This Gold Stock Poised to Break Out?

The recent Federal Reserve policy meeting ended in a somewhat flat outcome for investors interested in gold bullion. This is because some gold bullion investors had hoped for additional monetary policy stimulus to be enacted. However, even though this past meeting resulted in no change, the economic situation continues to deteriorate worldwide. I believe that the data will continue to be weak, and we will see additional monetary policy stimulus from several of the world’s central banks, which should drive gold bullion prices higher near the end of the year.

With gold bullion holding current levels quite firmly, mining stocks appear even cheaper than ever. As can be seen by several charts in various mining stocks, investors are already beginning to accumulate shares in anticipation of a higher gold bullion price.

Brigus Gold Corp. (NYSE/BRD) is one of several interesting mining stocks that gold bullion investors might want to consider for their portfolio. This is a firm that is trading just below book value with a profit margin of over 20%. With both revenue and earnings growth continuing, I believe investors will soon start to realize there is value in this stock.

One date that investors in this firm should be aware of is August 13, which is when the gold bullion miner will release its second-quarter financial results. At that point, we will learn more about the company’s recent financial performance and get updates on its guidance for the remainder of the year.

Brigus Gold Corp. Chart

Chart courtesy of

When it comes to mining stocks, a lot can be learned from looking at the technical analysis of the charts. In technical analysis, when a stock breaks a trend, it’s a very important moment. This could indicate a change in direction and momentum for the share price.

As many mining stocks in the gold bullion sector sold off this year, so did Brigus. In early April, this stock broke its downtrend and resulted in a sideways, range-bound market. We are approaching the culmination of a giant wedge formation, as the current stock price appears close to breaking the downtrend line. Mining stocks that have consistent buyers will see higher lows over time. This is exactly what we’ve seen since the lows in April, as each new low is higher than the previous one. This is a sign that this company, along with other gold bullion mining stocks, is being accumulated.

The next level to worry about will be the 200-day moving average, as that is a common resistance level in technical analysis. Obviously, if gold bullion prices move significantly higher, mining stocks will follow. Knowing that there is an important conference by central bankers at the end of August, followed with a Federal Reserve meeting in September, there are expectations that further monetary stimulus will be enacted during this timeline. If that were to occur, we should see a significant move in both gold bullion and associated mining stocks.

Note the resistance levels for this gold bullion miner, as they can be useful in how one would go about accumulating shares if it fits their portfolio requirements. Obviously, since the stock has not yet broken its trading range, it’s impossible to know which side the next leg in the markets will be. I would be patient and wait on the sidelines for a breakout either side of this wedge as a possible indicator for the stock. Considering how gold bullion has been holding up lately, I would lean towards the possibility that a break is soon to come.