Gold prices bought Yamana Gold towards the close of business today at $9.37 per share. It was a close call as to where to invest our funds but Yamana got the vote.

From the chart below we can see that Yamana has managed to hold and bounce off its 200-Day Moving Average, which we thought was very encouraging. The RSI, MACD and Stockastics are all turning in the stocks favour. Yamana exhibits considerable strength and we expect to see it trading back at its old high of $12.0 fairly soon.

This investment is of course predicated on gold returning to higher ground. Our research shows that the fundamentals remain in place for precious metals. Add to this the end of the season for the Central Bank sales and the start of the festival season in India and we think this could be the beginning of the next up leg in gold prices.

From what we have read it would appear that the Central Banks have not sold their full quota for this year, though the figures vary in each new publication. But, if this is so, then we see it as being bullish for gold as there is a banker out there who has seen the light and wants to hold onto his job. Unlike Gordon Brown who got it wrong big time and is now in line for promotion! How many times have you seen that happen?

As usual don’t go too mad on this one.

27 September 2006