re: ["What is your take on the PM,s reaction to the jobs
report Friday and possibly Monday?"]
Hilligas,
I think for the most part, the major players have a pretty
good read on the jobs numbers pre-release. Only major
surprises are going to make a significant impact.
Gold & Gold stocks are trading inverse to the market.
We saw some money rotate out of gold stocks in the anticipation
of a bounce back rally in the broad market, and yesterday's
move was nothing more than a muted short covering rally.
And now today, with a gap down open in the DOW, money is
rotating back to gold stocks.
It's always tough to counter-trend trade in a consolidating
tape. The trade has been to sell into gap up opens, as shorts
are covering on a positive over-night move in the gold
price, and individual investors always pour in at the
open.
It's human nature for the individual investor to want to do
"something" right at the open. That "something" is usually
wrong. That "Darwin/DNA" trade has been a predictable and
profitable trade.
There is a significant short position in gold stocks... many
have retained their long positions in gold, but shorted the
stocks as a hedge. So we're seeing added volatility on opens
from the shorts as well.
The danger will be that when the stocks have based, that
you'll be selling into the early stage of a major move...
and be left behind.
And that's why you keep your "core holdings" in place, and
just trade around the edges.
I think the main thing to do for those holding a significant
weighting to gold stocks, is to either add some puts as
insurance on rallies, or to be short sector, or broad market
ETF's as a hedge.
...you must be short something in this market.
I hold no long positions in anything other than gold stocks
right now. Not in my trading account, or IRA. Zero, zip, nada.
I have sold some puts in energy (I like low debt plays like
PTEN), so I guess that's potentially a long trade.
I like Treasury only funds (short term), cash (USD), physical
gold, short ETF's, and long gold stocks.
One of the challenges ahead may be a bullish surge in the USD
again, as there is significant debt in Europe that needs to
be rolled over that will bring stronger USD demand.
The US Dollar strength is what I refer to as "mechanical"
strength. The longer term fundamentals for the US Dollar
are weakening, but the advantage of being the reserve
currency during a debt bubble collapse can't be ignored.
And all the US Dollar has to be, is the "best of the worst."
Gold has done a pretty good job in breaking away from the USD,
and Oil, but another surge in the Dollar can't be ignored.
The HUI may continue to consolidate down to the 240's. The
valuation gap to gold is widening to historic levels just as
input costs for the miners are falling. With $900+ gold, that's
a license to print money.
Also, the South African miners are an attractive sub-niche here
as a currency play. HMY is rapidly reducing debt and is looking
to increase it's dividend. GFI is also very attractive at
these prices.
I don't like to "day trade" but, that's the environment that
we're in... and that's about all the market is giving us.
So the choice is either to hedge, add insurance and sit tight,
or to do a little trading around the "edges"... and try to
grind out a couple of bucks on these big gap up/gap down
days, as the sector consolidates.
SOTB |
