Gold just taking a break before next run this fall...

Gold went on a great one month run this summer which timed exactly with the cyclical season. Gold stocks then followed and we have seen some massive gains in a lot of stocks we follow including Creso Exploration going from .28 to $1, Kaminak going form $1.50 to $3.20 and several other hot gold plays that have seen steady increases over the last month to month in a half.

This is just the first part of this years run that should see gold push past $1300 for the first time ever this fall. Where it goes it is hard to predict when the yellow metal is making new highs but I would suggest an exhaustion price target of around 1330 -40 area before we see a serious sell-off again. I am not saying that the price won't go higher this fall but I am still expecting an extended gold bull market for years to come, contrary to quite a few analysts opinion's that this is the year that gold goes parabolic and that gold's bull exhaustion peak is close. I just don't buy it and will continue to go with the wall of worry that gold prices seemingly climb every year.

What makes me confident that POG is just resting is the current price level. As long as POG holds $1230, I am confident that the current gold run will continue with $1230 b e very key area to hold over the coming weeks.

Some high quality explorers that I think ave huge potential are KAM, NTR and ATC in the Yukon White Gold District. CXT at .72 is a great entry point after a huge run and FAU at .52 represents another good buy. Let me stress that CXT and FAU are investments that are at the opposite ends of the gold investing spectrum. CXT is an open deposit looking to add millions of ounces and looking for the huge discovery while FAU is a closed deposit with little chance at greatly increasing reserves, but is a fully functional turnkey mining operation that could be in production as early as next spring. The plan is to start up the mine and hopefully add ounces every year that will extend the mine life. Which is a very good possibility although what gives FIRE River gold an advantage is they are in highly prospective area for exploration and discovery. They may not add significant ounces to the Nixon Fork Gold Mine, but if they can make it profitable venture for the coming years then it gives them a good foothold to further explore and make discovery in Alaska.

There are several other stocks that I hold in high esteem and if you want to see what is on my gold watchlist... look no further than my HOT GOLD DISCOVERY Portfolio.

Click here to see what is high on my shopping list.

Gold The One Investment You Can Always Count On

When reading into and trying to understand the markets it is important to know a few things well. One cannot be an expert at everything and if you try, you will end up being good at nothing. One must find a place in the markets to park their butt, and learn.

Since I have entered the markets in late 2005, one of my first trends I identified was gold. I hopped on the gold bandwagon at the last time gold dipped below $500 and took off. That is almost 5 years ago and 150% return later, Gold is still going strong. Since that time I learned everything I could about gold, its fundamentals, its trading patterns anything and everything that has to do with gold. I learned the arguments for gold and arguments against gold. Over the last 4.5 years, basically memorizing everything to do with gold.

Now some may call me a gold bug because I believe gold is still far from peaking. But how can I be a gold bug when I have only been in the industry for 5 years? I am certainly not a gold bug and will jump off the train when the time is right, but that time is not now.

More often than not, (and after a bit of nail biting) my calls in gold are usually right. Last summer I called a breakout in gold the day Gartman claimed he sold all his gold and gold promptly went on a 4 month run from a breakout at $1000 to $1250...

This summer I called for a correction in gold, and though it wasn't as dramatic as I though it would be and it had to fail a breakout before it came down below $1200 and settle halfway in between my correction targets of $1140 - $1170 before promptly moving back to $1200. I heard so many people over the last week to get out of gold, on BNN, on Stockhouse, I even heard someone say short below $1170????

Really you can' fault these people because they don't follow gold like I do, but it proves you can't know everything and you need to defer to the experts instead of trying to know it all like most of those 'cases' on BNN. In the end they all look like fools... 3 analysts on BNN called for a major sell-off in gold. To the journalists credit, most of them gave the analysts a way out, asking about seasonal trades and timing, but all said the same thing... Sell gold. Don't buy it here.

I could not find a gold bull anywhere last week... except me. The fundamentals driving gold just won't relent and will stay in place for the time being.

I don't know much about the markets, and can often put my foot in my mouth, but one thing I know for sure is BUY GOLD!

The last 2 weeks were an excellent opportunity to buy like I said and now that we have confirmation that gold has bottomed and another breakout to all time highs is imminent, The time to buy Gold and Gold stocks is NOW!!! There is one area of resistance that needs to be broken before confirmation of this continuation pattern. This week or next, gold must beak through this last area of resistance between $1200 and $1210 to confirm the bottom that developed in gold over the last month.

