Gold and Gold Stocks: Take Some Profits

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Gold and Gold Stocks: Take Some Profits

Gold is overbought in our opinion and we think the yellow metal is in for a short term correction.

Gold and Gold Stocks: Take Some Profits

The coming drop in gold prices will drag gold stocks down with it and so we are taking some profits and selling some gold shares.

Today we reduced our exposure on:

Kinross Gold: Sold for an average price of $21.96
Yamana Gold: Sold for an average price of $16.50
Agnico-Eagle: Sold for an average price of $63.27

We hereby change our signals on the above stocks from HOLD to TAKE PROFITS. The rest of the stocks in our portfolio are marked HOLD for now.

If you hold any gold itself, via an ETF or via another form, then it might be a good idea to sell a portion and lock in some profits.

We are still confident in the longer term bull market in gold and precious metals, but for the short term we see a drop coming and so are stepping aside to let it pass, before buying back in again. The recent rally in gold prices was given one last boost by the Fed rate cut, but we now think that further upside is limited in the short term.

We acknowledge that this will not be popular with all our subscribers as we have received a fair amount of emails disagreeing with our position, even when we were just suggesting a correction. However we must call the market how we see fit, so there you have it.

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3 Comments »

You guys are good. And, truth be told, this is a pretty obvious call if you’re a trader. If one isn’t willing to sell into very overbought conditions, when does one sell?

The only time I found myself in something other than complete alignment with you was back in September. I’m the guy that sent you the following (excerpted):

Whereas gold failed and fell back in the face of good chart setup after good chart setup earlier this year, I now think that gold will hold firmer than expected and rally in the face of bad chart setups like the current one more often than not for quite a while.

Now that we’ve broken out of a long consolidation with some authority on the back of a total Fed capitulation, it seems to me that the game is turned upside down. Any selling we see will be simple profit taking. Those pullbacks will be quickly met with buying by those who missed the train when it was leaving the station in August.

My guess is that the vigor and persistence of the rally will surprise in the face of technicals that keep telling the prudent to take some off right now. Normally, I would have, but I’m not this time.

That sure played out. Lucky guess. I still think the bias against selling holds, but after this sort of run, I can’t imagine there are a lot of fresh buyers out there. I’ve gone largely to cash, for what it’s worth. I figure, even if the price runs to $1,000, which I think is unlikely prior to a pullback, I’ll still be able to buy lower than here at some time in the near future. The oscillators seldom lie. That’s a chasm between the MAs and the price at this point. Too puffed up for me.

Thanks very much for what you do. It’s a really good service.

TW

Thanks

Comment by TW — February 1, 2008 @ 8:19 pm
Dear Sir:
You give a very good call for the correction of gold. Thanks a lot!

Only two newsletter authors mentioned last weekend that gold and gold stocks might have correction. see
http://www.321gold.com/editorials/chan/chan012808.html
http://www.321gold.com/editorials/kern/current.html
but they were not certain. Today your call is right on the money. I would ask you how deep will be this correction? and how about Silver and Gold stocks, especially GDX? I am invest my hard saving money in these to ETF (GDX and SLV). I have been your reader since you published this newsletter. I hope you keep doing well and excellent.

Sincerely
GY Zhao

Comment by GY — February 2, 2008 @ 3:54 am
What are your guys thoughts on gold Juniors at the moment?

One company in particular caught my eye - Central Sun Mining (formerly Glencairn Gold [AMEX: SMC]). The Pres/CEO is Peter Tagliamonte - the former Pres/CEO of similarly named Desert Sun Mining… which is why it caught my eye.

Desert Sun got a mine up and running in Brazil back in ‘05, and was subsequently bought out by Yamana gold, in addition to garnering a win for “Mine Manager of the Year” for Tagliamonte (http://findarticles.com/p/articles/mi_m0EIN/is_2005_Dec_12/ai_n15930780)

I am of the opinion that DEZ one of, if not THE reason, for the rise in Yamana Gold’s pricetag and esteem.

I guess my point is… Tagliamonte seems like an industry stud, and was smart enough to get out of the buyout and move to another junior to give it another shot.

I’m going to be keeping my eyes on the company and consider a buy in. Any/all opinions welcomed, thanks!!!

Comment by jgr — February 4, 2008 @ 8:35 am

Gold and Gold Stocks: Take Some Profits

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