Europe Disaster: 8 Gold Stocks Hedge Funds Are Buying for Protection

Europe Disaster: 8 Gold Stocks Hedge Funds Are Buying for Protection

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Most investors, politicians, and economists agree that the debt crisis in Europe must be effectively addressed to ensure that global markets stay healthy, but that isn’t to say that all markets are negatively affected by the crisis. One asset that may continue to rise along with the EU’s uncertainty is gold.

Safe-Haven Buying

Much like the U.S. dollar and treasury bonds, gold is a safe-haven asset that people buy when riskier markets become too volatile for their liking. When investors worry about inflation, they buy gold. When they worry about a falling stock market, they buy gold too. The quickly evolving debt crisis in Europe is considered a bullish factor for the precious metals, according to Kitco News.

The price of gold had retreated after hitting an all-time nominal high of $1,917.90 an ounce in August, but the price has been up roughly 5% over the last month, currently trading around $1,770.

According to Jim Wyckoff at Kitco News, it wouldn’t be surprising to see bargain-hunting surface soon in gold as traders “buy the dip.”

Investing Ideas

To invest with this idea, we ran a screen on gold stocks that are most popular among the “smart money,” seeing significant net buying from institutional investors over the current quarter.

Do you think these stocks will benefit from a continued debt crisis in Europe? Use this list as a starting point for your own analysis.

List sorted by net institutional purchases as a percent of share float.

 

1. Gold Reserve Inc. (GRZ, Earnings, Analysts, Financials): Engages in the acquisition, exploration, and development of mining projects. Net institutional purchases in the current quarter at 7.3M shares, which represents about 22.39% of the company's float of 32.61M shares.

 

2. Vista Gold Corp. (VGZ, Earnings, Analysts, Financials): Engages in the evaluation, acquisition, exploration, and advancement of gold exploration and development projects in Australia, North America, and Indonesia. Net institutional purchases in the current quarter at 10.4M shares, which represents about 16.67% of the company's float of 62.40M shares.

 

3. Gold Resource Corp (GORO, Earnings, Analysts, Financials): Engages in the exploration for and production of gold, silver, precious metals, and base metals, including copper, lead, and zinc primarily in Mexico. Net institutional purchases in the current quarter at 4.2M shares, which represents about 13.16% of the company's float of 31.91M shares.

 

4. NovaGold Resources Inc. (NG, Earnings, Analysts, Financials): Engages in the exploration and development of mineral properties primarily in North America. Net institutional purchases in the current quarter at 17.3M shares, which represents about 11.57% of the company's float of 149.49M shares.

 

5. Extorre Gold Mines Ltd. Ordinar (XG, Earnings, Analysts, Financials): Engages in the acquisition, exploration, and development of mineral properties in Argentina. Net institutional purchases in the current quarter at 9.4M shares, which represents about 11.01% of the company's float of 85.34M shares.

 

6. Midway Gold Corp. (MDW, Earnings, Analysts, Financials): Engages in the acquisition, exploration, and development of mineral properties in North America. Net institutional purchases in the current quarter at 7.8M shares, which represents about 10.18% of the company's float of 76.63M shares.

 

7. Claude Resources, Inc. (CGR, Earnings, Analysts, Financials): Engages in the acquisition, exploration, and development of precious metal properties, as well as production and marketing of minerals in Canada. Net institutional purchases in the current quarter at 12.8M shares, which represents about 7.85% of the company's float of 163.14M shares.

 

8. Banro Corporation (BAA, Earnings, Analysts, Financials): Engages in the acquisition, exploration, and development of gold properties in the Democratic Republic of the Congo (DRC). Net institutional purchases in the current quarter at 9.6M shares, which represents about 5.09% of the company's float of 188.64M shares.

 

(Written by Alexander Crawford. Institutional data sourced from Fidelity.)

 

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