just cleared from e-mail tray
From: J
Sent: Sun, July 3, 2011 6:23:04 AM
Subject: Re: Comments - Week of July 4
question: should we worry more about illinois than fret over greece
illinois horror picture show, just in in-tray, i quote
dailybail.com
Top 100 Illinois teacher pensions = pension liability $887MM
can you say BKRPT 50x over ;0) unquote
and the wastrels are figuring to tee-up their acumen for private equity selection in order to fill the void
google.com
getgold, pileplatinum, stacksilver
From: T
Sent: Sat, July 2, 2011 9:40:15 AM
Subject: Re: Comments - Week of July 4
Hi Guys,
I find the best way to look at the gold stocks from a relative value perspective is to chart them in ounces of gold. Unfortunately, I don't have access to my charts today as my storage seems to be offline, but if you look at all the gold stocks in ounces of gold, you'll see that, since the highs in 2007, they have lost between 40 - 70% (same goes for the silver stocks).
Clearly this is ridiculous.
While you can make allowances for rising input costs and (maybe) an argument or two about the fundamental values of the stocks on a case-by-case basis, to cut the value of a mining stock when measured in what it actually produces as that commodity has risen in a straight line and the equity market as a whole has done likewise, is a mis-pricing that not only can't last indefinitely, but when it IS corrected, it will be sharp and probably end with stocks actually gaining value against their underlying commodities.
For those with access to Bloomberg, just check out 4 year charts of both GDX & GDXJ and change the currency to XAU - those two pictures paint a thousand words....
Happy 4th!
A
July 2, 2011 4:39 AM
After suffering for months, gold stocks are finally ready to rally.
The metal itself is trading around $1,500 per ounce, but most gold stocks are priced the same as they were two years ago… when gold was $1,000.
Gold stocks are cheap. Many of them trade at 12 times earnings or less – a big discount to the S&P 500's earnings multiple. And many of the big-name gold companies pay decent dividends. With global economic conditions around the world being what they are, it's easy to make a strong fundamental argument for owning gold and gold stocks.
Here's how the gold sector's bullish percent index (BPGDM) looks now…
Earlier this week, the BPGDM closed at 26.67. But in the past few days, it has inched higher… which should lead to higher gold stock prices in the next few weeks and months. The last real buy signal we got from this indicator was in February 2010. Gold stocks (as measured by the GDX) rallied 30% in just three months back then.
Gold stocks are notoriously volatile. They tend to get horrendously oversold and then bounce back without warning. Now is one of those times… which makes owning them right now one of the best risk/reward trades in the market.
H
July 2, 2011 4:06 AM
Gold stocks have begun to outperform relative to gold, but it is not quite clear to what extent this is due to the strong rally in the broader market. Generally though, it tends to be a positive sign.
Stan Hughes
July 2, 2011 3:41 AM
Gold trading commentary FWIW from Dan Norcini --
-- snip --
None of this matters to the brain-dead hedge fund community however which lets their computers do their "thinking" for them. I wish to repeat here for what seems like the umpteenth time - hedge fund computer selling hits every single commodity market when their algorithms generate sell orders. There are no exceptions, even for gold. What has been occuring however in the gold market until this week was that safe haven buying was coming in, and that kept the metal well supported in comparison to the damage that was being inflicted on the broader commodity markets. The bailout of Greece has temporarily derailed this safe haven bid, and we are now left to the usual physical demand of the type that proceeds out of India and the middle and far East. That demand is not of sufficient size at this time to absorb the hedge fund selling and thus the market has been unable to regain its footing above $1520, which is what it needed to do in order to prevent a deeper setback in price.
For the time being we are looking to see if the demand can keep price supported here at critical support between $1480 - $1470. This level MUST HOLD to prevent further long side liquidation on the part of the hedge funds. If the physical market can soak up enough gold down here, then we have a shot at stabilizing here during this season of the summer doldrums and building a base for the rally coming later this year.
We must get back above the $1500 level in gold to give the bulls a shot at stemming the bleeding here but more importantly, the 50 day moving average to short-circuit the "sell the rally" mentality currently in place for the gold market. That level coincides with $1520, the bottom of the former range that gold was consolidating within.
The weekly gold chart still shows the BEARISH ENGULFING PATTERN formed the week of May 2 dominating its chart picture. The market had been holding up and been resisting any downside follow through from that week but had not been able to clear and hold $1550 which was needed to negate that chart signal. That week's low, $1462, is the last level of support for the bulls. They cannot afford to let that level go if they wish to avoid a move down towards $1435.
full commodity commentary here including gold charts -- traderdannorcini.blogspot.com
----------------------------------------------------------------------------------------------- |
