Gold prices broke out to a 10-month high this week for three key reasons.
One, the Federal Reserve is pulling back on the idea of raising rates at all this year.
“In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes,” they said.
That “patience” is a catalyst for gold.
Two, the US Dollar is showing signs of weakness after failing at a resistance point that dates back to August 2018.
Three, global investors are piling into gold on geopolitical fear, induced by uncertainty over trade war talks, and the fact that Brexit has the potential to derail Europe’s economy.
All combine to create the perfect storm for gold prices.
As we wait to see what’s next for global markets, here’s what’s piquing our interest.
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Opportunity No. 1 – Goldcorp (GG)
GG acquires, develops, and operates precious metal properties in Canada, the United States, Mexico, and Central and South America. It primarily explores for gold, silver, lead, zinc, and copper deposits. The company’s principal producing mining properties include the Éléonore, Musselwhite, Porcupine, and Red Lake mines in Canada; the Peñasquito mine in Mexico; the Cerro Negro mine in Argentina; and the Pueblo Viejo mine in the Dominican Republic.
With gold prices recovering nicely, and the US dollar pulling back, gold stocks like GG could push significantly higher with patience. The stock is aggressively oversold, and in our opinion, could refill a bearish gap at $13.50 short-term.
Opportunity No. 2 – HUYA Inc. (HUYA)
HUYA operates game live streaming platforms in the People’s Republic of China. The company works with e-sports event organizers, and has developed e-sports live streaming as one of the most popular content genres on its platform.
While that may not sound very exciting, you have to realize how big the eSports market could be globally. This year, the global eSports audience is expected to grow to 453.8 million – year over year growth of 15%, according to Newzoo.
They also believe revenue could hit $1.1 billion for the first time ever just this year, which would represent 26.7% year over year growth.
Opportunity No. 3 – AbbVie Inc. (ABBV)
After a considerable pullback, ABBV is greatly oversold for the wrong reasons.
For example, investors are concerned about what will happen to the company when its top-selling drug, Humira faces biosimilar competition. But considering Humira won’t be threatened by biosimilars until 2023, there’s nothing to fear at the moment.
Also, the US FDA just assigned priority review status to ABBV’s new drug application for upadacitinib, a potential therapy for adult patients with moderate-to-severe rheumatoid arthritis. This means the FDA likely act on the application within six months, as opposed to 10.
From last week’s 2/15/19 watch list:
- Green Thumb Industries (GTBIF) closed at $13.50 on February 15, 2019. It currently trades at $14.95. We have a near-term price target of $17.
- Ceragon Networks (CRNT) closed at $4.73 on February 15, 2019. It currently trades at $4.16. We have a near-term price target of $5.50.
- The VelocityShares 2x VIX Short-Term ETN (TVIX) closed at $33.58 on February 15, 2019. It currently trades at $31.53. We have a near-term price target of $40 as global market tensions begin to pick up steam again.