Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
iShares Nasdaq Biotechnology ETF IBB AI Mega-trend Tech Stocks Investing 2020 - 15th Feb 20
Gold Stocks Still Stalled - 15th Feb 20
Is The Technology Stocks Sector Setting Up For A Crash? - 15th Feb 20
UK Calm Before Corona Virus Storm - Infections Forecast into End March 2020 - 15th Feb 20
The Growing Weaponization of Space - 14th Feb 20
Will the 2020s Be Good or Bad for the Gold Market? - 14th Feb 20
Predictive Modeling Suggests Gold Price Will Break Above $1650 Within 15~30 Days - 14th Feb 20
UK Coronavirus COVID-19 Infections and Deaths Trend Forecast 2020 - 14th Feb 20
Coronavirus, Powell and Gold - 14th Feb 20
How the Corona Virus is Affecting Global Stock Markets - 14th Feb 20
British Pound GBP Trend and Elliott Wave Analysis - 13th Feb 20
Owning and Driving a Land Rover Discovery Sport in 2020 - 2 YEAR Review - 13th Feb 20
Shipping Rates Plunge, Commodities and Stocks May Follow - 13th Feb 20
Powell says Fed will aggressively use QE to fight next recession - 13th Feb 20
PALLADIUM - THIS Is What a Run on the Bank for Precious Metals Looks Like… - 13th Feb 20
Bitcoin: "Is it too late to get in?" Get Answers Now - 13th Feb 20
China Coronavirus Infections Soar by 1/3rd to 60,000, Deaths Jump to 1,367 - 13th Feb 20
Crude Oil Price Action – Like a Coiled Spring Already? - 13th Feb 20
China Under Reporting Coronavirus COVID-19 Infections, Africa and South America Hidden Outbreaks - 12th Feb 20
Will USD X Decline About to Trigger Precious Metals Rally - 12th Feb 20
Copper Market is a Coiled Spring - 12th Feb 20
Dow Theory Stock Market Warning from the Utilities Index - 12th Feb 20
How to Get Virgin Media Engineers to FIX Hub 3.0 Problems and NOT BS Customers - 12th Feb 20
China Under Reporting Coronavirus COVID-19 Infections by 66% Due to Capacity Constraints - 12th Feb 20
Is Coronavirus the Black Swan That Takes Gold To-Da-Moon? - 12th Feb 20
Stock Market 2020 – A Close Look At What To Expect - 12th Feb 20
IBM AI Mega-trend Tech Stocks Investing 2020 - 11th Feb 20
The US Dollar’s Subtle Message for Gold - 11th Feb 20
What All To Do Before Opening A Bank Account For Your Business - 11th Feb 20
How and When to Enter Day Trades & Swing Trade For Maximum Gains - 11th Feb 20
The Great Stock Market Dichotomy - 11th Feb 20
Stock Market Sector Rotation Should Peak Within 60+ Days – Part II - 11th Feb 20
CoronaVirus Pandemic Stocks Bear Market Risk 2020? - Video - 11th Feb 20
Facebook (FB) AI Mega-trend Tech Stocks Investing 2020 - 10th Feb 20
The US Constitution IS the Crisis - 10th Feb 20
Stock Market Correction Continues - 10th Feb 20
Useful Tips for Becoming a Better Man - 10th Feb 20
Will CoronaVirus Pandemic Trigger a Stocks Bear Market 2020? Part1 - 9th Feb 20
Could Silver Break-out like it did in 2011? - 9th Feb 20
The End of the Global Economy - 9th Feb 20
Fed to Stimulate in Any Crisis; Don’t Let Short-Term Events Bother You - 9th Feb 20
Is The Coronavirus bullish for Stocks? - 8th Feb 20
Ryzen 9 3950X Best UK Custom PC Builder 2020 - Scan.co.uk vs Overclockers.co.uk - 8th Feb 20
Warwick University Offer Holders Open Days 2020 - Visitors Car Park 15 Parking - 8th Feb 20
The Historical Impact of Recessions on Gambling Activity - 8th Feb 20
UK Points-Based Immigration and Its Effect on the Job Market - 8th Feb 20
British Pound GBP Long-term Trend Analysis - 7th Feb 20
The Case for Buying Precious Metals - 7th Feb 20
Vacuum Cleaner Features You Need To Know - 7th Feb 20
How to Shrink Financial Market "Maybes" Down to a Minimum - 7th Feb 20
Stock Market Broad Sector Rotation Starts In 60+ Days – Part I - 7th Feb 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Investors Are Returning To The Undervalued Gold Mining Stocks

