Short-Term Key: Negative    Long-Term Key: -85.5 (Neutral to Bearish)

Gold is up today, and the correction in the yellow metal appears to nearing its final stages. We wouldn’t be surprised to see a further 5 percent decline to the $1,040/oz level (close to the 100-day moving average), but given our expectations for where prices could go – we wouldn’t wait for another dip, either. We’re also seeing some divergence in the way gold and both the U.S. dollar and gold miners’ stock act – an encouraging sign for gold on both accounts.

 

Even as gold has pulled back, some miners have been advancing. One in particular, Small-Cap Value’s NovaGold Resources (NG), has moved higher by more than 20 percent in the last two days. The reason was company-specific: The junior miner announced that it’s acquiring the remaining 49 percent interest in the Ambler property in northern Alaska. The company will pay $29 million in stock and cash to a subsidiary of mining mammoth Rio Tinto for the undeveloped 90,000 plus acres of property.

BHP Billiton (BHP), which is featured in both our Growth and Income Portfolios, failed to consummate a marriage with Rio Tinto (RTP) last year. But a subsequently proposed joint venture between the pair, the second- and third-largest iron ore producers in the world, could be nearing reality. The partnership between the two companies, if the deal is finalized, would merge their iron ore operations in Australia and create a synergy that could save around $10 billion a year on capital and production costs. The two companies are expected to ship more than 300 million tons combined of iron ore worldwide this year.

 

The joint venture is not written in stone yet. The companies are looking to finalize the deal by a December 5 deadline stated by Rio, while BHP’s CEO Marius Kloppers is less concerned about the date and is looking for completion before year-end. Regardless, the joint venture makes sense for both companies.