Gold mining stocks are not cheap, but if you want to own gold, Newmont Mining Corporation (NEM) is a good choice, as it best tracks the performance of Comex gold futures. Newmont is not cheap fundamentally, as its P/E ratio is 200.67, and the dividend yield is anemic at 0.77%.
Investors should have 10% of their portfolio invested in gold-related choices, and Newmont is one such choice. The stock closed Tuesday at $38.39, up 2.3% year to date after falling into correction territory at its 2018 low of $35.98 on Feb. 9. Newmont shares are up 6.7% since then. The stock peaked at $42.04 on Jan. 24 and is currently 8.7% below that high.
Analysts expect Newmont Mining to post earnings per share of 40 cents when it reports results before the opening bell on Thursday, Feb. 22. Some analysts say that gold production should continue to improve in Africa and North America. Meanwhile, copper is another metal mined by Newmont that is projected to have year-over-year gains. (See also: 8 Reasons to Own Gold.)
The daily chart for Newmont Mining
The daily chart for Newmont Mining shows that it has been above a "golden cross" since Aug. 10, when the stock closed at $36.44. A "golden cross" occurs when the 50-day simple moving average rises above the 200-day simple moving average, indicating that higher prices lie ahead. The horizontal lines show that the stock held its semiannual value level of $36.15, when it held its 200-day simple moving average of $36.20. The stock is above its 50-day simple moving average of $38.10, with its monthly risky level at $40.76. (For more, see: Top 4 Gold Stocks.)
The weekly chart for Newmont Mining
The weekly chart for Newmont Mining will be negative if the stock closes Friday just below its five-week modified moving average of $38.43. The stock is above its 200-week simple moving average at $29.06, which is also the "reversion to the mean," last tested during the week of April 15, 2016, when the average was $28.91. The 12 x 3 x 3 weekly slow stochastic reading is projected to end this week at 60.45, down from 65.88 on Feb. 16.
Given these charts and analysis, investors should buy Newmont Mining shares on weakness to my semiannual value levels of $36.15 and reduce holdings on strength to my monthly risky level of $40.76. (For additional reading, check out: Getting Into the Gold Market.)