I hope you took the last 2 weeks to load up on your favorite gold stocks because this fall is going to be another major run. If you haven't yet, there are still some good value for some great gold stocks.

EAS, VEN, CSI,SAS, SGR all have great growth profiles for a midcap names.

If you want more leverage and can assume more risk... CXT, PEM, DEC, and FAU are great smallcap names.

Happy Trading

30 year Bond Bull Coming to An End?

I was looking through the newswires tonight and I noticed in my mining feed that TECK has announced pricing of $750M worth of 7 and 30 year notes priced at 3.85% and 6.00% respectively. They are using the funds to retire 9.75% and 10.25% notes which gives them quite a bit of savings on the interest which would be in excess of $100M for sure. Not chump change by any means, but still, really quite a bit of mundane news in itself.

What I am taking from this news more than anything is that TECK's decision to issue new longterm notes and retire higher interest debt, has more to do with where the company sees future interests going. If one thinks that interest rates are going to rise in the future then companies are going to start making these types of corporate decisions and locking in while paper is as cheap as it is.

Are interest rates going up tomorrow? I doubt it, but as you see more and more companies making these types of decisions you know that general attitude in the corporate sector is that rates will rise. Once the global economy gets through this uncertain economic stretch and economies return to more normal levels of growth, rates will rise to keep the economy from being overheated. On the other hand, if the currency crisis reappears, rates will go up in order to support the currencies. It will become a choice of saving buying power versus stiffling economic growth at home.

At this point in time, countries are trying to debase their currencies and as long as this strategy stays in place, interest rates will remain artificially low, but doesn't mean they cannot rise from the absolute rock bottom prices where they are without that strategy being affected too much. Interest rates have to go up. If the economy gets used to cheap paper. Like a highly addictive drug. It will never get off, and when it does, you will see severe pain.

One trade that I am researching to take advantage of when it happens is to short the bond market. Interest rates have been on the decline since the early 80's to a point where they can't get any lower and as a result the bond market has been in a super bull which I believe is nearing an end. Don't go out and short the bond market just yet as a correction this fall will push the bond market up as a place to hide, but once economies return to normal or countries are forced to raise rates because of downward spiraling currencies, The SuperBull in Bonds will be over!

Markets Confirm Further Upside

Last week I wrote twice that the markets were going to go up further despite weaker than expected economic numbers and worries about high unemployment. I reasoned that earnings were just too good so far, with the majority of companies beating expectations and most expected to beat for the rest of earnings season. This set the stage for the uptrend from July 1st lows to continue. I wrote that the Dow needed to break 11600 with confidence and today it opened above that resistance level setting the stage for a continued rally to resistance of 11,900 and then a heavy bit at the 11,200 level.

It should be a good month for stocks as the global economy is still alive and well and until China and India both show signs of significantly slowing to paces under 6% growth the money will follow the earnings. Most of the companies that are beating are beating on strong international sales so with the global nature of our companies today you need to have an international outlook as opposed to just looking at fundamentals on just home soil.

What looks more certain to me than deflation, is poor to flat economic growth in the face of rising prices, which is what will ultimately happen if the developed world economies don't resume a reasonable pace of growth again soon.

One problem the US has is that it needs to encourage spending on home soil as well get credit moving through the system again. The system was designed to run a certain way and now that they are changing it all of a sudden to run a different way the the economy can't take it. It needs the spending to run, it needs it until it can encourage its industry to expand. It needs that spending to bridge the gap until industry can come and reinvest in the US economy.

I think you can have poor economic conditions and positive earnings in this day in age. Its very easy to see how. A lot of people are talking that the markets have to follow US economic conditions, I don't think so and for the first time in history you will see a disconnect between the US economy and the US stock markets because of the international nature of most major companies.

I think the markets push to at least 11,200 but in all probability may go as high as 11,500 - 12,000 where possibly in the fall a further slow down in China as well as further negative revisions of economic data could combine to take us lower.

