This Gold Company Releases a Statement About Government COVID-19 Efforts and Pops 16%
The price of gold took a pause today as it sagged into the close finishing 1.37% lower on the day. However, what happened with gold didn’t affect all gold companies equally. Gold Fields Limited (GFI) saw a breakout on Wednesday on substantial volume.
While unrelated, the GFI did release a statement supporting the efforts on the part of governments to contain the virus. They said, “The world finds itself facing an unprecedented situation – the Covid-19 pandemic has forced governments across the globe to take decisive actions to safeguard the lives of their people. Gold Fields is fully committed to first and foremost protecting the health and safety of our people and communities, and supports all governments’ efforts to contain the spread of the virus,” says Gold Fields CEO Nick Holland.
While the announcement may be unrelated, the valuation of the company and their prospect to make money with gold prices over $1600 presents a great prospect for price appreciation. The all-in cost (AIC) for gold production for GFI is $1064 per ounce in 2019. That produces great profit margins if gold prices hold up.
GFI also produced a common reversal price pattern called a double bottom over the past couple weeks as the price moved from support just below $3.80 to the $5.64 resistance it established on March 17. On Wednesday, the price closed above the resistance completing the pattern. The $1.84 range of the pattern provides a near-term target of $7.50 based on the breakout level of $5.64 plus the measured move of $1.84. This target is indicating a retest of the February highs.
Option traders may want to consider a 17 APR 20 6/8 long call vertical for around $0.70. This provides a max gain of $130 a contract, or 185%, if the stock closes above $8 by expiration. Consider closing early if the vertical can be sold for $1.50 or more.