Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Strictly: Drilling II -- Ignore unavailable to you. Want to Upgrade?

To: Fun-da-Mental#1 who wrote (26587)	1/25/2003 11:49:24 AM
From: ItsAllCyclical	Respond to of 36161

FDM, good post. Pretty much agree with that sentiment, but have taken a less aggressive portfolio position. If we break HUI 155 I'll likely take a very aggressive position short term using margin if necessary.

To: Fun-da-Mental#1 who wrote (26587)	1/25/2003 11:58:31 AM
From: orkrious	Respond to of 36161

This question of why gold stocks haven't moved more has to be on everybody's mind. Message 18488771

To: Fun-da-Mental#1 who wrote (26587)	1/25/2003 1:01:16 PM
From: menanna	Read Replies (3) \| Respond to of 36161

Some explanations of the reasons why mine stocks are not moving with POG gold-eagle.com Shorts Attacking the Gold Miners Many gold investors have noted, with consternation, at the divergence between the price of gold and the performance of the gold mining stocks. Gold has generally been trending higher while the miners are going nowhere. The theory goes that the miners lead the price of gold but that doesn't seem to hold water here as gold keeps heading north. So why the divergence? Perhaps the answer is in the high levels of short-selling in the miners. Most gold investors are aware of the shorts on the metal itself and the hedges that some of the miners hold. For some reason, there are shorts attacking the miners too. Perhaps they think that there is too much euphoria in the gold miners or that the gold miners are a good area to short because they've risen so much. Or perhaps an an entity doesn't want a lot of people bidding up the miners which would take attention from tech stocks where executives exercise huge numbers of options when prices rise. And heavy shorting can drive down the price of a stock. Whatever the reason, I'd like to point out what's going on in a few stocks on the American Stock Exchange. These are from a report that comes out monthly and came out on Thursday, January 23, 2003. There are reports available for the New York Stock Exchange and the NASDAQ but the NYSE Short Interest report carries a fee of $400 per year [I believe] and the NASDAQ isn't out yet. We can see that Kinross has a huge short position relative to average daily volume. The short position rose 17 percent from December to January, even as Kinross rose in price. Wheaton River is also a bit of a shock. It started trading in December and accumulated 1.2 million shorts in a month. It can also be interesting to compare the short position to the total float of a stock. You can get that information from Yahoo Finance. Strangely enough, a large rise in the number of shorts can be bullish because it can result in spectacular short squeezes where shorts get panicked and cover at market driving the price higher and higher. I look forward to that happening in the miners when earnings reports come around. And not having a lot of shorts can be bearish as there aren't shorts that become desperate to buy at market. Of course gold is in a bull market so these stocks should trend higher with the price of gold as earnings will grow with the price of gold. I also recommend reading an article at Mineweb (http://www.mineweb.com/) with the title: Short sellers switch attention to Durban Deep posted Wednesday, January 22, 2003. This article covers the short positions of a number of other mining stocks and further information on shorting in general, which you may find useful. The data for their article, though looks like it is from December 2002 which means that it's a month old. Still, it gives you an idea that someone out there is hoping that our miners fail. I think that the heavy shorting has contributed to the divergence between the price of gold and the performance of the mining stocks. Even stocks with small short positions can be affected by the stocks that are getting heavily shorted. I remain patiently bullish on the miners playing the long-term-buy and hold strategy. Disclosure: I own more than half of the securities listed above. I recommend that you do your own due diligence in researching stocks for investment or speculation purposes. The securities listed above in no way constitute a recommendation to buy or sell them. -------------------------------------------------------------------------------- Michael Moy mmoy@yahoo.com 27 January 2003