Happy Trading :)

All That Glitters is Gold

Gold stocks look to be on the move today signalling that the selloff in gold may be close to an end. Ventana Gold released excellent results with more extremely high grade results which has pushed the stock up over 13% to over $8 at its height today. If gold doesn't make it back over $1170 it will probably try and test the lows and support at the 200MA, but the way the price is acting and the way the cream of the crop gold stocks are acting today, it is starting to look like a bottom.

With stocks like Ventana reacting so well to good news it also bodes that the mood is much better for buying gold stocks than it has been at any time in the last 3 months. East Asia Minerals, another impressive deposit also took a hard turn towards the 50 and 200MA's today breaking out of its consolidation pattern. It certainly is not a declared bull again in gold but some of theses stocks look like they are not going to get any cheaper.

Today's trading looks like there is more than average buying interest for gold stocks. At least the premiere ones today. The smart investors will be buying gold stocks over the next month for a very strong seasonal run this fall.

All I know is that the 2 factors that are pulling the markets between a bull and a bear at the moment both will eventually drive POG much higher.



All that glitters is gold. :)

Happy Trading

Gold hits first Correction target

Yesterday morning or afternoon depending on where you are in the world, gold hit my first correction target of $1170. Gold actually traded $1175 but it is close enough to say that it hit it and it moved off that price with authority. This represents an excellent entry point for gold, but is not a fail safe entry point as it is still halfway between the 50M and the 200M meaning that technically there is still a good chance that POG can correct to the 200MA at $1141. Any correction to $1141 should be quick and brief if it happens so be prepared to buy at that price point as well. We are technically entering into a strong buying season for where prices are seasonally strong and within super bull markets, cyclical bulls can be quite predictable and gold is seasonally strong from now until September in the very least with more strength coming in the late fall and early winter that usually extends the summer rally.

I am expecting gold to breakout above $1260 this August / September and now is the time to pick up some of these stocks on the cheap. I would enter half my position now at this point and buy the other half at $1140 if it gets there and if it doesn't would buy the other half on a breakout above the 50MA.

Some great stocks to buy... VEN.TO, EAS.V, CSI.TO, SAS.TO, KAM.V, DEC.V, FAU.V, CXT.V.

Markets should continue to bounce

Last Friday after the close we correctly called an oversold situation and the markets have had 3 strong days on rally mode since Tuesday. We should see at least another 300 point follow through into next week. Not saying that tomorrow will be an up day but the negative sentiment that has been in the market for the last 2 months seems to be abating and I would expect a continued rally on light volume over the next week for sure as we enter into the summer months.

One positive sentiment factor for a continued rally is that the Euro has technically moved into rally mode of its own making a strong move and we should see the Euro test resistance at 1.300 and the breakdown point around 1.32 and change. With the drastic cuts to budgets in Euro zone nations the reaction has been positive, but we will still wait and see if the Euro zone economies can recover with these cuts.

Since it was the breakdown in the Euro and widespread fear that caused this last sell-off we could see the markets and Euro recover. At best we will be range bound for the summer when we enter into September and a new round of economic data. The TED spread is rising and we wait to see if the spread comes down which will signal stability in Europe. If it continues to go u,p that could be a warning sign although currently it is still within a normal range but on the high side.

The USD seems to be recovering as well from its recent drop off so the YEN is starting to become weaker against all currencies. If you are long the EUR, being long against the YEN may offer more upside than being long against the USD.

Gold should continue to sell-off over the next few weeks and I would expect at least $1170 and lower. If it goes under $1130 I would shy away from the trade. Gold stocks are very weak at the moment. Dogs include YRI and K... Kinross used to show so much promise and now the market treats them very poorly. Huge gap down the other day which is never a good sign. G and ABX are holding up the best but I would expect all gold stocks to continue to drag lower. There is definitely some negative divergence with the spot price and gold stocks. It seems that the strategy for the gold player would be to be long the yellow metal physically and trade the gold stocks cyclically because so far they have not broken out into a super bull market in gold stocks which we are all waiting for. I would expect this market to turn around at the end of July where one could time a good trade to the upside as Gold will soon be entering into a time of cyclical bull period into August and September.

One negative sentiment is that all risk adverse assets seem to be in sell mode and are well off highs. This is usually the first market that the money flees if we are indeed entering into another bear market this fall and none of the risk adverse assets I follow seem to be showing much bullish sentiment at all. The last buying spikes of pennies in April and into May could have been a last gasp of a bullish market the little guys.



