Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
How to Protect Your Site from Bots & Spam? - 21st Aug 19
Fed Too Late To Prevent A US Housing Market Crash? - 21st Aug 19
Gold and the Cracks in the U.S., Japan and Germany’s Economic Data - 21st Aug 19
The Gold Rush of 2019 - 21st Aug 19
How to Play Interest Rates in US Real Estate - 21st Aug 19
Stocks Likely to Breakout Instead of Gold - 21st Aug 19
Top 6 Tips to Attract Followers On SoundCloud - 21st Aug 19
WAYS TO SECURE YOUR FINANCIAL FUTURE - 21st Aug 19
Holiday Nightmares - Your Caravan is Missing! - 21st Aug 19
UK House Building and House Prices Trend Forecast - 20th Aug 19
The Next Stock Market Breakdown And The Setup - 20th Aug 19
5 Ways to Save by Using a Mortgage Broker - 20th Aug 19
Is This Time Different? Predictive Power of the Yield Curve and Gold - 19th Aug 19
New Dawn for the iGaming Industry in the United States - 19th Aug 19
Gold Set to Correct but Internals Remain Bullish - 19th Aug 19
Stock Market Correction Continues - 19th Aug 19
The Number One Gold Stock Of 2019 - 19th Aug 19
The State of the Financial Union - 18th Aug 19
The Nuts and Bolts: Yield Inversion Says Recession is Coming But it May take 24 months - 18th Aug 19
Markets August 19 Turn Date is Tomorrow – Are You Ready? - 18th Aug 19
JOHNSON AND JOHNSON - JNJ for Life Extension Pharma Stocks Investing - 17th Aug 19
Negative Bond Market Yields Tell A Story Of Shifting Economic Stock Market Leadership - 17th Aug 19
Is Stock Market About to Crash? Three Charts That Suggest It’s Possible - 17th Aug 19
It’s Time For Colombia To Dump The Peso - 17th Aug 19
Gold & Silver Stand Strong amid Stock Volatility & Falling Rates - 16th Aug 19
Gold Mining Stocks Q2’19 Fundamentals - 16th Aug 19
Silver, Transports, and Dow Jones Index At Targets – What Direct Next? - 16th Aug 19
When the US Bond Market Bubble Blows Up! - 16th Aug 19
Dark days are closing in on Apple - 16th Aug 19
Precious Metals Gone Wild! Reaching Initial Targets – Now What’s Next - 16th Aug 19
US Government Is Beholden To The Fed; And Vice-Versa - 15th Aug 19
GBP vs USD Forex Pair Swings Into Focus Amid Brexit Chaos - 15th Aug 19
US Negative Interest Rates Go Mainstream - With Some Glaring Omissions - 15th Aug 19
GOLD BULL RUN TREND ANALYSIS - 15th Aug 19
US Stock Market Could Fall 12% to 25% - 15th Aug 19
A Level Exam Results School Live Reaction Shock 2019! - 15th Aug 19
It's Time to Get Serious about Silver - 15th Aug 19
The EagleFX Beginners Guide – Financial Markets - 15th Aug 19
Central Banks Move To Keep The Global Markets Party Rolling – Part III - 14th Aug 19
You Have to Buy Bonds Even When Interest Rates Are Low - 14th Aug 19
Gold Near Term Risk is Increasing - 14th Aug 19
Installment Loans vs Personal Bank Loans - 14th Aug 19
ROCHE - RHHBY Life Extension Pharma Stocks Investing - 14th Aug 19
Gold Bulls Must Love the Hong Kong Protests - 14th Aug 19
Gold, Markets and Invasive Species - 14th Aug 19
Cannabis Stocks With Millennial Appeal - 14th Aug 19
August 19 (Crazy Ivan) Stock Market Event Only A Few Days Away - 13th Aug 19
This is the real move in gold and silver… it’s going to be multiyear - 13th Aug 19
Global Central Banks Kick Can Down The Road Again - 13th Aug 19
US Dollar Finally the Achillles Heel - 13th Aug 19
Financial Success Formula Failure - 13th Aug 19
How to Test Your Car Alternator with a Multimeter - 13th Aug 19
London Under Attack! Victoria Embankment Gardens Statues and Monuments - 13th Aug 19

Market Oracle FREE Newsletter

The No 1 Gold Stock for 2019

Gold Stocks Show Bullish Divergence

Commodities / Gold & Silver Jun 06, 2008 - 02:11 PM GMT

By: David_Morgan

Commodities Best Financial Markets Analysis ArticleIt is impossible to extrapolate anything from a single data point, however careful observation usually pays dividends especially when looking for certain clues that financial markets may signal. Today, Thursday June 5, 2008 I noticed that gold was down on the day and yet gold stocks were up. Silver actually had a rather positive day overall and many silver equities were up two to three percent on the day. Normally, when gold is off even slightly and gold stocks show mild strength it is a result of short covering. In fact this is most likely the cause of today's price action. 


