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Tuesday
Oct062009

Gold: Third Time Lucky!

Gold: Third Time Lucky!

The recent rise in gold prices above the $1000 mark has sparked interest in the yellow metal once again, but this is in fact the third time in less that two years that gold prices have reached four figures, with the previous two occasions preceding large drops in the gold price.

So is it a case of third time lucky this time for gold?

We certainly think so, particularly as we watch gold tick up in Hong Kong to flirt with $1020. However $1033 is the critical level that we are watching intently, as we believe a break above this level will confirm that gold is indeed in a major rally and not just another failed attempt at maintaining a four figure price.

Emphasis must be placed on the importance of gold breaking the $1000 level, and maintaining it, this time around. If it fails again this will jeopardize future attempts, firstly as bulls will become nervous as soon as it ever comes close again, and secondly traders will jump on gold as a textbook short. This could put gold's bull run back a year or two.

Thankfully however, we do not see this happening. We see gold breaking $1033 very soon, and then running to $1200 over the coming months.

Hold tight, its going to be wild ride on the way though.



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.

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Friday
Oct022009

SKF in Class Action Case

The following is an excerpt form an article carried by Sys-com.com regarding a Class Action involving SKF. It would appear that some of these newer investment vehicles cannot deliver everything that they purport to be able to do. The outcome of this court case should help to clarify matters for us.


The complaint names ProShares, ProShare Advisors LLC, SEI Investments Distribution Co., Michael L. Sapir, Louis M. Mayberg, Russell S. Reynolds, III, Michael Wachs, and Simon D. Collier, as defendants (collectively, "Defendants"). ProShares sells its Ultra and UltraShort ETFs as "simple" directional plays. As marketed by ProShares, Ultra ETFs are designed to go up when markets go up; UltraShort ETFs are designed to go up when markets go down. The SKF Fund is one of ProShares' UltraShort ETFs. The SKF Fund seeks investment results that correspond to twice the inverse (-200%) daily performance of the Dow Jones U.S Financials Index ("DJFIX"), which measures the performance of the real estate sector of the U.S. equity market. Accordingly, the SKF Fund is supposed to deliver double the inverse return of the DJFIX, which fell approximately 52.2 percent from January 2, 2008 through December 17, 2008, ostensibly creating a profit for investors who anticipated a decline in the U.S. financials market. In other words, the SKF Fund should have appreciated by over 104 percent during this period. However, the SKF Fund only appreciated approximately 2.2 percent during this period.

The complaint alleges the Defendants violated the Securities Act by failing to disclose the following risks, inter alia, in the Registration Statement: (1) if SKF Fund shares were held for a time period longer than one day, the likelihood of catastrophic losses was huge; and (2) the extent to which performance of the SKF Fund would inevitably diverge from the performance of the DJFIX -- i.e., the overwhelming probability, if not certainty, of spectacular divergence.
Plaintiff in the SKF Action seeks to recover damages on behalf of all Class members who purchased or otherwise acquired shares of ProShares SKF. If you purchased or otherwise acquired ProShares SKF shares, and either lost money on the transaction or still hold the shares, you may wish to join in the action to serve as lead plaintiff. In order to do so, you must meet certain requirements set forth in the applicable law and file appropriate papers no later than October 20, 2009.


Have a good one.

Got a comment – then fire it in.

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Friday
Oct022009

The Independence of the UK rests with the Irish Vote

Vote NO.JPG


An article in the FT today by Tony Barber and John Murray Brown in Dublin had this to say:

European Union leaders will urge a prompt end to almost a decade of debilitating, inward-looking debates over institutional reform if the result of Ireland’s referendum on the EU’s Lisbon treaty confirms on Saturday that voters have approved the charter at the second time of asking.

A Yes vote, predicted by all opinion polls in advance of Friday’s referendum, will redouble pressure from Brussels and EU national capitals on Vaclav Klaus, the Eurosceptic Czech president, to sign the treaty and remove the last important obstacle to its implementation early next year.


As an Englishman I'm gutted that the independence of my country now depends on people other than Englishmen. Should the Irish vote Yes to this Treaty then Britain will not get the referendum they were promised and will become a mere region of the European Union. A union that is so corrupt that Deloitte's, their accountants have been unable to sign off the accounts as audited for the last the ten years. The Irish voted No when first asked so they have to have another vote and will keep voting until the EU get the results that they need. How sad is that!

The Dutch and the French have already voted No when confronted with the new European constitution so the EU camouflages it now as a treaty and does not give the Dutch or the French the opportunity to reject it at the ballot box.