Happy Trading :)

Euro Leading the Markets

Not sure what to do in this volatile market? With Europe on jitters and the EU being held together with a ball of yarn it seems these days everything is taking its lead off the Euro. Yes we have many other fundamentals in this market the should be driving us, but when fear and panic take over and Euro starts falling, it sets off a domino effect and investors start selling everything out of fear. So for the immediate turn until Europe gets off the front pages with the debt crisis, markets will continue to take their cue from the Euro.

Happy Trading

Will Gold Move To a Bear?

Some people are calling for gold to correct with the rest of the markets in this bear as it did in 08/09. Not to sure if I agree...

Argument is inflation/deflation for the bear side with global ST deflation a possibility with EU and China bears. Problem is that is not the only component that is driving gold. The decoupling of POG from the USD this spring has major significance that some people are just plain missing. Gold will selloff on the all asset liquidation days for sure, but it will have major strength as an emerging alternative currency.

Any price movement between the 50 and 200 MA's is a major buying opportunity. With impending implosion of the Euro and sell-off of major currencies, an obvious choice has been gold. Confidence will not return to the currency markets for awhile so this trend to buy gold as a currency hedge is increasing, not decreasing.

Added to this fact is that the long term result of printing all this money today to bailout the financial crisis and now this impending debt crisis, is that there will be major inflation over the long term. Prices don't go up because of demand, but because of a falling value of a currency. Simple. Too much money added too quick will take down the currency because now value has been created. To paint a picture, it would be like preferred dividend holders getting a ridiculous common stock dividend that diluted the company enormously while the rest of the common stock shareholders got nothing. All they are doing in the long run is dilluting the currencies.

The party is long from over in the current gold bull.

Markets Look to Rebound this Week

After a very strong selling push to below 10,000 on the Dow the markets look to be extremely oversold for the short term and look like they could rebound next week. One key indicator for me that next week should be a good trading week to the upside is that the RSI made a strong move and bounced off 30 with some force. It bounced off 30 two weeks ago as well and tested the 50MA before moving back down.

I am not quite in the double dip camp yet, but it looks like the markets have topped out in the end of April. Any push higher should be traded and sold in my opinion and worries about Europe are far from over. The aid package for the EU should help alleviate short term worries and we may see a significant bounce in the EUR and GBP while markets rebound. Some key areas of resistance in the Euro would be around 1.2700 and 1.3000 where it initially started to break down and could technically fill that gap up before another leg down.

I highly doubt that Europe's woes are over with Greece and it will probably take most of the year to sort out what is going to happen in Europe and its economy. The severity of Europe's may have a significant impact on China's economy as the EU is a major customer of China's exports. With Geithner in Asia stressing that China needs to allow the Yuan to rise to allow China to develop its internal consumer economy which is growing, to me is a signal that China has to change its export driven economy and can no longer be rely solely on exports. If they remain this way they are subject to global economic conditions and can not be a leader in consumerism like they should be with a population of over 1 billion. With China still unwilling to unpeg their currency from the USD it still shows their huge reliance on their export industry as it would almost certainly lead a significant rise in the Yuan in the current global conditions.

Another, interesting tidbit was the US doubling their exports which is what I have been blogging about on Stockhouse for the last year. That US needed to reinvent itself as an economy and no longer rely on the consumer and a strong dollar to outsource because the American consumer is too in debt to keep spending at this rate and couldn't pull the economy out. They have deflated their dollar which had a double positive effect of reinvigorating their export industry and makes their debt much cheaper to pay back. So far so good for the US plan for recovery without the American consumer. But if this strategy keeps up, US unemployment will heat recover and when full-time employment numbers come back, so will the rest of the economy.

With Geihtner talking up the global economy this weekend and as well as the EU aid package, attitudes seem to be more positive going forward. At least for the short term. One disconcerting thing that could be red herring for now is the German Chancellor and the British Prime Minister not seeing eye to eye. But with expected visits from Giethner this week. Political rhetoric coming out of those 2 powerhouse EU nations may change and be a little more united.

Gotta love the gold stocks, in a major bull market and had such a nice selloff can't help but buy those that retreated to their 50MA's.

My top 3 juniors are EAS.V since $2, CSI.TO since $4.50, and VEN.TO since $5. I would buy all 3 one weakness.

Happy Investing