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« The US Dollar Index: Is What? | Main | PPT Propping Up The USD Again? »
Thursday
Aug162007

Buying Opportunity In Gold Stocks


A great buying opportunity in gold stocks is rapidly approaching, if it is not already here.

Buying Opportunity In Gold Stocks KGC

In spite of the fact that there was no significant downward move in gold prices yesterday, we saw gold stocks take a big beating. Agnico Eagle was down 9.42%, Kinross Gold dropped 9.87% whilst Yamana Gold fell 8.10%. Gold stocks across the board posted big percentage losses at the market close.

This is certainly a large pullback and when there is a pullback in a great bull market, such as the one currently unfolding in gold and gold stock, we move to add to our holdings in our favourite gold stocks, or buy them for a short term trade. This is what we did with Kinross Gold on June 29th as we signalled an additional BUY on Kinross at $11.66 missing the very bottom of the pullback by just 34 cents or 3.00% . Kinross went on to gain over 23% as the chart above shows.

We are in no doubt that Kinross is currently a good buy at this level and the current price offers a good discount to the value of the stock. However we are going to hesitate for the moment for signs that this pullback is over before we flash a BUY on Kinross and possibly some other gold stocks that are at a considerable discount. Technically speaking, the RSI is signalling a buy and the STO is the bullish zone, but we have yet to see the black break up through the red to confirm the buy. We are prepared to miss the very bottom, as we did before by 3%, in order to ensure the pullback is over.

The reality is, at the moment it doesn't matter how good a stock may look fundamentally, technically or otherwise. This current credit squeeze means that investors are selling anything to generate cash for margin calls and other obligations. Therefore we are looking for Kinross to form a bottom before we signal a BUY to our readers of The Gold Prices Newsletter, which one can subscribe to completely free of charge.

Kinross Gold trades as KGC on the NYSE and as K on the TSX.

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