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« Gold-Prices.biz: Portfolio Update 21 August 2007 | Main | Goodbye Dollar, Hello Gold! »
Monday
Aug202007

Kinross Gold Corporation: BUY

After a long period of will she, won’t she, breakout of this trading range, she did, to the downside. The global sell off took no prisoners as every market was hit including precious metals.

Friday brought us relief as the Federal Reserve intervened with a loosening of the financial constraints and the markets responded with a bounce. The rate cut is one thing but to us the underlying signal is that the markets will be supported with the easing of interest rates and additional liquidity. These actions will lead to the US Dollar losing more of its value and when investors see the light, both gold and silver will be recognised as safe heavens.

For those already in precious metals such as us, then it was a gut-wrenching week. However we are of the opinion that the pendulum has swung too far presenting us with an amazing buying opportunity. That its not to say that the volatility is over completely, it is going to be a rocky ride requiring all the nerve we can muster so that events like last week do not panic us into selling mode. Paper loses are hard to live with but remember that they only become real loses when we press the sell button and we have no intention of doing that.

First take at look at the HUI (the Gold Bugs Index) and what do we see? A seriously oversold situation.

The HUI Chart:


The HUI Chart 20 Aug 07


The HUI has fallen back to the same level that it was in January 2006. The technical indicators are screaming BUY as these stocks are significantly oversold. Although we have most of our cash in the market we are pleased to have a small group of investors who have managed to add to our cash position.

So we are going to take advantage of this opportunity and buy today. There are a number of possibilities that we like very much however we have managed to reduce the short list to just one gold stock for today’s purchase.

The stock is Kinross Gold Corporation.

Kinross Gold Chart 20 Aug 08

The sell off knocked 1/3 off the stock price, but the recovery has started. Note the RSI has just turned positive along with the Stockastics. We expect Kinross to regain its former price levels of $13 to $14 so today we made another investment at $11.48.

Our readers may recall that we signalled a BUY on Kinross not so long ago for a short term move and the stock went on to rise over 22% in the next 20 days. See our history of articles on Kinross Gold by clicking here.

Kinross Gold Corp trades as KGC on the NYSE and as K on the TSX. Stay informed on the gold bull market by subscribing to our FREE Gold Prices Newsletter.

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