Three Top Ways to Trade a Potential Gold Rebound

Jun 28, 2022
Gold trophy award background.

Gold may be a good bet for the second half.

Gold prices could rally well above $2,500 this year, says Goldman Sachs.

Analyst Jeff Currie sees the perfect storm for gold based on three catalysts. One, we could see strong investor demand for gold with fears of inflation and recession. Two, central bank demand for gold is at an all-time record. Three, there’s substantial physical demand for gold from countries around the world.

In fact, “This is the strongest demand from all three channels that we’ve ever seen. The last time we saw this type of demand strength was from 2010 – 2011 where gold rallied 70%.”

In addition, “Conditions for gold are perfect, with high inflation plus collapsing stock and bond markets together sowing the seeds of panic,” says Will Rhind, founder and CEO of ETF provider Granite Shares,” as noted by Barron’s.

That being said, investors may want to keep an eye on the following ideas.

VanEck Vectors Gold Miners ETF (GDX)

Sitting at major support, the GDX ETF could push aggressively higher with gold prices. After all, when the price of gold rises, miners typically see greater profits from selling on the market. With an expense ratio of 0.51%, some of the fund’s top holdings include Newmont Corp., Barrick Gold, Gold Fields Ltd., Royal Gold Inc., Kinross Gold, and B2Gold Corp. to name a few.

Barrick Gold Corp. (GOLD)

Beaten down, oversold shares of Barrick Gold Corp. could race higher with gold, too. In fact, from a current price of $18.81, we’d like to see GOLD retest $21.05, near-term. Better, the company recently increased its dividend to 20 cents from 10 cents.

“President and chief executive Mark Bristow said the Company’s net cash balance at the end of Q1 stood at $743 million, reflecting cash flow from the operations, the continuing sale of non-core assets, and its share of a further $0.6 billion in cash distributions by Kibali,” as noted in a Barrick Gold press release.

B2Gold Corp. (BTG)

Just as beaten down, and oversold, BTG could run. From a current price of $3.57, we’d like to see BTG retest $4.20, near-term. BTG also declared a dividend of $0.04 per common share (or an expected $0.16 per share on an annualized basis), payable on June 29, 2022, to shareholders of record as of June 20, 2022.

Earnings have also been solid. Total gold production of 209,365 ounces (including 12,892 ounces of attributable production from Calibre Mining Corp., 5% (9,760 ounces) above budget, and consolidated gold production of 196,473 ounces from the Company’s three operating mines, 4% (8,431 ounces) above budget, with solid performances from all the Company’s three mines, with each mine exceeding its budgeted production for the first quarter of 2022. Consolidated gold revenue was $366 million on sales of 195,100 ounces at an average realized price of $1,874per ounce.