This question of why gold stocks haven't moved more has to be on everybody's mind. It reminds me of the oil bull a couple of years ago. As it went to $20, oil stocks surged. When it followed that up by immediately going to $30, nobody knew what to make of it. They actually waited for it to come down before buying more stocks.
I think it's the same thing with gold. When it hit $350, everybody started selling their mining stocks. So what if it went to $355, they figured the next day it had to crash. When it blasted off from $360, they figured screw it, if it was a sell at $350 I'd be stupid to chase it now.
There is a tradeable pattern that has been repeating for 2 years, i.e. a quick rise of $20-30 followed by a selloff back to previous levels:
stockcharts.com[w,a]daclyyay[de][pb50!b200][vc60][iUb14!La12,26,9]&pref=G
Everybody was trading that pattern, and now it's been broken nobody knows what to do.
However I'm betting on a longer-term pattern: buy in November, sell in May. Look how this has worked for the HUI the past couple years:
stockcharts.com[w,a]daclyyay[df][pb50!b200][vc60][iUb14!La12,26,9]&pref=G
We are still exactly where we should be in this pattern. There isn't the same enthusiasm now that there was in May, because May was the end of a long uptrend, and this is (hopefully) just the beginning of one. But if this pattern is broken, I'll sell.
That is my take on it. Also I don't think gold is being moved so much by war worries as by financial system worries. Remember Greenspan's speech in December (or Jan?) when he said gold had to play a larger role in the US monetary system? That was a huge reversal of Fed policy.
This is my thinking, and I'm betting the farm on it, so anybody who has a good counter-argument please let me know.
Fun-da-Mental |
