Gold Stocks Set for Big Advance

Gold equities are stuck in the middle of the summer doldrums and are pulling back from their highs. But technical analysts Ron Meisels and Olaf Sztaba of the NA Marketletter are not worried. They wrote that the bland behaviour of the stocks should not draw attention away from the larger, more bullish picture, especially since golds take extra time to build bases for future advances.

"The current consolidation [the longer the better] is part of a base-building process which usually results in a major move at a later date," they wrote in a note.

They figure that the build-up of pessimism should reach its zenith "just in time" for a year-end rally in the stocks. The first indication of such a move would be a stabilization in the majors like Barrick Gold Corp. (ABX) and Newmont Mining Corp. (NEM), followed by a "decisive" move above their 50-day moving averages.

Citing Gammon Gold Inc. (GRS), Alamos Gold Inc. (AGIGF.PK) and Royal Gold Inc. (RGLD) as examples. they wrote:

In fact, a significant number of gold stocks have been developing bullish, multi-month base-formations which, if realized, could result in noticeable up-moves.

Of course, slow periods like this are when investors get lethargic and take a "wait and see" approach. The analysts wrote that this is the wrong strategy, as weak and boring periods are often the best time to accumulate the stocks.

"Ultimately, the stocks that are the strongest during a correction are the ones that usually lead the next advance," they wrote.

Comments

[djj420:]

Will today's PPI be the catalyst to get the reflation trades back on track?

Jul 14 02:59 PM

[chargers_ru...:]

Gold is too high now. The bad economy will not last forever. advising people to purchase gold or gold shares when the market is so high already is unwise. If the deflationary forces start to take hold then gold will see sub 600 fast. Gold is just another ponzi scheme that needs more players to make it go up.
Let the buyer beware. The old addage "Buy low sell high", should be remembered now about gold.

Jul 14 03:00 PM

[Jeff Nielson:]

In fact, valuations of gold miners versus the price of bullion are near their low for the DECADE.

Meanwhile, U.S. equities have been pumped-up to absurd valuations on the basis of an "economic recovery" which has ZERO probability of occurring.

Jul 14 03:46 PM

[Dave Dorgan:]

I looked at the daily charts on the stocks listed and do not understanding your logic. The 50 day moving average does not seem to play any role in defining support or resistance. Rather, I would be looking to play the trendline breaks.

Jul 14 04:25 PM

[User 422955:]

It is hard to see how the table (and accompanying article) can help people looking for high yield stocks. The table is simply enormous. It is not sorted by yield, which might be the first thing someone looking for high yield stocks would look at.

Jul 14 08:30 PM

[garuche:]

Gold is too high now. The bad economy will not last forever. advising people to purchase gold or gold shares when the market is so high already is unwise. If the deflationary forces start to take hold then gold will see sub 600 fast. Gold is just another ponzi scheme that needs more players to make it go up.
Let the buyer beware. The old addage "Buy low sell high", should be remembered now about gold.

YOU CAN 'KEEP THE CHANGE' I'LL KEEP MY GOLD

Jul 14 10:55 PM

[Mad Hedge F...:]

Where's the beef? ) I have been a huge bull on gold this year, piling investors into the yellow metal at the $800 level in early January (see www.madhedgefundtrader...). But after an exciting couple of months, it has tiresomely become dead money. This is a commodity that has absolutely everything going for it; the Great Depression II, threats of nuclear war with North Korea, riots in Iran and China, a government borrowing binge of Weimar proportions, and money supply growth that is through the roof. In fact the US is doing everything imaginable to debase its own currency. Unfortunately, all I see on my screen right now is an ugly smudge at $910 an ounce. So what gives? Someone has been leaning heavily on gold every time it approached the magic $1,000 level, and they have now created a quadruple top on the charts. Gold has become the metal that everyone loves, but nobody wants to buy. There have been rumors of European Central Bank selling of gold reserves, Russian selling to cope with a lower oil price, and traders simply playing the range for lack of anything else better to do. The global risk reduction that began with a vengeance a few weeks ago is certainly having an impact. If demand from the famed Indian wedding season doesn’t come through, things could get worse. Gold bugs should expect to suffer more short term pain in this great long term core holding.