Commodities / Gold & Silver Stocks Aug 31, 2011 - 08:36 AM GMT

By: Jeb_Handwerger

Commodities

Best Financial Markets Analysis ArticleThe brouhaha over the debt ceiling has generated upward moves, particularly in gold bullion. This is a primary example of a news driven market skewing orthodox technical measurements. Now it is entirely possible that the scare headlines are generating a caffeinated move to surpass resistance areas, especially in gold. The debt farce can end precipitously and so may the risk trade. What the market giveth exogenously is what the market taketh away with the resolution of the underlying media hype. The risk off trade may boost mergers and acquisition activity in the mining sector.


Six weeks ago, I became aware of a major divergence between the miners and the underlying metal. This juncture represented a buying opportunity. On July 13, 2011 Barron's wrote that my firm was a solitary voice in indicating that miners would outperform gold bullion, saying "...One contrarian to that view is Jeb Handwerger, editor of Gold Stock Trades. He points to technicals that favor miners, although he remains bullish on prospects for both types of precious metals ETFs."

Subsequently, miners did bottom in mid June. In fact, we have witnessed parabolic moves in the gold sector, completely overlooking some undervalued miners such as Goldcorp (GG), Barrick (ABX), and Newmont (NEM). These are some of the fastest growing stocks in the market with increasing profits and margins.

It is precisely gold's linear bull trend as opposed to a geometric blowoff which indicates the longevity of this millennial move in gold. As the metal surpasses resistance we anticipate and welcome the customary healthy pullbacks on this rising arc. The risk off trade will transfer capital from the extended gold price to the undervalued mining equities.

Meanwhile, the debt debates serve to provide fuel for these sectors as the "Washington Square Dance" was resolved by a nip and tuck procedure when major surgery is really required.

My firm senses we are on the road to additional economic stimulants by whatever guises necessary, probably in the next few weeks. They may surface under different names but the basic principle should be the de facto desirability of accumulating wealth in the ground assets of precious metals, uranium, and rare earths.

The Market Vectors Gold Miners ETF (GDX) recently advanced above its 200 day moving average and is not nearly as overbought as its underlying metal. A bullish golden cross of the 50 dma above the 200 dma is occurring now. Up to now the crises over both European and American monetary problems have marked bullion as a safe haven. It appears that the metal has become overextended relative to the miners.It's time for the miners to come to the ball.

We are seeing some major, cash loaded miners diversifying into copper and now into significantly discounted uranium miners. My firm has long been focusing on this trend. For example:

  1. Newmont took a stake in uranium miner Paladin.
  2. Barrick bought copper miner Equinox.
  3. Stillwater (SWC), a palladium miner, expanded into copper with the acquisition of Peregrine.
  4. Anglogold Ashanti (AU) acquired First Uranium Corporation (FIU.TO).
  5. China's Hanlong made a hostile bid for Bannerman Resources on the bargain counter at $.60 a share, representing what may be an increasingly obvious straw in the wind.
  6. Now this week we hear of Cameco's (CCJ) hostile bid for Hathor's Roughrider Deposit. Could this be the catalyst the sector has been looking for? Stay tuned to my daily bulletin.

Disclosure: Long GLD,SLV, GDX

By Jeb Handwerger

http://goldstocktrades.com

© 2011 Copyright Jeb Handwerger- All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules