Goldcorp Inc. (USA) (GG), Newmont Mining Corp (NEM): Trending Now, A New Gold Rush?

More fundamental to the structural shift in the market is that after an extended period of underperformance by gold miners such as Goldcorp Inc. (USA) (NYSE:GG) and Newmont Mining Corp (NYSE:NEM), this phenomenon has reversed for the time being. As of this writing, since the two-day collapse, Goldcorp Inc. (USA) (NYSE:GG) is up under 7% as compared with a rise of nearly 8.5% for Newmont Mining Corp (NYSE:NEM) and a 12.5% surge for Goldcorp Inc. (USA) (NYSE:GG). The miners are probably benefiting from the shift toward bullion. If the miners are able to reverse this market preference for gold over gold miners, it could have long-term ramifications for gold in general.

GLD data by YCharts

Perhaps even more critical to remember is that the recent trend is not new. Gold has been rising for the past 12 years, and it was the fall that was the aberration. If the commodity rises from here, it will simply be a continuation after a reasonable correction. The fundamentals for gold continue to look solid, but with U.S. stocks reporting strong earnings, there are some risks to consider. Ultimately, an allocation to gold remains appropriate, but it should be seen as a part of a balanced portfolio, not the sole driver of performance.

The article Trending Now: A New Gold Rush? 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 recommends Goldman Sachs.

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