Gold's been on quite a rally since the beginning of 2012, increasing in value by 5%, a nice upside to the S&P 500 index's 3.9% gain. Gold is currently valued $1,651.80 per ounce.
Gold bulls are feeling optimistic. Sure, gold dropped 21% in less than three months in 2011, but it finished the year ahead 10%. Again, this was ahead of U.S. equities: The S&P 500 index closed virtually unchanged from the start of the year.
CNBC reports that long-term bulls are taking a Darwinian approach to last year's volatility: "These kinds of moves are simply par for the course ... It's just a way of shaking out the weaker and more speculative investors that pile into the metal for a short-term trade."
Economic factors
Skeptics of gold's future success say it may strongly depend on disappointing economic data. "If the economy, and subsequently the stock market, can recover on their own merits through rising employment and capital investment, then that could spell the true end to the gold bull market," investors said.
On the other hand, bulls point to the EU's financial crisis. They may have to "print their way out their own financial crisis," devaluing the currency and giving more weight to the value of gold bullion.
Investing ideas
Do you agree with the long-term bulls? Will the commodity that has proven a winner for 10 consecutive years make it to 11?
If you're optimistic, you may be wondering which gold companies are taking the lead in 2012. For ideas, we searched for rallying gold stocks, that is to say they are trading above their 20, 50, and 200-day moving average (MA).
Do you think these gold stocks have the momentum to trade even higher? (Click here to access free, interactive tools to analyze these ideas.)
1. Banro (NYSE: BAA ) : Engages in the acquisition, exploration, and development of gold properties in the Democratic Republic of the Congo (DRC). Market cap of $882.65M. The stock is currently trading 13.66% above its 20-day MA, 16.67% above its 50-day MA, and 15.59% above its 200-day MA.
2. Franco-Nevada: Operates as a gold-focused royalty and stream company with additional interests in platinum group metals, oil and gas, and other assets in the United States, Canada, and Mexico. Market cap of $5.17B. The stock is currently trading 4.22% above its 20-day MA, 1.07% above its 50-day MA, and 2.54% above its 200-day MA.
3. Randgold Resources Limited (Nasdaq: GOLD ) : Engages in the exploration and mining of gold mines in west and central Africa. Market cap of $10.07B. The stock is currently trading 3.39% above its 20-day MA, 1.71% above its 50-day MA, and 14.27% above its 200-day MA.
4. Central GoldTrust (NYSE: GTU ) : The company primarily invests in unencumbered gold bullion. Market cap of $1.06B. The stock is currently trading 4.34% above its 20-day MA, 0.79% above its 50-day MA, and 1.8% above its 200-day MA.
5. Jaguar Mining (NYSE: JAG ) : Engages in the production of gold, as well as in the acquisition, exploration, development, and operation of gold mineral properties in Brazil. Market cap of $602.69M. The stock is currently trading 10.36% above its 20-day MA, 10.04% above its 50-day MA, and 28.44% above its 200-day MA.
6. Nevsun Resources (NYSE: NSU ) : A natural resource company, together with its subsidiaries, engages in the acquisition, exploration, development, and production of mineral properties. Market cap of $1.20B. The stock is currently trading 3.28% above its 20-day MA, 5.21% above its 50-day MA, and 2.4% above its 200-day MA.
7. Timmins Gold: Through its subsidiaries, engages in the mining, acquisition, exploration, and development of mineral resource properties in Mexico. Market cap of $350.68M. The stock is currently trading 25.5% above its 20-day MA, 17.55% above its 50-day MA, and 0.2% above its 200-day MA.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Rebecca Lipman does not own any of the shares mentioned above. Data sourced from Finviz.
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