So, if you think politics stinks where you live then spare a thought for us on the eve of this impending disaster.










Thursday
Oct012009

Another Market Crash?

DOW Chart 01 October 2009.JPG

There are a number of people predicting another market crash, similar or even bigger than experienced in 2008. What are your thoughts on this and do you think that Gold and Gold stocks will fall with everything else, as they did in 2008? If not, why would this year be different?

Regards,
AM


The above is a question from one of our readers which we would answer as follows:


Indeed there could be another sell off in the broader markets and the precious metals stocks could well be classified as just another stock as they were last time.

There is also talk of another infusion of cash or a second round of quantitative easing which may help to prop up the markets for a while longer.

Our opinion for what it is worth leans heavily towards gold making record highs and if and when the sell off comes, precious metals stocks may suffer initially but would soon regain their strength as gold is the underlying asset. If we are wrong and gold also suffers then yes the stocks will feel the pain.

One possible defensive strategy would be keep tight 'stops' on our positions just in case, however we risk being stopped out. Another would be to buy a few PUT Options as an insurance against our portfolio heading south, if the worst happens then the PUTS would increase in value thus helping to cushion the fall. Should our tiny sector go from strength to strength then we would run the risk of these options expiring worthless. Another possibility would be to short the DOW and hope that it compensates for any loses suffered in the metals sector. We have been watching such vehicles as SKF for such a trade but it really is dangerous going against Uncle Sam.

This is something that we are watching and if we do move we will post accordingly.


Have a good one.

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Wednesday
Sep302009

Gold Up $14.40 to $1006.10/oz

Golden Panda.JPG
A Golden One Once Panda

Gold fell in early trading in New York and touched $995.00 before fighting back to close at $1006.10/oz with silver putting on an impressive $0.47 to close at $16.60.

We are pleased to see gold move up and especially from the $989.00/oz mark which we mentioned recently as being a minor support level.

At the current price levels there is no doubt that the quality, well managed precious metals producers are doing well and turning a profit. If gold prices can hold at these levels then they will continue to do well. However, the eyes of the investment community are upon us as gold has tried a few times and failed to stay above the $1000/oz level. Furthermore we really do need to see gold power through the old high of $1033.00/oz and make a run to much higher ground.

As we mentioned in yesterdays post this is all about the US Dollar at the moment and yesterday the dollar fell 0.52% to trade at 76.72 thus allowing gold prices to improve.

Options traders need to tread carefully at this point as gold may remain in consolidation mode for now thus eroding your time premium. Our own very humble opinion is that the dollar will go lower and gold will take out its old high and then we are in unchartered waters which should see gold prices delighting all of us.

Stay tuned as we are at a critical juncture and history is about to be made.





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Wednesday
Sep302009

Gold Prices Capped by Stubborn Dollar

USD Chart 30 September 2009.JPG

A snap shot of the dollar over the last few days, going sideways and trying to consolidate. This action, along with a number of pundits calling for dollar rally has helped to put a cap on gold prices.

The chart below takes a longer view of the dollar and is overlaid with golds progress. It clearly demonstrates the inverse relationship that exits between the dollar and gold. Gold and indirectly silver are reflecting the dollars behaviour so we need look no further for now.

USD Chart with gold 30 Septemebr 2009.JPG

However the time will come when gold will be recognized by many more investors and will rise regardless of the dollars progress. When this becomes apparent the general public will begin to take a keen interest and that will signal the beginning of the mania period whereby both gold and silver head north in leaps and bounds. At this point even the dogs with fleas in this sector will experience unheard of price rises as the masses buy anything that resembles the real thing.

However, quality always shines through and those who hold the quality stocks will do the best.



Have a good one.

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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.

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Tuesday
Sep292009

Kinross Gold Corporation Could Up Gold Production by 57% in 5 Years

Kinross Gold Chart 30 Sep 09.JPG


Kinross Gold Corporation (KGC) is Canada’s third- largest producer of the precious metal, may increase output by about 57 percent in the next five years if it proceeds with projects under evaluation in South America.

Proposed expansions at three producing mines and the possible development of three new projects may add about 1.3 million ounces of annual output, Chief Executive Officer Tye Burt, 52, said yesterday. Putting all six into production may cost about $3 billion, Burt said.

“These are major projects, and if they all received the go-ahead, they would see us growing for the next five or six years,” Burt said in an interview at the company’s headquarters in Toronto. “They could add 1.3 million ounces of annual production, but most importantly at very attractive economics.”

