A Good Time to Accumulate Positions in Small and Mid-Size Miners

The FOMC report did add one interesting point. The Fed opined that high commodity prices (oil and presumably precious metals, which means the $USD would have to keep rallying) would come down in the near future. Although I too believe it, I wish the Fed would explain their rationale for important statements like that.

In any event, gold and the Euro took a tumble overnight, and the $USD moved higher. I see more losses ahead for the precious metals. The bounce that occurred in many of the goldminer stocks resulted from an over-sold condition. Did you take note of my comment that the Daily RSI-7 for Goldcorp (GG) Wednesday before the open was down at the 20 level? It dropped lower during the morning. You might have also noted that rallies off over-sold conditions are good opportunities to find bids in a sinking market.

Finally, not to disappoint the goldbugs, I also opined that the $USD has not started a new Bull market, so this is a short-term rally that will soon be followed by another selling wave, and the timing of that reversal would be a good one to consider going back into the bullion. I can't tell you when that might be, but, knowing what to look for, I can often spot it when it happens.

As to trading the goldminer stocks at that point, I can’t say much now other than it would be a good point in time for the big capital pools to start accumulating positions in the better financed smaller and mid-size miners and explorers that are bringing in new mine production, i.e., would likely see a large earnings increase in 2009-2012. Gold and silver in the ground is money in the ground.

Thursday is May Day. Don’t labour over it. :-)

Comments

[Serena:]

All GOLDCORP shareholders must see the excellent charts and valuable commentary of Goldcorp by Trader Dan Norcini posted on May 2 on Jim Sinclair's MineSet website. All YAMANA investors will want to see the SUPER BULLISH YAMANA French Curve Chart also posted on May 2 on the Mineset website and note that Mr. Sinclair asserts there that "the downside in gold will be in by the end of the first week in May". All GOLD fans should note that in his Special Gold Trading Update (written April 29 and posted on April 30 on the Kitco website) Alister Gilbert (Gann adherent) writes "GOLD IS GETTING READY TO EXPLODE HIGHER IN WAVE 3 OF 5. The Fibonacci TIME chart shows we have just hit the 61.8% level in time of Wave A. The 61.8% in price target of Wave A is $853. This means was are either bottoming today or will run to this Friday 2nd May. Friday is the 100% in TIME and fits well with the due Delta date for ITD#1 and MTD#2 turning points. Friday is also a Fibonacci 34 Trading days from the March 17th high. Gold is ready in TIME for the big move having completed 61.8% in TIME of Wave A and with 100% due on 2nd May."

2008 May 05 09:14 AM

[fxtrader07:]

hm, yeah right. fibonacci and gann humbug will lead to a proper gold forecast. how about elliott-wave superguru robert prechter predicting gold below 200$/oz for years and years and years...
but heck, if it is not wave iii of 3 of 5 it might be wave 1 of 5 extended. or maybe, we see some more of a-b-c of wave 2 of 5. but then again, it might be some irregular flat cortrection as well.
give me a break. fundamentals matter in the long run. not some fibo-ratios and time-lines that fit 50% of the time at best. so they are almost as accurate in their predictive power as a coin-flip.
apart from that i am bullish gold and gold stocks - but there may be more short-term weakness ahead first. longer term, the fundamentals will lead to much higher gold prices

2008 May 06 09:32 AM