Blue Chip Gold Stocks HM, NEM, ASA, ABX, PDG Message Board

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Gold/Mining/Energy : Blue Chip Gold Stocks HM, NEM, ASA, ABX, PDG

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From: Wade	6/26/2010 5:35:12 PM
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What's Bearish For Stocks Is Not Bearish For All Precious Metals gold-eagle.com June 25, 2010 By P. Radomski "The main inference from this chart is that gold is less likely to be affected by weakness in the general stock market than silver and mining stocks. Note that their correlation (based on the last 30 trading days) hovers around 0.7. This is a strong correlation, which indicates likely movement in the same general direction. Finally, we see that juniors are also highly correlated with stocks, which is normally the case. Consequently, given the current bearish situation on the general stock market gold itself appears to be the best option for the vast majority of Precious Metals Investors and Traders. This is consistent with what we have stated for several weeks. The risk/reward ratio has been and continues to be more favorable for gold. It does not mean that silver nor mining stocks will not move higher along with gold - it means that the risk of them being negatively influenced by move lower in the main stock indices is higher than it is the case with gold. In other words, silver and mining stocks are not a bad long-term investment, but a more significant decline in these two sectors could occur if further downtrends continue in the general stock market. Simply put, gold is preferred in the short and medium-term. Silver and mining stocks continue to be quite risky for speculative capital at this time." "Summing up, little changes of significance were seen in the markets this week (the general stock market being the only exception, as it continued to provide further bearish confirmations.) The frantic developments in Europe directly affecting the euro and the USD have somewhat calmed. Without any extreme headlines reverberating around the globe, the markets were generally quiet as seasonal factors were able to yield some guidance to market direction. As far as gold and silver are concerned, they are likely to move upwards and the risk-reward ratio of gold continues to be much preferred over that of silver and mining stocks." Naturally picking right silver mining stock is critical at any market, but buy quality at any pull back is always the play. The recent unusual seasonal strength of PM and stocks during OPEX tells us that the fundamentals have changes, which is a critical message from the market should not be ignored that big money is buying at weakness. In the mean time, we will watch silver to CRB (or to CCI) ratio chart closely so that we'll know when it has evolved into real money.

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