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Strategies & Market Trends : Three Amigos Stock Thread
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To: Ditchdigger who wrote (20799)8/29/2000 7:22:37 PM
From: Sergio H  Read Replies (3) of 29382
 
DD, I've been looking at gold and other natural resource
plays for the fourth quarter due to the rise in energy prices also. Natural resources tend to move in tandem, so a logical conclusion would be to expect gold prices as well as other commodity prices such as steel, lumber, etc. to also rise.

Despite the historic natural resource correlation, I don't see the price of gold going up. The strong US dollar, held up by the weakness of the Euro and a new round of Asian banking problems will continue to hold gold prices down, IMO. As you know, gold prices are based on the value of the US dollar.

I will change your pick to NEM if you like.

Some thoughts on NEM and GOLD shared today on Bloomberg TV:

<Michael Dudas of Bear Stearns focuses on gold stocks:

-Equities overly discounting the current deterioration in price of gold

-Gold stocks merit attention going forward till the end of the year; difficult to make long term bullish argument if inflation is under control

-Lot of liquidity in gold markets, which dampens volatility in the sector

-Lack of volatility in the sector is the main reason for lack of excitement in gold stocks

-However, when gold stocks move, they move quickly and violently

-Stock picks:

NEM: most leveraged to gold price; stock oversold in the down trend in gold price; great management team; good reserve position; pop in gold price will move stock sharply

HM: acquisitions in past impacting liquidity; well positioned

ABX: defensive play; solid relative performer in current environment; comfort level when gold prices are lower.>

Sergio
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