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« Gold Stocks: Too far, too fast! | Main | Kinross Gold Call Options Up 100% in Two weeks! »
Sunday
Jun292008

Gold, Silver, Mining Stocks and the US Dollar!

Gold Chart 29 June 2008

The following is a brief update on the precious markets, which stocks and options we are buying, where we see the market going and what we intend to do about it! Gold and silver are in a multiyear up-trend, which offers the opportunity of a lifetime to generate considerable profits.


We kick off with the chart for gold where we can see that a triangular pattern has been formed over recent months with gold breaking out this week. The main reasons for this breakout are the record-breaking price of oil and the lack of support for the dollar by the Federal Reserve Chief Ben Bernanke. As regular readers will know we have predicted another major rally in precious metals in the coming months and have been buying gold and silver mining stocks along with Call Options on market dips. The real action will begin in the fall, however the current environment suggests that we should be in position and fully invested before then.

Silver Chart:

Silver Chart 29 June 2008


Silver is lagging behind the in terms of progress when compared its big brother gold, however we do anticipate that silver will play catch up going forward. Buying at these levels around $17.00 should pay dividends, as the downside does appear to be limited. But do bear in that we are of the opinion that silver will eventually outperform gold in this bull market and we are therefore slightly bias towards it.


US Dollar Chart:

USD Chart 29 June 2008

The US dollar has tried to rally over the last few months but the failure to get real support via an interest rate hike has effectively thrown it to the wolves. The Federal Reserve are talking tough about fighting inflation but we don’t see them doing adjustments to the rates too soon, as it would be a hammer blow to the American economy and the housing sector. Also note that the being the chairman of the Federal Reserve is a position that is not an elected one, but an appointed one, so the possibilities of a rate rise before the presidential election are slim.

Having touched on the three key ingredients of this bull market we would like to bring a number of stocks to your attention, which we see as having a starring role as this bull market, unfolds.

Gold Stocks:

Agnico-Eagle Mines Limited:

Agnico Chart 29 June 2008

The chart shows a decent break out for one of our favourite gold stocks, however the technical indicators suggest that it is overbought at the moment so it may be better to wait for a cheaper entry level before acquiring this stock. The P/E ratio is 72, which is high when compared with Kinross or Yamana who have a P/E ratio of 42.
Agnico-Eagle Mines Limited trades on the New York Stock Exchange and the Toronto Stock Exchange under the symbol of AEM.


Kinross Gold Corporation:

Kinross Gold Chart 29 June 2008

Again we can see from the chart that Kinross has stuck its head above the resistance parapet in its recent breakout. Also note that the RSI, MACD and the Stockastics are on the ceiling, which suggest that this stock is a little overbought. The stock price has increased lately from the $18.00 level to the $23.00 level which might tempt some traders to indulge in a little profit taking and who could blame them for doing so. Nevertheless, this is a solid producer to hold in our core position. Two weeks ago we purchased some Call Options on this stock, which performed well by doubling in price so we sold them on Friday in order to lock in the profit. Kinross Gold Corporation trades on the New York Stock Exchange under the symbol of KGC and on the Toronto Stock Exchange under the symbol of K.


Randgold Resources Limited:

Randgold Chart 29 June 2008

A recent addition to out portfolio and off to a pleasing start with a 23% gain in two weeks so we appear to have bought at the bottom of this current dip. The technical indicators have moved up rapidly so Randgold may just take a breather at this juncture. Randgold Resources Limited trades on the NASDAQ under the symbol of GOLD and on the London Stock Exchange under the symbol of RRS.



Silver Stocks:

Hecla Mining Company:

Hecla Mining Chart 29 June 2008

We do hold this stock and from time to time trade it as the opportunities present themselves. It is a volatile stock which was oversold recently so we decided to increase our exposure to it with the purchase of some Call Options last week, they have increased by 50% since then which is pleasing to us. Hecla Mining Company trades on the New York Stock Exchange under the symbol of HL.

Pan American Silver Corporation:

Pan American Silver Chart 29 June 2008

We hold Pan American Silver Corporation as part of our core portfolio and increased our exposure just over a week ago when acquired more of this stock for $31.06. As we can see on the chart this purchase is also fortuitous, as it appears to be close to the bottom of this consolidation period. Pan American Silver Corporation trades on the NASDAQ under the symbol of PAAS and on the Toronto Stock Exchange under the symbol of PAA.


In conclusion we believe that the next two months should be used to accumulate your favourite gold and silver stocks, as well as any associated options, before the next leg of this bull market really clicks into gear. Volatility will accompany us all the way so expect it and it won’t ruin your day. Dips are buying opportunities that we intend to take advantage of via additional acquisitions or through the alternative of options trading.

All of our research, analysis and trades are published on our web sites together with our newsletter and alerts, which you can receive for FREE by clicking here for Gold and here for Silver.

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Reader Comments (4)

Hello--

I am enjoying your commentary very much.

Do you think it is worthwhile to invest in CDE and SIL--two silver stocks that have been beaten down and which don't appear to be going any place (yet)? They are a better buy than the more pricy stocks you have chosen, since they are so low in price. Do you think they will recover? When buy? now?

Thanks,

Lars

June 29, 2008 | Unregistered CommenterLars

Lars,

We are not in CDE at the moment because we believe that there is better value elsewhere.

We did a review of Apex Silver recently as it was requested by a number of readers. If you use the search bar at the bottom of the page you should find the article, which we hope, is helpful to you.

June 29, 2008 | Unregistered CommenterGold Prices

I hold CDE for some time and was really disapointing. Too many transactions, millions every day, and nothing happens. It's too much diluted. It went from $3.74, my entry, to just $4.50. Ever since I was not playing silver, however I boutgh recently Fresnillo (FRES.L), a new player in the London SE, which holds the largest silver mine in the world south in Mexico. It's been trading for just a few months and is currently below its IPO, around 495 pences. I cannot miss this time.

June 29, 2008 | Unregistered CommenterToni

Scenario 1: Oil price comes down after The Olympics and the crowd will move from oil to gold.

Scenario 2: Oil continues to go up up and away with occasional dips. This will pull gold up.

Either way, gold will go up.

I have another scenario which may bring gold stocks down. But I'll save it.

Having fun with my crystal ball. Thank you for reading.

ep

July 3, 2008 | Unregistered Commenterep

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