@MRB, NSU -- trotsky, 13:22:16 07/28/06 Fri
strong buying in MRB today. both MRB and NSU were highlighted by Steve Saville as potential take-over targets yesterday.
you may recall that i have also pointed out in the past that these two fit the bill as potential targets.
they are vastly undervalued relative to their underlying assets, for reasons that strike me as either transitory (in MRB's case, it's the Mexican stand-off regarding a blasting permit) or a bit misguided (NSU's 'political risk' discount).
at current prices, the risk/reward in both stocks seems very compelling - with the usual caveat that they can be expected to be volatile and that the metals themselves need to remain reasonably strong.
Hambone@pms -- trotsky, 13:09:57 07/28/06 Fri
i'm not averse to your misgivings, but i note that the broad stock market sentiment indicators have ALSO recently hit extremes that suggest the current rally could have some more legs. for instance, the AAII bear percentage recently hit a high seen only two times in the past 20 years (at the 1990 low and the early 2003 low), and the CBOE put/call 10-dma actually hit an all time high (not just a 17-year high as i reported yesterday).
in short, considering that the gold shares are currently correlating positively with the Dow, and that gold stock sentiment indicators ALSO look bullish, the current rally could go on for a while.
one possible scenario i'm considering is: up for a few more weeks (into late August/early September), then down with the general market into the 4-year cycle low in November to retest the June lows, and then the beginning of a new uptrend , as by that time, the yield curve should be reverting to steepening mode (a big decline in stocks and commodities would definitely set that process into motion). |