Burt said on Sept. 16 that the gold industry “may be in the midst of a perfect storm” because demand for the precious metal is outpacing new discoveries. Gold climbed to an 18-month high of $1,025.80 an ounce on Sept. 17 in New York. The price reached a record of $1,033.90 in March 2008, as per a report by Bloomberg.

Taking quick look at the chart we can see KGC is making steady progress and is being supported by its 50dma and its 200dma which are heading north in parallel. The volume of shares traded jumped early in September but has now returned to close its daily average and the technical indicators are in the middle of their ranges at the moment.

Gold closed at $991.70 in New York as the US Dollar stubbornly hangs on to the slippery wall dollar debasement, quantitative easing et al.

Kinross Gold Corporation trades on the Toronto stock Exchange under the symbol of ‘K’ and on the New York Exchange under the symbol of ‘KGC’

Have a good one.

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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.

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Sunday
Sep272009

Randgold Resources Limited: A Buy Shortly

Randgold chart 28 Sep 09.JPG

As we can see from the above chart Randgold Resources Limited (GOLD)
this stock jumped dramatically putting on almost twenty dollars recently and is now taking a breather, we need to pay attention and watch closely for a suitable re-entry level.

Randgold is responsive to gold prices and moves quickly either way, this volatility presents us with trading opportunities from time to time. The next opportunity is approaching quickly as Randgold pulls back from a high of $75.00. This pull back should play itself out over the next two weeks when the stock could trade at sub $60.00 which we believe would be a tremendous opportunity to purchase Randgold and also to look at purchasing a few Call options, possibly the December series.

Should gold remain at current levels and continue to consolidate for at least the next few weeks, then the froth on such stocks could well dissipate giving us the opportunity to trade. If gold decides to make a dash for $1033, then it will be a case of hold on to your hats as this stock will move fast.

We hope that this sort of heads up helps you to understand what we are thinking and how we intend to trade the situation once the opportunity has been identified.

We will observe for now and let know when we think the time is ripe to pounce.

Have a good one.

Got a comment – then fire it in.

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.

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Thursday
Sep242009

Gold Rally Takes A Pause, For Now

Gold Rally Takes A Pause, For Now




Gold appears to be taking a pause for now, having rallied from $950 to $1020 without stopping to take a breath. However although a pause is healthy considering gold's $70 rise, it must not be prolonged as this will kill the momentum in the move.

Looking at the chart above, it is clear that the technical indicators are signaling further weakness in the gold price in the short term. The Relative Strength Index hit 70 and became overbought, and now is dropping back to more neutral territory as gold slips below $1000 again. Similarly the STO is falling and has endured a negative crossover, as has the MACD. All this equals probable further weakness in the gold price over the short term, before the yellow metal can surge up again.

The most important number here is $1033. We view this as the most critical level standing in the way of golds route to $1200 and beyond. Unless this is broken, and soon, there is a high risk that gold will slip away from the $1000 level – and for the third time it will have failed to maintain prices over $1000 for a decent period of time. That would seriously hamper and future attempts for gold to seriously break above $1000.

We do not think gold will fail this time however. We think that even if we are to see some short term weakness in gold at the moment, this will be followed by a serious surge up through $1033 and on to $1200.

However it may be a good idea to wait until $1033 is broken before buying more positions on gold. At present we are holding our main position in our favorite gold stocks and watching and waiting for the chance to deploy some of our opportunity cash.



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.

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Wednesday
Sep232009

Gold-Prices.Biz tops 9000 subscribers

gold chart 24 Sep 09.JPG
A huge thank you from all the team here to the 9000 subscribers who have now enrolled for our newsletter. This newsletter is now being read in all corners of the globe from Cairo to Johannesburg and from Oslo to Houston. We are flattered not only by the volume but also by the number of Stock Brokers, Fund Managers, Financial Institutions, Mining Companies, CEOs, VPs, Financial Letter Writers and Banks who are also recipients.

You may have noticed the counter on the home page which says 9002 readers by Feedburner, which is slightly misleading as it refers to subscribers. The number of casual visitors to the site is around 30,000 per day on a busy day.

The thing that pleases us most though is the quality of the comments that we received on the site and via our mail bag. These comments help to police us and add a semblance of balance and normality to what is a small market sector which is still on fire and has a lot further to go!

Please feel free to join in if you have not already done so, we want to hear your voice whether you agree with us or not, your comments are really appreciated by the team here.

Once again many thanks indeed for your co-operation, patience and support.

Have a sparkling day.


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This message is in response to the inquiries that we have received regarding the suspension of some of our readers accounts.

Many thanks for your patience in this matter.


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