, Ghana, and Suriname.
As of February 22, 2018, the company had proven and probable gold reserves of 68.5 million ounces and an aggregate land position of approximately 23,000 square miles. Newmont Mining Corporation was founded in 1916 and is headquartered in Greenwood Village, Colorado.
Newmont is well-known as one of the leading players on the large-cap mining scene. The stock has been carving out a sideways range now for over 18 months as the Federal Reserve plays out the teeth of this hiking cycle. At this point, shares are hanging on in a fight to hold support at the 200-day SMA.
We would look for some interesting action here if it moves back above the $40 level, particularly if such a move comes in concert with a move in gold back above the $1300/oz level.
ASIA BROADBAND ORD (OTCMKTS:AABB) could be an interesting name to track for those looking for action in the junior mining space. The company is a highly speculative player in the metals mining space that has started to make noise about a possible uplisting of shares after getting current with its financial data. Shares are trading above the major moving averages and appear dirt cheap relative to balance sheet and topline performance data.
AABB is a resource company focused on the production, supply and sale of precious and base metals, primarily to Asian markets, through the Company’s wholly-owned subsidiary Asia Metals Inc..
The Company utilizes its specific geographic expertise, experience and extensive industry contacts to facilitate its innovative distribution process from the production and supply of precious and base metals in Guerrero, Mexico to our client sales networks in Asia. This vertical integration approach to sales transactions is the unique strength of Asia Broadband and differentiates the Company to its shareholders.
The company recently announced that it has continued to develop its ancestral mine and mineral concessions acreage over the past two years in the state of Guerrero, Mexico. Following that announcement, the market got word that has confirmed and booked the Company’s second quarter sales, marking the highest quarter sales results achieved to date. Precious and base metal production and sales for the second quarter, the company noted, have reached their highest levels in its operating history.
The company also noted recently that it has now initiated an exploration and development program that will target a specific area in close proximity to the company’s mine in Guerrero, Mexico, to further delineate the existing historical gold vein structure.
With a float of just 30 million shares, AABB is starting to make a run higher that holds potential to turn nasty for bears in the stock. Shares found moving average support in April, and have picked up about 250% on substantially increased average daily trading volume. This is very positive action for such a cheap stock as the company is starting to see record revenues and progressing toward expanded mining operations, so we would keep this one on the radar as a lotto pick in the space.
Royal Gold, Inc (USA) (NASDAQ:RGLD), together with its subsidiaries, acquires and manages precious metal streams, royalties, and similar interests. It focuses on acquiring stream and royalty interests or to finance projects that are in production or in development stage in exchange for stream or royalty interests.
As of June 30, 2017, the company owned stream interests in 4 producing property and 2 development stage properties; and owned royalty interests in 35 producing properties, 18 development stage properties, and 135 exploration stage properties. Its principal producing stream and royalty interests on properties are located in the United States, Canada, Chile, the Dominican Republic, Ghana, and Mexico.
The company also holds stream and royalty interests in mines and projects in other countries, including Argentina, Australia, Bolivia, Brazil, Burkina Faso, Guatemala, Honduras, Macedonia, Nicaragua, Peru, Russia, Spain, and Tunisia. Royal Gold, Inc. was founded in 1981 and is based in Denver, Colorado.
RGLD shares are in a very interesting technical moment, with a recent breakout and potential failure underway as we move forward. The stock just powered above its September 2017 highs and broke above the $95/share level, nearly testing the key $100 level. A move above there could well take RGLD shares to new all-time highs above the 2012 rally highs when gold was in its QE bubble.