Spot Gold Holding up Strong—Gold Earnings Set to Shine

The main stock market indices have pulled back, but the spot price of gold is still holding above $1,700 an ounce, and this is very positive for gold stocks. There is no particular reason why gold prices are holding up, only that the marketplace feels that its store of value is worth this much. Spot gold did already experience a correction, and is now in consolidation mode, waiting for a new price trend.
On the stock market, many gold stocks are in consolidation mode, exhibiting no particular trend, either. Many gold mining companies haven’t reported their third-quarter financial results as yet, and therefore, these stocks are just treading water.
One important benchmark within the gold sector is Yamana Gold Inc. (NYSE/AUY). When spot gold began to tick higher during the summer, Yamana’s share price accelerated significantly on the stock market. The company just reported record production and revenues in its latest quarter. For gold stock investors, Yamana Gold is a company that’s always worth following. The company’s stock chart is featured below:

Chart courtesy of www.StockCharts.com

At the junior, exploration stage, gold stocks naturally trade on their own events, but a strong commodity price environment is always helpful. One exploration company that’s developing a following among institutional investors is Belo Sun Mining Corp. (TSX/BSX). Similar to Yamana, this position moved higher on the stock market commensurate with spot gold, but the company has been diligently working on developing its Volte Grande resource in Brazil. It recently closed a major new financing, and will use the proceeds to fund further exploratory drilling and complete a full feasibility study on its potential mine. Belo Sun’s stock chart is below:

Chart courtesy of www.StockCharts.com

Like the rest of the stock market, gold stocks are in a wait-and-see mode; even though financial growth is quite prevalent. As a stock market sector, I think gold stocks are going to shine in 2013, and a properly diversified equity portfolio should have some exposure to this commodity.
If you pull up a long-term chart on the SPDR Gold Shares (NYSEArca/GLD) exchange-traded gold fund, you’ll see a spectacularly consistent upward price trend in these shares since 2005. Gold prices have been in consolidation for well over a year, but the long-term trend isn’t broken. What’s clear is that institutional investors have pulled away from the sector of the stock market, making it that much more attractive at this time.