Will Gold Be Scared Higher by Bernanke?: Barrick Gold Corporation (USA) (ABX) and More

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Moving up again
The most likely message from Bernanke would be one of non-committal moderation that reiterates the need for continued bond buying. The effect should be positive for gold, particular as we all wait to see if Congress will learn to play nice before Friday. While I am not optimistic that a lasting solution is imminent, an extension is the probable outcome.

GLD Chart

GLD data by YCharts

While GLD has outperformed the major gold miners like Barrick Gold Corporation (USA) (NYSE:ABX)Goldcorp Inc. (USA) (NYSE:GG), or Newmont Mining Corp (NYSE:NEM), all four traded higher on Monday. Despite the fact that all three of the miners are down double digits so far this year, there is an argument for miners over the commodity itself. While a big part of the performance issues are driven by higher production costs – Barrick recently reported escalating costs – inflationary pressure taking over from the recessionary ones is bullish for miners. Miners are corporations that can be hit by a recession – be aware of the sequester issue – but if inflation and European weakness are driving gold, so the miners may have a chance to catch up. Overall, before Friday’s deadline, GLD is the smarter play, but gold looks poised to go higher from here across all vehicles.

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The article Will Gold Be Scared Higher by Bernanke? originally appeared on Fool.com and is written by Doug Ehrman.

Fool contributor Doug Ehrman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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