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« UK Interest Rates Rise Yet Again | Main | Stock Picking Contest: 1st Place »
Thursday
Jul052007

Gold: Volatility Decreasing

Gold Prices are notorious for being volatile, but recently, volatility has been decreasing.

Gold Volatility Decreasing

Is this a sign gold prices are preparing for a rally?

As the chart above shows, gold prices are becoming more stable over the last few weeks. The green Bollinger Bands are an indicator of volatility and the wider the gap between them, the more volatile the commodity, stock or index.

If the lines are moving closer together, it shows that gold prices are stabilising. In the last week or so the BB have moved closer together as the upper band fell the 669.85, the middle to 655.40 and the lower band has risen to 642.75

Volatility usually decreases before a rally, and hopefully this will be the case for gold. We see a rally taking place after these summer doldrums and this will be very beneficial for our gold stocks, which expect to put on large gains as gold prices head for our target of $1000/ounce.

This is a seasonally quiet period for gold prices and gold stocks so now may be a good time to add to positions in gold and gold stocks or acquire positions if you have not already done so. We signalled a BUY on Kinross Gold (KGC on NYSE), a long time member of our portfolio of gold stocks, on Friday. Kinross was trading at about $11.66 and closed yesterday at $12.31 up 5.57% since we suggested to our readers that they should add to holdings.

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Reader Comments (1)

The stocks are a bit stronger and I feel people are starting to pile in. Interesting. I love it when my capital increases.

July 6, 2007 | Unregistered CommenterGMiki

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