>> Seriously, not sure if the bullion can punch through the $300 level <<
Patience my friend. Gold made it's first run at $300 last night. A little pullback is healthy. Look at the chart, I told you it would have some trouble at $292! quotes.ino.com
After trying to push definitively through it for a couple hours it just caved. More importantly even though gold gave up it's overnight gains and closed down a couple bucks the gold stocks held up well. All three gold stock indexes closed up today.
10:59am 05/21/01
Gold stock prices 'irrational': Lehman ($GOX, HM, NEM, PDG) By Tomi Kilgore
The CBOE Gold Index ($GOX) is moving up 2.3 percent, and is now up 27 percent since the end of April. Among its more active components, Newmont Mining (NEM) is slipping 19 cents to $23.81, Homestake Mining (HM) is tacking on 16 cents to $8.04 and Placer Dome (PDG) is 28 cents better at $12.46. Homestake's stock reached a 52-week high of $8.15 earlier in the session, while Placer Dome matched its high of $12.48. Those stocks have seen percentage gains of 31, 29 and 23 percent, respectively, in May. Analyst Peter Ward at Lehman Bros. tempered recent enthusiasm by saying gold stock valuations were generally "irrational." Ward feels gold stocks are already pricing in an additional $50 per ounce increase in the price of gold, and feels the risk/return profile is unfavorable. "We recommend reducing position," he told clients in a research note. He pointed out that the gold market has had several "speculative" rallies in the last few year which have all failed. And due to a fifteen-year inventory of gold increasingly being liquidated, Ward says it's hard to believe any "squeeze" is imminent.
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These bozos at Lehman rated NEM at market underperform today and it closed up! Also, he thinks the bullion has to go up $50 to justify the run-up in the stocks. Notice gold finished slightly weaker but gold stocks crept slightly higher! Seems like the market doesn't agree. If gold was going to just have a short "technically driven spike" why would the gold stocks be doing so well? They are obviously signaling a sustained rise in the metal going forward, as prices above $275 start adding leverage to producer's earnings. |
