Gold Finds Its Mojo After Short, Mild Pullback 1 comment
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A reader wrote to ask: wrote to ask: Does the action in gold Wednesday make you bullish again on gold stocks?
I’m getting there. While I had some serious concerns that gold’s rally was coming to an end, the action Tuesday and Wednesday shows that the bulls still are in control. The pullback I anticipated turned out to be both mild (about 4%) and short (lasting only weeks between fresh highs). At the same time, most commodity indexes have hit new highs, crude is bumping $100, and copper has returned with a vengeance.
Those signals indicate that the path of least resistance for gold is up. To answer Jess’s direct question, I’m not fully bullish yet because the bottom I noted in the U.S. Dollar has held and many commodities in the ag complex look toppy, but I am dangling a foot into the bullish camp. I have no short positions in either the metal or miners, and may rebuild long positions in select junior and mid-tier miners.
UPDATE (3:50 ET 2-20-08): Over at Minyanville, the always sharp Lance Lewis reminds us that major gold miners report Wednesday night and Thursday. Unlike most earnings this season, upside surprises are more likely than disappointments. A few good reports could really light a fire under the complex in the short term, and this catalyst is enough to get me involved. I’m now long Goldenstar Resources (GSS), U.S. Gold (UXG), Goldfields (GFI), and Gammon Lake Resources (GRS).
UPDATE (4:10 ET 2-20-08): Agnico Eagle Mines (AEM) just released record 4th quarter results. Hat tip to Lance Lewis.
DISCLOSURE: Long GSS, UXG, GFI, GRS.
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