Market Overview

A Golden Time To Buy Goldcorp


In 2013 gold miners such as Goldcorp Inc. (USA) (NYSE: GG) had a tumultuous year. Shares of one of the world's largest gold producer fell by a staggering 41%. Owning any company in this once red hot sector definitely proved to be fool's gold. By December 2013 bearish sentiment was the only thing going up for the likes of Goldcorp Inc. (USA) (NYSE: GG), and investors wanted no part in owning shares in these companies.

With everyone in the bearish camp and all on the same side of the trade, a somewhat typical thing occurred. Prices of these miners began to go up and shorts began to cover, which led to more buying. Shares in Goldcorp Inc. (USA) (NYSE: GG) shot out of the gate and were up as much as 35% back in March of this year. Suddenly the bears who couldn't give their shares away were becoming bullish, and everyone started to pile on one side of the boat, and the top was formed.

Once again the bearish sentiment is starting to build and the gold mining sector is coming under pressure. While some investors are once again very negative about the outlook for companies such as Goldcorp Inc. (USA) (NYSE: GG), I can't help but become interested on the long side. Gold typically has a seasonally bullish period from around the end of June/beginning of July which runs through to around October. In 2012 this seasonal effect provided longs of Goldcorp Inc. (USA) (NYSE: GG) a return of 50%. 2013 was no slouch either as it returned 44%. So with pessimism building again and the seasonal time frame around the corner, June might prove to be a great time to begin nibbling away at this beaten down sector.

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Parm Mann

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The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Commodities Markets Trading Ideas


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