SAN FRANCISCO (CBS.MW) -- I ran into technical analyst Mike Hurley at www.eoffering.com the other day. He's got some news for the bugs -- the gold bugs.
Hurley scans charts for investment opportunities, then publishes his findings at the San Francisco investment bank's Web site. Hurley has been "sizing up the technicals" for 15 years at various San Francisco investment banks and research firms.
XAU gold index and BKX bank index
Hurley was taking a look at the Philadelphia Gold and Silver Index ($XAU: news, msgs), a collection of the largest North American gold companies. And why not? That big London gold auction this week -- the second by the Bank of England -- was more than eight times over-subscribed.
Gold prices, while in the dumps, have responded well to the British central bank's firesale of the precious metal. Gold sold for more than $270 an ounce in New York futures trading (GC=Z9: news, msgs) on Friday before closing at $269.50. That's the active gold contract's highest point since June 8. The price of an ounce of gold -- for delivery in December -- has gained $15 in the past five trading days.
Hurley sees "accumulation" in some gold stocks this summer and now, the autumn. That means Wall Street institutions look like they are willing to buy the stocks in increasingly large portions -- and on upticks. That hasn't happened in a long, long time.
In a report Friday, Salomon Smith Barney analyst Leanne Baker said that "with gold having climbed by $12 per ounce in the three days following the auction, we are more confident than at any time in the last year that this rally has staying power -- at least through year-end." The analyst raised the investment bank's rating on precious metal stocks as a group to "market outperform" from "perform."
The so-called XAU gold and silver index, meanwhile, has a chart that intrigues Hurley at e-offering.
"The XAU looks extremely positive in its own right and may be forming what technicians call a saucer bottom, a pattern commonly found at major lows," he says.
Gold stocks such as Newmont Mining (NEM: news, msgs) and Barrick Gold (ABX: news, msgs) often make sharp moves that are tied to the price of the metal. Nothing new there. Hurley goes a step further and contrasts the XAU with the New York Stock Exchange's Financial Index of bank stocks ($NF: news, msgs). Financial stocks generally lead the U.S. stock market up -- or down. And gold stocks generally do the opposite of financial stocks. (In the above chart, we compare the XAU with the Philadelphia Bank Index ($BKX: news, msgs).)
These days, the gold index and the bank index are going their separate own ways -- only the gold chart looks like it's rising and the bank index looks like it's falling. That means some investors might see trouble ahead for the broad market -- for whatever reason (that's another column, folks).
"Investors and traders seeking a hedge against a stronger-than expected-economy and/or Y2K turmoil may now be seeing the type of investment entry that rarely comes along," Hurley says.
That would be gold. The yellow metal that has lost lots of investors lots of money in the 1990s. Unless they were short-selling the stuff.
Enough said.
cbs.marketwatch.com
|
