Comex Gold Futures have been rising since August and Barrick Gold Corp. (GOLD - Get Report) , Yamana Gold Inc. (AUY - Get Report) , Goldcorp Inc. (GG) and Newmont Mining Corp. (NEM - Get Report) have been outperforming since their lows set between September and November. This trend should continue. Investors should have 5% to 10% of their investment portfolios in gold shares as they should continue to outperform even after the bear market rally for stocks comes to an end.

Recently, Newmont announced that it would buy Goldcorp in a $10 billion merger to become the world's largest gold miner. This deal will be shown with price gaps on their daily charts below. I recommend selling Goldcorp and buying Newmont.

The merger between Barrick and Randgold closed as January began, which is when the symbol changed to GOLD.K.

Owning gold or gold mining stocks has always been considered a "just in case" asset that goes back to the Great Depression when gold miner Homestake Mining rallied significantly as the stock market crashed. I have been advocating a 5% stake in gold miners and today's recommendation is to raise the stake to 10% "just in case."

Daily Chart for Comex Gold Futures

Courtesy of MetaStock Xenith

The daily chart for gold futures shows that gold is above a "golden cross" that was confirmed on Jan. 22 when the 50-day simple moving average rose above the 200-day simple moving average to indicate that higher prices would follow. The close of $1,281.3 on Dec. 31 was the input to my proprietary analytics and two of the three horizontal lines are based upon this input. My semiannual value level at $1,277.81 was tested as a buying opportunity on Jan. 22 and Jan. 24. My annual value level is the lowest line at $1,180.80. My quarterly risky level at $1,389.1 is above the chart. The close of $1,319.7 on Jan. 31 was a new input to my proprietary analytics and this resulted in the horizontal level at $1,199.0, which is my monthly value level for February. Gold futures is above its 200-week simple moving average or "reversion to the mean" at $1,238.3.

Daily Chart for Barrick Gold

 

Courtesy of MetaStock Xenith

The daily chart for Barrick shows that formation of a "golden cross" on Nov. 27. This was in play as the stock set its 2018 high of $14.18 on Dec. 10. As 2019 began, the 200-day SMA was a magnet at $12.37 between Jan. 8 and Jan. 28. The Dec. 31 close of $13.54 was input to my analytics and resulted in the horizontal lines on the chart. My quarterly value level is $12.73, with my annual risky level at $14.61 and above the chart is my semiannual risky level at $17.24. The Jan. 31 close of $13.39 was input to my analytics and my monthly value level for February is $11.57. The stock is below its 200-week SMA or "reversion to the mean" at $13.97.

Trading Strategy: Buy weakness to my quarterly and monthly value levels at $12.73 and $11.57, respectively, and reduce holdings on strength to the 200-week SMA at $13.97 and to my annual and semiannual risky levels at $14.61 and $17.24, respectively.

Daily Chart for Yamana Gold

 

Courtesy of MetaStock Xenith

The daily chart for Yamana shows the stock above its 200-day SMA at $2.64. The stock is trading between $1 and $3 a share, which is the range I consider as an "option on survival". Investors are putting their money into this stock knowing the risk that this holding could become worthless. The Dec. 31 close of $2.36 was input to my analytics and resulted in the horizontal lines on the chart. My quarterly value level is $2.49. The Jan. 31 close of $2.83 was input to my analytics and my monthly value level for February is $2.66. The stock is below its 200-week SMA or "reversion to the mean" at $3.00.

Trading Strategy: Buy weakness to my monthly and quarterly value levels at $2.66 and $2.49, respectively, and reduce holdings on strength to the 200-week SMA at $3.00. My semiannual value level is below the chart at $1.77.

The Daily Chart for Goldcorp Inc

 

Courtesy of MetaStock Xenith

The daily chart for Goldcorp shows that the stock still lags its 200-day SMA at $11.47 despite the spike higher on Jan. 14 on the buyout by Newmont. The Dec. 31 close of $9.80 was input to my analytics and resulted in the horizontal line on the chart which is my quarterly pivot at $10.97. The Jan. 31 close of $11.19 was input to my analytics and my monthly value level for February is $7.40. My semiannual value level is $8.03. The stock is below its 200-week SMA or "reversion to the mean" at $14.06.

Trading Strategy: If you own this gold miner, sell it to buy Newmont. Reduce holdings on strength to the 200-day and 200-week SMAs at $11.47 and $14.06, respectively.

Daily Chart for Newmont Mining

 

Courtesy of MetaStock Xenith

The daily chart for Newmont shows the stock below its 200-day SMA at $34.71 but it's above its 200-week SMA (not shown) at $32.04. Note the price gap lower on Jan. 14 that was caused by the purchase of Goldcorp. The Dec. 31 close of $34.65 was input to my analytics and resulted in the horizontal line on the chart, which is my quarterly risky level at $36.30. My semiannual risky level is above the chart at $45.87. The Jan. 31 close of $34.11 was input to my analytics and my monthly value level for February is $28.13. The stock is above its 200-week SMA or "reversion to the mean" at $32.04.

Trading Strategy: Buy weakness to the 200-week SMA at $32.04 and at my monthly value level at $28.13 and reduce holdings on strength to the 200-day SMA at $34.71 and to my quarterly and semiannual risky levels at $36.30 and $45.87, respectively.

Score a Touchdown with Jim Cramer's Big Game Special

Get access to the best stock picks in Jim Cramer's investment portfolio by executing a two-minute drill on our Big Game Special on Action Alerts PLUS, Jim's VIP club for investors. Sign up now through Feb. 4 and receive 58% off of the normal subscription price. Now that's a real touchdown!

Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.