Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Chinese Tech Stocks CCP Paranoia and Best AI Tech Stocks ETF - 26th Oct 21
Food Prices & Farm Inputs Getting Hard to Stomach - 26th Oct 21
Has Zillow’s Collapse Signaled A Warning For The Capital Markets? - 26th Oct 21
Dave Antrobus Welcomes Caribou to Award-Winning Group Inc & Co - 26th Oct 21
Stock Market New Intermediate uptrend - 26th Oct 21
Investing in Crypto Currencies With Both Eyes WIDE OPEN! - 25th Oct 21
Is Bitcoin a Better Inflation Hedge Than Gold? - 25th Oct 21
S&P 500 Stirs the Gold Pot - 25th Oct 21
Stock Market Against Bond Market Odds - 25th Oct 21
Inflation Consequences for the Stock Market, FED Balance Sheet - 24th Oct 21
To Be or Not to Be: How the Evergrande Crisis Can Affect Gold Price - 24th Oct 21
During a Market Mania, "no prudent professional is perceived to add value" - 24th Oct 21
Stock Market S&P500 Rallies Above $4400 – May Attempt To Advance To $4750~$4800 - 24th Oct 21
Inflation and the Crazy Crypto Markets - 23rd Oct 21
Easy PC Upgrades with Motherboard Combos - Overclockers UK Unboxing - MB, Memory and Ryzen 5600x CPU - 23rd Oct 21
Gold Mining Stocks Q3 2021 - 23rd Oct 21
Gold calmly continues cobbling its Handle, Miners lay in wait - 23rd Oct 21
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Stocks: Timing Your Next Purchase

Commodities / Gold and Silver 2012 Apr 09, 2012 - 06:21 AM GMT

By: Bob_Kirtley

Commodities

Best Financial Markets Analysis ArticleGold prices continue to trade in the $1800.00/oz and $1550.00/oz range exhibiting scant regard for the current state of world. The Arab Spring looks set to run and run as the dethronement of each leader creates a power vacuum and the opportunity for one of the many political factions involved to make their move and gain control. The North Koreans are about to launch a long range missile, albeit for peaceful purposes, the news of this action as put the Chinese on red alert. (please excuse the pun) Turkey is now seeing an increase in the influx of refugees at their border with Syria as the carnage continues there, despite the protestations of many nations.


In Europe, Spain is starting to see its bonds rise suggesting that a bailout much larger than that of Greece will be required, if only to buy the eurocrats a little more time. The yield on the Spain's ten-year bond spiked around 0.20 of a percentage point, on Thursday, to 5.61 percent compared to a month ago, when the rate was down below 4.9 percent. The latest proposed budget cuts are severe and it remains to be seen if the newly appointed premier, Mario Monti, can implement such measures.

Over in the United States the jobs numbers were a disappointment as the March figures saw a lowly 120,000 jobs created. Expectations were for 200,000 new jobs following on from the 240,000 new jobs created in February. This poor performance will not spur the Fed Chairman into action, however, if these figures are followed by equally poor job numbers in April and May, then Ben Bernanke will be looking to fire the big QE3 bazooka. Once the market gets a hint that QE3 is a starting to look more like a probability than a possibility, then we will see gold commence its next rally to higher ground.

Although gold is range trading at the moment, the true disappointment in its lack of progress can seen in the poor performance of the mining shares, such as those who are constituents of the the HUI, the Golds Bugs Index. We have plotted the HUI on the gold chart above so you can see that it is dropping and is a reflection of investors impatience, as they cash up and move to the sidelines. To a large extent we agree with them and been advocating a 'keep your gun powder dry' strategy for some time.

As investors we have skin in this game, in that we have a core position of mining stocks along with our holding of physical gold and silver. Having realized that the stocks were not returning a leveraged return on our capital we steadfastly refused to increase our exposure to them and we are pleased in having done so as many of the stocks that we follow are a whole lot cheaper now than they have been over the last few years.

So, in terms of actionable allocation of our cash, our intention is to hold onto our core positions in both the precious metals and mining stocks. However, we will continue to resist the temptation to increase our exposure to the mining sector, as the risk/reward environment is not yet in our favour. We may indeed miss the beginning of the next rally and we should mention that many of our peers are anticipating a large move north for mining stocks and they may be correct. Again though, timing is a critical component of a good decision and we are of the opinion that the 'time' lays ahead of us and not behind us, so don't panic if you are not fully allocated, as stock prices may crumble a tad further from this point. We are aware of just how difficult it is at times like these but the important thing is to make the 'right' decision for your own particular needs and objectives and not be carried along by hoopla.

Jumping back to the chart above we can see that gold prices recently managed to avoid the cross of death, as the 50dma almost crossed over the 200dma in a downwards movement, but managed to survive. However, the 50dma has turned south again and so we may see it crossover the 200dma, which would be negative for gold. This is of course only one of many indicators and is not one hundred percent accurate, however, some traders are guided by any such event, which to their way of thinking would indicate a sell trade, thus putting even more downward pressure on gold.

Apart from holding the physical metal and our core position in the mining sector, our forays into the options market has generated some good returns for us, but you do need a cast iron stomach and the ability to sleep easily despite the precarious state of the financial markets.

For now we will hold fast and continue to look for absolute bargains and we will try to be patient enough to wait until whats on offer is the real deal.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. Winners of the GoldDrivers Stock Picking Competition 200

DISCLAIMER : Gold Prices makes no guarantee or warranty on the accuracy or completeness of the data provided on this site. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This website represents our views and nothing more than that. Always consult your registered advisor to assist you with your investments. We accept no liability for any loss arising from the use of the data contained on this website. We may or may not hold a position in these securities at any given time and reserve the right to buy and sell as we think fit.

Bob Kirtley Archive

© 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