With gold breaking new highs and causing a massive lovefest everywhere, I thought I’d take a look at one of my favorite gold stocks, Yamana Gold (AUY) – mainly because I like saying the name.
Too be honest, I’ve never been a huge fan of gold as an investment, but it can make for a good trade – especially considering the mess with economies everywhere.
There are basically two reasons, and the following 2 charts will show what those reasons are.
First, just taking a look at the chart of the indivdiual stock, you can see that it has broken a resistance with the next clear price target at $13. Volume is also not so bad.
Second, I wanted to compare how Yamana actually moves with the price of gold. Obviously, if there is no connection, then it really can’t be a play on gold, right?
So I’ve combined Yamana (colored line) with the Dow Jones US Gold Mining Index (black line). There are a host of different indices you can use, but it really just depends on what you follow.
You can pretty much see that Yamana moves hand in hand with Mining index. In fact it is lagging a bit, which leads me to believe that this stock should jump soon – given that gold continues to rise.
See 8 other stocks/ETFs to play gold.