Many in the precious metals investment arena have bemoaned the fact that the metals have performed better than the mining stocks and far better than the junior mining companies. 

In the May edition of The Morgan Report I wrote: “Earning season is here and many of the producers have reported very good margins, far superior to what they reported last year during the first quarter. The market is taking a big yawn at this excellent news and we need to comment. It is only a matter of time before Wall Street wakes up to the fact the many of the leading gold and silver companies (like those we feature each month in the top asset allocation model) are making profits. Earnings drive stock prices eventually, so the point is simply that these earnings will not be ignored forever. 

For example, Silver Wheaton Corp. (TSX, NYSE:SLW) announced record net earnings of US$27.9 million (US$0.13 per share) and operating cash flows of US$33.1 million (US$0.15 per share) for the first quarter of 2008. Newmont and others had excellent earnings. As I stated in August of 2007 when the credit crisis surfaced in the financial markets, some companies have hit their (intermediate) bottom and now is the time to buy. At the time I honestly thought that some of the better juniors had probably hit bottom as well. During this month's review it appears that mainly the top tier companies bottomed in August. It is very difficult to find any junior resource stock that is not close to or below the August 2007 low. 

Last month we focused on the probability of the current corrective phase in the precious metals. Some are still of the opinion that the correction is almost over and we can expect to see silver and gold move toward their recent highs in short order. We do not see that taking place and expect at least a three to six month corrective phase to develop. This is the time to build or accumulate stocks you favor . 

One of the clearest signs that the bottom is complete will be the precious metal mining equities refusing to move down further in spite of the fact the metals themselves may continue to find lower prices. In other words, I fully expect to see the mining stocks form a bottom before the metals themselves. If we are wrong and this sell-off is short-lived, we will send an alert to our readers. The problem will be filtering out a quick move to the upside that might last for a very brief time. We will employ the rules and discipline that have served us so well in the market so far.”

So, today could be the day and then again it may not be. The point however, is to use the traditional summer weakness in the precious metals complex to your best advantage because the months and years ahead are going to prove to be a time when great fortunes are won and lost based upon investing in what the market values and what is does not value. 

We are still climbing the wall of worry and many that have put their investment toe in the water of precious metals found the temperature uninviting and have left the pool. There is plenty of “reasons” to get out because many of the most notable in the industry are calling this a commodity bubble. 

To my analysis it is not a bubble but verification that most investors are still skeptical of gold and silver. Still worried about the overall financial landscape but do not have any real conviction to their investment strategy. They simply want to play it “safe” and therefore stick with the general stock market and avoid the commodity sector. This will change, and I expect far more interest in the gold market once the metal of kings moves over the $1000 USD level. 

As an interesting aside I will also go out on a limb and forecast that more gold will be purchased between $1000 and $1500 than was purchased between $500 and $1000. Investors do not buy low and sell high, most wait until things are well underway and then gain the confidence to invest accordingly. 

Want verification? Simply look at the tech wreck or technology bubble, most jumped on the Nasdaq after it hit 8000 on the way up. As far as I am concerned it will be similar for the precious metals, most investors will find gold and silver irresistible during the optimism phase, and during the final euphoric phase (mania) most everyone will be screaming it is different this time.

Remember, the more things change the more they remain the same.

By David Morgan,
Silver-Investor.com

Mr. Morgan has been published in The Herald Tribune , Futures magazine, The Gold Newsletter , Resource Consultants , Resource World , Investment Rarities , The Idaho Observer , Barron's , and The Wall Street Journal . Mr. Morgan does weekly Money, Metals and Mining Review for Kitco. He is hosted monthly on Financial Sense with Jim Puplava. Mr. Morgan was published in the Global Investor regarding Ten Rules of Silver Investing , which you can receive for free. His book Get the Skinny on Silver Investing is available on Amazon or the link provided. His private Internet-only newsletter, The Morgan Report , is $129.99 annually.

Contact information: silverguru22@hotmail.com , http://silver-investor.com

Disclaimer: The opinions expressed above are not intended to be taken as investment advice. It is to be taken as opinion only and I encourage you to complete your own due diligence when making an investment decision.

David Morgan 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

6 Critical Money Making Rules