Earlier today, news out of China confirmed that almost 800 of its citizens had contracted a mysterious coronavirus. Six of which have, sadly, perished.
And just a few hours ago, U.S. public health officials confirmed that a male traveler from China has been diagnosed with the same virus in Snohomish County, Washington State.
Fears of the coronavirus spreading sent stocks lower this morning. After it hit American soil, stocks fell rapidly. Uncertainty is back, and for the first time in a long while, it isn’t trade war or Iran related.
The last time a super-virus emerged from China was back in 2003, when SARS ran parts of the pseudo-communist nation ragged. 8,098 people became sick worldwide. Of them, 774 died.
The market logged double-digit losses in the weeks that followed the initial outbreak but eventually recovered to have a very bullish year. For several months, though, gold bugs and market bears were rewarded with “easy” gains as the SARS hysteria hit a fever pitch.
Today, the new coronavirus has picked up steam with media outlets. It’s been less than a single news cycle and investors are already losing their cool. Gold has, unsurprisingly, risen mightily as a result.
So have gold miner stocks, like Barrick Gold Corp (NYSE: GOLD), a company that’s preparing for a February “moonshot” should the coronavirus remain a serious threat.
In the daily candlestick chart above, you can see that GOLD has sold-off significantly since logging its 2020 high shortly after the new year. During the precious metals revival last year, gold miners like Barrick enjoyed an impressive bull run.
Now, they’re quickly approaching a bullish continuation. With two higher lows in its back pocket, GOLD broke out above its minor bearish trend (represented by the yellow trendline), suggesting that a major shift in momentum is taking place. The stochastics indicator, though close to 80, has yet to rise into overbought territory, suggesting that this stock has more room to rise.
And if GOLD ends up moving above the most recent candlestick’s (today’s) high, it might make sense to go long with a trade trigger of $18.40. From there, GOLD could easily breach the January highs en route to a protracted rally.
Best of all, the market doesn’t even need to plummet for GOLD to go up. In 2019, the S&P soared. So too did precious metal prices and gold miner stocks. So long as the coronavirus continues scaring bulls, GOLD will keep rising – something that seems likely based on today’s response to the news.
