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« Yamana Gold: Approaching Crunch Point | Main | Gold Prices Surge – Breaking Downtrend »

Buy in May or Face Dismay?

The summer season brought with it the summer doldrums until a few weeks ago when both gold and silver started to tick upwards.

The HUI short term 20jul07

As we can see from the short-term chart above, the gold and silver mining stocks were quick to respond pushing the HUI up from 320 to 370 in less than 4 weeks for a gain of 15.6%. This is a nice summer rally that should help to convince disenchanted gold bugs that it is not all doom and gloom.

Our strategy for this year was not to ‘Sell in May and Go Away and Come Back on Labour Day’ as we thought that this year could well be a little different. For those who did sell it could still work out for you as we could still suffer further pullbacks in this market, which would present wonderful buying opportunities. However, if we do not get another pull back then those who sold in May will have to buy back in at higher prices as the HUI is now higher than at any time during the month of May as the chart below demonstrates.

The HUI Sell in May

This year could be the year a new adage is coined:

BUY IN MAY OR FACE DISMAY or something along those lines.

As investors we do at times need to challenge ‘conventional wisdom’ and step aside from the herd in order to generate serious profits, this could be one of those times.

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