Jul 15 12:18 AM

[chux08:]

Picking market bottoms, especially gold market bottoms, is a game for CLOWNS & LOSERS. Buying gold during weakness, when the price is low and selling strength when the price is rising, is how PROFESSIONAL GOLD TRADERS, as well as the bankers, who happen to be the most successful gold traders in all of history, make money. When you go shopping, do you wait to see prices heading up before YOU buy your groceries? No?? Then WHY WOULD YOU BUY GOLD ANY DIFFERENTLY???
If you're sick of BURNING & LOSING MONEY IN THESE "GOLDEN CLOWN SHOWS" who constantly try and pick the bottom and then BAIL on their gold positions AND their subscribers, (and all the while blaming the "evil old bankers." Sound familiar?) check out someone who calls gold "the least riskiest investment known to man", who DOESN'T give financial advice and MOST IMPORTANTLY, his subscribers MAKE MONEY IN THE GOLD MARKETS just like I did earlier today when I sold some of my gold into strength AND MADE MONEY TODAY. How many of you did THAT today? LEARN from a GREAT teacher just like I did at gracelandupdates.com. I'll quit recommending him as soon as I see an end to these golden clown shows, as Stewart Thomson so aptly has named them, doing idiotic things like trying to pick gold market bottoms.

Jul 15 01:20 AM

[Peter Cooper:]

Gold is back up to $940 as I write this comment. The summer months are usually weak for gold, and while conditions are good for the yellow metal now, they are about to get much better. A dollar crisis in November is one prediction from Jim Sinclair, the biggest gold bug of them all, listen to his interview on South African TV this week: arabianmoney.net/2009/.../

Jul 15 09:09 AM

[HBWOW:]

Gold and all commodities, stock, bonds, etc. are all under heavy manipulation. Nothing will change that as the government is not
interested in cleaning house, just a little noise now and then. Therefore, we can all talk bull or bear but the market is really controlled
by skunks.

Jul 15 10:19 AM

[Abou ben Adhem:]

And probably Goldmann Sachs are the biggest manipulators with their program - recently disclosed on Bloomberg - for rigging the market.
Couning cards in the casino will get you thrown out, but doing the same on Wall Street gets you a government bail out when you temporarily get it worng.

Jul 15 11:08 AM

[capital pains:]

Gold and gold bugs - What a yawn !
I recall the 1970's when the worst President in history; Jimmy Carter ushered in 18% inflation.
The Aden sisters were the most famous gold bugs of their time, calling for $2,000 gold, Approximately 35 years later, gold is $940...How exiting and exacting ! Gold coin scammers were flourishing in the 70's as well.
Historically whenever gold runs up, manipulators thrash it back down. The US government is the most prominent manipulator of all. After all, we can't print gold can we ? Obviously there is a reason our government is not on the Gold Standard.
Russia has no use for high priced gold either.
Whether in theory there is definite merit in high gold prices. In reality, that just won't happen.
Anytime our Treasury whispers in the ear of their pals at Goldman,Goldman will make fortunes bashing gold prices down. There are a hundred better ways to lose money - gold is a phantom
investment.

Jul 15 11:30 AM

[tmosley:]

You don't really have an eye for details, you know, little details like Volcker raising the interest rate to 20%, which is what saved the dollar from collapse. Remember details like the context of the time. The US had gone off of the gold standard a mere seven years before, and was printing money to pay for the Great Society (monetary inflation is the inevitable result of printing money).

Now, take a look at some other details, like the fact that we now have a gargantuan national debt which precluded the raising of interest rates (if we went to 20% as in 1980, we would have to raise ALL taxes by some 500% to pay the interest on the national debt).

Honestly, it's like getting trapped in a cage once, but you had a cutting torch,where you were able to cut the lock and escape, then getting caught again, only this time, you have no torch, ad claiming "Well, I got out last time, I can get out this time too!".

