re: physical vs. gold shares....
This meltdown in the market is putting tremendous
pressure on "paper" gold shares, even as gold
rallies to new interim highs.
Investors are getting margin calls, as the market tests
it's former lows, and are being forced to liquidate shares
to meet those calls.
Human nature & Darwin's Law of DNA being what it is...
the individual investor sells what's working, to prop
up what's not (exactly the opposite of what they should do).
Additionally, shares at, or near broker minimum price
levels of "marginability" (ie: MFN) will see the most
selling pressure as the broad market tests it's lows.
The marginal gold investor/trader is getting liquidated
along with the broad market, and we've been seeing that
over the last couple of days, and even today, I think
the share rally will be a bit "capped".
While that is a negative in the near term, it's a positive
in the longer term, as this flush of the "marginal" gold
investor is a necessary set up for the larger move.
I've always believed that the more difficult the tape,
the more negative the news, and the uglier the market
that gold forms a bottom into, and rallies against...
the better and bigger the coming move.
The DOW is now back near to the lows of October and November,
but most gold stocks are at levels +50% to double where
they were then. Once the marginal gold investor gets
washed out here... we'll see what this move is made of.
SOTB
PS: Fwiw... I'm taking profits and cashing out of TBT
this a.m. ... will expand on why - later.
Interesting article on gold sector buyout candidates,
speculating KGC could take out AUY.
seekingalpha.com
I think JAG is another likely takeout, and it's a leader
this a.m. and looks to be pricing in that speculation. |
