Gold and Silver Consolidate While These Two Stocks Are Going Up

The spot price of oil is the best barometer for stock market investor sentiment. Currently, at $85.00 a barrel for West Texas Intermediate, oil speculators aren’t expecting much from the global economy. In the commodity space, gold and silver are holding up much better than oil prices, and we’re even seeing companies raise new money to expand operations.

One gold and silver producer to recently hit the market with a significant new financing is New Gold Inc. (NYSE/NGD), which recently announced a $500.0-million debt offering. In today’s environment of artificially low interest rates, we’ll likely see more debt financing instead of new share issuance, which is advantageous for gold stock investors.

New Gold’s been doing well on the stock market since May, but the stock has actually been going up strongly since December of 2008. At that time, New Gold was a penny stock, trading around $1.25 a share. The stock then appreciated to a record price just under $14.00 a share last September, and has held up well since gold and silver prices experienced their consolidation since then. New Gold’s recent stock chart is below:

Chart courtesy of www.StockCharts.com

Another gold and silver producer in the mid-tier space that’s been a real market leader is Argonaut Gold Inc. (TSX/AR), which is a company I’ve featured before in this column. This growing precious metal producer has a similar stock chart to New Gold; the company’s share price has been going up since August of 2010.

Chart courtesy of www.StockCharts.com

Just over two years ago, Argonaut Gold was also in penny stock status, trading around $2.50 per share. With growing production of gold and silver ounces, commensurate with rising spot prices, the stock accelerated to an all-time record high of $11.08 per share, which it achieved just last month.

Like always in the investment business, good timing is as much responsible for your returns as anything. I think gold and silver prices are going to accelerate in 2013, and the fundamentals are in for this to happen. Gold and silver prices need a catalyst to begin a new trend, and it’s probable that this will come from policymakers (or perhaps a lack of policy action) regarding the “fiscal cliff,” sovereign debt and deficits, or the Federal Reserve.