Market Wrap - Gold & Silver Stocks
Companies / Forecasts & Technical Analysis Feb 06, 2007 - 01:00 AMBy: Douglas_V_Gnazzo
The HUI Index lost 0.21 cents for the week, closing out at $332.32. During the week it had been as high as $343.56 and as low as $324.38. Another false break out occurred as will be shown on the chart below.
The same caveats apply here as they did to gold. Working off overhead supply takes time. A last correction/consolidation may take place before the new bull market phase begins in earnest. The above $324.38 is our first line of support.
Next up are two charts of the GDX Index. The first is the monthly and the second the daily. The monthly chart shows a very nice long term bullish trend in place.
The daily chart shows a bullish signature as well, however, it also indicates that more work is needed to repair the technical damage and to work off the overhead supply.
HUI/GOLD RATIO
Next is the hui/gold ratio. It compares the performance of the gold stocks in the HUI Index with the price performance of physical gold.
A rule of thumb is that it is better for the gold stocks to be outperforming the gold stocks. Maybe - maybe not, but that is the conventional thinking.
Individual Gold Stocks
There is not much more to be said regarding the various gold and silver stocks out there. Gold is in a bull market - hence gold stocks are in a bull market. You can expect a 3 to 1 return/ratio via the stocks.
We are of the opinion that this gold bull has not even run hard, let alone is it near the end of the race. We are closer to the beginning then the end.
The ride may get bumpy at times, but in the end the sovereign of sovereigns will prevail - as it always has done throughout the ages.
Newmont mining used to be one of the best run gold mines existent. Forever whatever the reasons - Newmont has turned into a sour note - a laagered that no longer keeps up with the other gold stocks. Newmont is heavily weighted in the HUI Index, so its weakness is misrepresenting the true overall condition of the gold stocks. The chart below illustrates the point.
The following stocks (except for Rydex and Gold) are in our personal portfolio. We are looking to accumulate fairly large positions in Rydex Precious Metals using four (4) buys to accumulate incrementally to make up for any bad timing.
We are also looking to buy Yamada and RandGold on any future weakness. The charts are self-explanatory so we will add no comments. Onward to the charts.
Douglas V. Gnazzo
Honest Money Gold & Silver Report
Douglas V. Gnazzo is the retired CEO of New England Renovation LLC, a historical restoration contractor that specialized in the restoration of older buildings and vintage historic landmarks. Mr. Gnazzo writes for numerous websites, and his work appears both here and abroad. Just recently, he was honored by being chosen as a Foundation Scholar for the Foundation of Monetary Education (FAME).
Disclaimer: The contents of this article represent the opinions of Douglas V. Gnazzo. Nothing contained herein is intended as investment advice or recommendations for specific investment decisions, and you should not rely on it as such. Douglas V. Gnazzo is not a registered investment advisor. Information and analysis above are derived from sources and using methods believed to be reliable, but Douglas. V. Gnazzo cannot accept responsibility for any trading losses you may incur as a result of your reliance on this analysis and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions. This article may contain information that is confidential and/or protected by law. The purpose of this article is intended to be used as an educational discussion of the issues involved. Douglas V. Gnazzo is not a lawyer or a legal scholar. Information and analysis derived from the quoted sources are believed to be reliable and are offered in good faith. Only a highly trained and certified and registered legal professional should be regarded as an authority on the issues involved; and all those seeking such an authoritative opinion should do their own due diligence and seek out the advice of a legal professional. Lastly, Douglas V. Gnazzo believes that The United States of America is the greatest country on Earth, but that it can yet become greater. This article is written to help facilitate that greater becoming. God Bless America.
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