This time, there's no way out. It's either going to be hyperinflation, or default. Default will lead to hyperinflation anyways, as foreigners who have lost faith in the dollar flood the market with the reserves they have accumulated over the last thirty years, at which point we will see the full extent of the inflation that we have been exporting during that period. If you aren't holding gold and silver at that time, you're going to wish you had. Those that hold those metals will see their purchasing power go through the roof, as competition for the few remaining jobs skyrockets.

On Jul 15 11:30 AM capital pains wrote:

> Gold and gold bugs - What a yawn !
> I recall the 1970's when the worst President in history; Jimmy Carter
> ushered in 18% inflation.
> The Aden sisters were the most famous gold bugs of their time, calling
> for $2,000 gold, Approximately 35 years later, gold is $940...How
> exiting and exacting ! Gold coin scammers were flourishing in the
> 70's as well.
> Historically whenever gold runs up, manipulators thrash it back down.
> The US government is the most prominent manipulator of all. After
> all, we can't print gold can we ? Obviously there is a reason our
> government is not on the Gold Standard.
> Russia has no use for high priced gold either.
> Whether in theory there is definite merit in high gold prices. In
> reality, that just won't happen.
> Anytime our Treasury whispers in the ear of their pals at Goldman,Goldman
> will make fortunes bashing gold prices down. There are a hundred
> better ways to lose money - gold is a phantom
> investment.

Jul 15 12:50 PM

[skeptictoo:]

You are basing your decisions on rumors?? Do you EVER make any money?


On Jul 15 12:18 AM Mad Hedge Fund Trader wrote:

> Where's the beef? ) I have been a huge bull on gold this year, piling
> investors into the yellow metal at the $800 level in early January
> (see www.madhedgefundtrader...). But
> after an exciting couple of months, it has tiresomely become dead
> money. This is a commodity that has absolutely everything going for
> it; the Great Depression II, threats of nuclear war with North Korea,
> riots in Iran and China, a government borrowing binge of Weimar proportions,
> and money supply growth that is through the roof. In fact the US
> is doing everything imaginable to debase its own currency. Unfortunately,
> all I see on my screen right now is an ugly smudge at $910 an ounce.
> So what gives? Someone has been leaning heavily on gold every time
> it approached the magic $1,000 level, and they have now created a
> quadruple top on the charts. Gold has become the metal that everyone
> loves, but nobody wants to buy. There have been rumors of European
> Central Bank selling of gold reserves, Russian selling to cope with
> a lower oil price, and traders simply playing the range for lack
> of anything else better to do. The global risk reduction that began
> with a vengeance a few weeks ago is certainly having an impact. If
> demand from the famed Indian wedding season doesn’t come through,
> things could get worse. Gold bugs should expect to suffer more short
> term pain in this great long term core holding.

Jul 15 12:54 PM

[dealjunkie:]

If gold is such a bad investment, why are there still no gold cooins available for retial purchase. There are signs all over "WE BUY GOLD" and none for sale.

What gives?

Jul 15 03:31 PM

[Jake2:]

Authors have not read current post of Living4Dividends. All that glitters is not gold, even if it is gold.

Jul 15 05:22 PM

[dragonpaw:]

Gotta remember; for every "ounce" of gold traded in all markets(Troy, of course 12 oz./pound) Comex, GLD,miners(Rangold, Barrick, Newmont, etc);there is in fact only real ounce of gold above ground for every 140 ounces traded.This is the meaning of futures;anticipated 'extractions.'

Great problems here for manipulation.
Look at short positions for major players (and there are many hundreds of thousands of 'ounces' shorted). All the manipulators need to do, is to drop a few tens of thousands of ounces (gosh;in collusion?), gold drops $200-300/ounce and all the longs are screwed.
On the other hand, gold continues to climb to $2000/ounce, the short geniuses loose. Comex can't recover on the short positions; Comex daclares banpruptcy and all the longs are screwed as gold drops to say $200-300 (or you pick the absurd bottom).
How,oh how do you play this Ponzi scheme?!

Jul 15 10:33 PM