Blue Chip Gold Stocks HM, NEM, ASA, ABX, PDG Message Board

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Gold/Mining/Energy : Blue Chip Gold Stocks HM, NEM, ASA, ABX, PDG

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To: NOW who wrote (41380)	3/4/2013 1:25:17 PM
From: Mike M2	5 Recommendations Read Replies (1) of 48092

I did not think so either but one major difference between then and now the broad markets were crashing along with gold stocks. there was a forced selling panic . highly levered hedge funds were forced to sell anything and everything to raise cash to meet margin calls. A good case can be made that the S&P is extended and due for a correction and I am not sure how battered gold stocks will perform in that environment so I remain in a wait and see mode. Justin Mamis wrote a book were he discussed the concept of price risk versus information risk. The best ( lowest) price is often at times of maximum uncertainty . When we want more information we pay a higher price. The fundamental case for the resumption of the bull market in gold is overwhelming yet the decline continues. There has been much discussion as to the reasons why but the fact remain we remain in a downtrend. I am willing to pay a higher price to wait for a clear resolution. I do expect gold will go to record highs and obviously gold stocks will do quite well in that environment. I do understand that sentiment is extremely poor in the mining sector which is good from a contrarian perspective and exactly the conditions one expects after a prolonged decline. I am not willing to commit new money to the sector until there is a clear and decisive bottom. For example the GDX is now 36 lets guess( not a forecast) the GDX bottoms in the low 30s - it traded in a range of 29-33 on March 9, 2009 the day the S&P bottomed. Rather than buy the GDX today at 36 and watch it decline to the the low 30s I want to see it trade at its lows where ever that may be and trade up from those levels 5-10%. If my post marks the bottomed today with the GDX 36 I am happy to pay higher prices for new positions rather than see new money go down the slippery slope of hope. There is always the possibility of a black swan event which takes all the markets down or an event causing a spike in the price of gold. I do have faith in gold and gold stocks but market experience has taught me the hard way to respect the trend.

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