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« Will the Real Price of Gold Please Stand Up | Main | Mining Stocks or Funds The Tussle Continues »
Thursday
Sep032009

Gold and Silver moved by India, Hong Kong, Sentiment, et al.

Gold Chart 03 Sep 09.JPG

Phew! What a dazzling couple of days for the precious metals bugs as gold prices and silver prices leap into the spot light. Gold is currently trading at $991.70 and silver at $16.12 both having put on tremendous gains.

The wedding season in India traditionally sees a surge in the purchase of gold and Hong Kong is taking physical delivery of its gold from London and storing it in new facilities in the cities airport in a bid to become a gold trading center.

The US Dollar is hanging on just above the '78' level on the index which compares it to a basket of other currencies and the broader markets finished slightly up on the day.

What is also interesting when you look at the charts of your favourite gold and silver producers is the sudden increase in volume of stocks traded which also bodes well for the future.

Here is a snippet from an article on MarketWatch regarding sentiment

Consider the average recommended gold market exposure among a subset of short-term gold timing services tracked by the Hulbert Financial Digest. During gold's February assault on the thousand dollar barrier, the average gold market exposure among these gold timers got as high as 61%. During early June's, it got even higher, 65%.
Right now, in contrast, even though gold is trading for higher than it was in early June and almost as high as it got in February, the gold timers' average exposure is no where near as high -- just 25%, in fact.


These are 'gold timers' and their exposure is only 25% so this tells us that they still have room to move higher in terms of their exposure and recommendations. When this happens their influence will be another positive factor in the precious metals story.

Click here to read the article in full.

We are currently 85% in the metals and their associated stocks and 15% in cash. We think that we should always have some cash for future opportunities but on the next 'dip' we could increase our exposure a little further.

In our recent assessment of Randgold Resources Limited (GOLD) we wrote the following:

On balance we think that this may be as good as it gets for Randgold and that a purchase here would prove to be a profitable one, however we are looking for an absolute bargain and have chosen to wait a little longer. This decision is not unanimous within our team so as always the final decision is yours and yours alone to make.

We held out for a cheaper entry point and missed out on this current bounce, the price we pay for being too tight. If you disagreed with us and made a purchase then give yourself a pat on the back, well done.

Enjoy this sparkling day but don't go to sleep, the economic environment is changing at a fast pace so read as widely as you can to stay on top of events and build your portfolio in this sector at a steady rate.


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

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Reader Comments (7)

Hi,

Just read your article about gold stocks. As we know the normal gold Efts dont all have the physical gold they purport so many are paper gold only. I supposse the leverage EFTS use derivatives to produce the increas return, there could be a risk one day of a derivatives blow out and your money could be at risk. At least with gold and gold stocks you have something real a product or companies which produce the product.

Thanks for a thought provoking article.

September 4, 2009 | Unregistered CommenterC

i told you, the downtrend to 500 gold will be setting from yesterday into today. watch it!

September 4, 2009 | Unregistered CommenterDi

Di, what are you trying to say. Do you believe Gold is going to drop 50%. With the whole world awash in fiat money I don't see how you can believe this. If you look around I don't believe you will find any annalists that would agree with your statement.

September 4, 2009 | Unregistered CommenterRJ

Randgold has been popping between 55 and 65 for some time now. At 56.99 on monday, down 1.88, I decided not to wait for the absolute best entry point since gold was little changed. Bought 55 and 60 Sept. calls. Wow! My only regret is I also put in sell orders at double my purchase price. A nice pop of $10 up seems to be a little much for 2 days of trading. If I owned the stock, I would be seriously considering profit taking. So now I am considering puts on the same. Thanx so much for your excellent analysis.

September 4, 2009 | Unregistered CommenterRick Nielsen

Rick,

How can you possibly have regrets when made a 100% profit in a day or so!

Spare a thought for us we tracked it all the way and waited a tad too long and missed the boat..

Let us know how you get on with the PUTS in Randgold please.

Well done,

Bob K

September 4, 2009 | Unregistered CommenterGold Prices

It looks like on the chart that the RSI and STO are overbought.

September 4, 2009 | Unregistered CommenterA

If Gold can break 1000 and hold..We could go to 1250-1300 sooner than you think. It is early in the Gold season. Could run for a couple of months. Will see...Taking some off the table along the way...

September 4, 2009 | Unregistered CommenterGAry

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