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« Spread betting: A gamble that failed | Main | Kinross Gold Corp: Up 39.58% »
Tuesday
Sep122006

GOLD: A rough ride

GOLD: A rough ride

The last few days has seen the gold price drop down and penetrate gold’s 2oo DMA. So, where does gold go from here?

This sell off has surprised us a little as it looks like one or more of the central banks are doing the selling. We had thought that the banks would tend to be holders of gold rather than sellers when you take into consideration gold’s progress in the last few years. Britain sold at very bottom having announced to the entire world that it would hold a series of auctions to get rid of the family silverware. Something that my Grandmother would never do despite the many hard times she had to live through.

We understand that there is approximately 140 tonnes of gold that can still be sold before the 23rd September deadline from this years allowance. Will they? Won’t they?

We know that the German government wants to sell gold and use the funds for all sorts of schemes and the German treasury wants to hold to gold as an investment. Who will win this tug of war? Will we find out in the next couple of weeks! The French too are in a similar position.

It could be a rough time for gold. Our strategy is to sit it out. We still believe that gold is headed much, much higher and to sell our portfolio now would be like giving someone else an early Christmas present. It takes strength, courage and patients to sit on your hands during these periods especially when September is usually a good month for gold.

However, once we get September out of the way we reckon it will be onward and upward for gold.

We are NOT selling any gold mining stock and may even acquire a little more if and when we conclude that the selling is over done.

Relax and go and do what you do. Hit a few tennis balls, play with the kids, talk to your wife, talk to your pals wife, but generally chill; the smart investors are not selling at the moment.

12 September 2006

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Reader Comments (3)

We share the same views. There's two important levels now: 580 and 550. I do not think that 584 was the bottom, but I do hope that 580 will be the bottom. That means possibly another rough week ahead of us.
As for my mining stocks, I will hold and chew on a stick for the time being. In fact, I added Yamana Gold to my portfolio yesterday and might continue to add if gold falls further.

September 12, 2006 | Unregistered CommenterJoey

550 is a support point sure, but 580 is the key as it is the 200MA this hasnt been broken since the gold price was $400!

580 has to hold for the uptrend to be intact.

September 13, 2006 | Unregistered CommenterSam

My gut feel says that the damage is over. However, I think we should let the dust settle before making a move. This might be a great buying opportunity but I'm just not absolutely certain that we are at the bottom.

September 13, 2006 | Unregistered CommenterBob

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