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« The Gold Backed Dinar | Main | Is the Gold Trade “Crowded”? »
Monday
Jul192010

Kinross Gold Corporation Hits the Wall

KGC Chart 20 July 2010.jpg


The stock price of Kinross Gold Corporation (KGC) has been hammered recently with a loss of around 20% to close today at $15.46, on the back of gold prices softening during this holiday period to trade at $1184.20 as we write.

We have plotted gold prices on the above chart so that we can see just how Kinross Gold has performed relative to them. As we can see this stock was heading south while gold was heading north and as gold prices peaked and fell the stock price of Kinross got hammered.

This is a disappointing performance by Kinross, however, they are not alone as many of the other quality stocks have also failed, or at least been sluggish in their reaction to golds advance. Kinross Gold will release its financial statements and operating results for the second quarter of 2010 on Wednesday, August 4, 2010, after market close. These results may add some cheer, however, the last set of results fell a tad short of analysts expectations and so the stock fell accordingly.

On the positive side if the stock drops a little further then it could well present us with a wonderful pre-fall bargain, when, from Labour Day onwards we expect precious metals prices to zoom. This aberration in KGCs stock price could also give us an options trading opportunity, once we have established that this downward trend is over. We will continue to monitor the situation and as usual we will post as soon as we see a trade with a good possibility of generating a profit.

Kinross Gold Corporation trades on the TSX under the symbol of K, and on the NYSE under the symbol of KGC. Kinross has a market capitalization of $10.86 billion, with average turnover of around five million shares, a P/E of 31.66 and closed today at $15.46.

In response to our readers requests we recently launched an options trading service which has recorded sixteen consecutive winning trades, a performance that puts our core holdings in the shade. We had intended to use it to give our portfolio a small boost, however, it does raise questions about the strategy of holding mining stocks on the basis that they will perform as they did in the last gold bull market. This is not 1980 and things are most certainly different and the overall outcome could also be different, a question we will tackle shortly.

Have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:

On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.

On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.



Accumulated Profits from Investing $1000 in each OPTIONTRADE signal 14 May 2010.jpg

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more.


Silver-prices.net have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.

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. (Winners of the GoldDrivers Stock Picking Competition 2007)

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.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.


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Reader Comments (4)

The fact that mining stocks will do well is a no brainer. When less than 1% of total investment money in the world is in precious metal stocks, i think the price levels are going to be way, way higher than in the 1970s until all currencies are repriced or a new global currency comes into being.

July 20, 2010 | Unregistered CommenterNaresh

The point is that the stocks have failed to perform recently, as an example AEM was $80.00 when gold was $1000/oz, it now stands at $56.00 when gold is at $1192. So will stocks make up ground or are investors happy with gaining exposure to gold through GLD, etc?

July 20, 2010 | Unregistered CommenterGold Prices

That's a nice way of putting it. However, our large financial institutions have a large vested interest in NOT letting Gold stocks perform to their potential since it goes against the White Shoe New York model of investing where these institutions earn fees and commissions through financial products. Where's the commission earned if everyone starts buying Gold and Gold Shares? So I believe they will short this asset class to death and hold the shorts until the physical delivery bandwagon takes it to the bitter finish. Gold is, after all finite in quantity, isn't it? And the Comex is the weakest link in the chain which bridges the Physical Gold reality with the Financial Gold fantasy. We must wait until a delivery default happens VERY PUBLICLY, and then we watch what happens to the Gold Stocks and the physical! It should take real Gold and real producers to the moon. Time is on our side. It may take another 10 years, but time will be on our side considering the professional investing community is already with us and the mainstream will catch up pretty soon!

July 20, 2010 | Unregistered CommenterNaresh

Iraqi Dinar is very real, but the pitch many Dinar dealers try to send your way is far from reality and designed to get you buy from them. Some of these dealers even go as far as to explain that they are trusted by the government and supply you with a document to reinforce this illusion.
First, the US government requires a business (or anyone for that matter) to register with them when selling any kind of currency. Once you register, the US Government will send you a letter confirming your registration. IT DOES NOT mean that they trust or vouch for the company, only that they complied with the law.
Read More:http://www.dinariraqi.net

July 31, 2010 | Unregistered CommenterIraqi Dinar

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