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Gold/Mining/Energy : A to Z Junior Mining Research Site -- Ignore unavailable to you. Want to Upgrade?

To: 4figureau who wrote (2753)	1/19/2003 11:53:12 AM
From: Mannie	Respond to of 5423

from Steve Saville.. Gold market sentiment Following last Tuesday's sharp decline in the prices of most gold stocks we sent out an e-mail alert to all subscribers. The purpose of this alert was to point out that a) a correction might be underway, but it would probably only last 2-4 weeks and not result in significant additional price weakness, and b) we continued to expect the prices of most gold stocks to hit new highs during the first quarter of this year. Then, in last week's Interim Update we noted that the correction lows for the major gold stocks might already have been seen and used a couple of ratios to show that there was still considerable upside potential in the gold sector. The main point we were trying to make in both the e-mail alert and the Interim Update was that the market had not yet reached a point where selling was advisable unless, of course, sell stops were hit (see below for a discussion of sell stops). However, based on e-mails we received during the latter part of last week it seems that some of our readers decided to significantly reduce their positions in gold stocks in response to the pullback. It is never a bad idea to take some money off the table when you have substantial profits, but the impression we get is that a lot of investors in the gold sector (perhaps even the majority) are extremely eager to sell in response to the first sign of trouble. This, in turn, suggests that there is very little belief in the gold rally. Probably due to the sharp decline in gold stock prices that happened last July most gold stock investors are focused on locking-in profits before these profits disappear. Notwithstanding Thursday's $7 surge in the gold price to a new high it is probable that a correction in the gold stocks is still underway. However, unless you are a very nimble trader it is dangerous to try to 'play' these short-term moves by selling with the aim of re-purchasing at a lower level. Attempting to sidestep the short-term corrections in a bull market might improve your returns, but it is a risky approach. In a bull market most of the surprises will be on the upside and, as we continue to emphasise, there is no evidence that the gold sector is yet close to an intermediate-term peak. If you did sell some of your major gold stocks last week then no harm has been done because the stocks have continued to consolidate just above their recent lows. Also, one of our goals over recent months has been to reduce exposure to the large gold mining companies and increase exposure to the junior companies, so at least part of the proceeds from any recent sales of major gold stocks could be channeled into some of the high-potential juniors we've been highlighting over the past few months.