2010.02010.08.27 CGSI has been leading the UGSI because the C$ was back down from the par. Now the U$ starts to show weakness, more and more investment is moved into gold stocks because higher price means a much higher profit increase at the current sweet spot. The gold stock starts to have a taste of speculation.
2010.08.27 The OBV is up but the volume is down. Tradition reading says that the up trend has not support. For solid fundamental asset this does not have to true. On one side of the argument is that there is not crazy buy. On the other side of the coin is that the gold bug does not sell. There is no mass buy and sell but there is only accumulation. In such situation, the rising OBV jives with the price rally should be valid. We should reject and worry if this is a glass top.
2010.08.20 The depressing gold stock market may have a break. The gold stock is sort of leading the metal. Expectation is building. It is weakly confirmed by the better OBV (above 200MA and showing some parabolic sign.
2010.08.19 The gold stock could not keep up with the metal. Dow Industrial is down 144 points today. This is a panic day so everything that can move has to go. It is especially bad for the American market when panic kicks in. In the Canadian market, the situation is better. UGSI is down 2.74 points or 0.8% but CGSI is up 0.73 point or 0.2%. This is while USD up 14 bps or 0.1%. It is completely counter intuitive in short term but long term could not be changed.
2010.08.13 The OBV shows some weakness but the stocks holding up pretty well when the market collapsed. Gold stocks can only partial detached from the market which means gold stocks are not in favour. From P&F, the trend of OBV is up. There is some buy on dip.
2010.08.10 While gold got hammered the OBV of UGSI has encouraging development. It has a lift off above the 200MA. Although the CGSI is just as lucky. So we have the case that the price and OBV are both rise above the 200MA. Therefore, we may see the gold stocks moving higher.
2010.08.06 Gold stock has been the leader of gold. The OBV has continued to rise in lower volume. Some small accumulation. Nonetheless, the game is on.
2010.07.30 The OBV is the hint for any buyer. On Friday, the OBV turns up. This is a sign of turning around. Does it inspire by the U$13-14 gold price jump? If it is the strength may dissipate. So next week may be a corner stone.
2010.07.23 After almost a whole year of dipping OBV, now the OBV 200MA is flattening slightly. If we could have some more up side on the OBV, the indices will go higher. Both indices have just dipped below the 200MA and rose. So the odd is on the up side supported by the strong 200MA of indices. There is also a slightly lower of the gold to UGSI ratio but this 200MA has not turn down yet. It is flat at best.
2010.07.17 Gold stocks are now very emotional to both up and down side. Other than fear and greed, it seems short term traders are very active. The small fluctuation of the OBV confirms that. On the whole, concern on the gold stocks and corporations are the same: inflation is high and consumption is low. No accumulation no dramatic upside.
2010.07.09 The market jitter causes the gold shares to fall. Even short covering is weak.
2010.07.03 The indices do not tell the full story. Both indices beaten up as gitter in the market mounts. In light of inflation and deflation, gold demand is creeping up. This is the macro trend. In the last 6 month, gold stocks are recuperated to make another attempt to break the high in last December. However, many other stocks are not doing well. The liquid and profitable are being liquidated to cover the book. Last week was brutal in the sense that many stocks have a very serious hair cut. As always, gold stocks are dumped. The OBV was about to peek above the 200MA which is started to bottoming. If the OBV could be improved, then the selling pressure of gold stock is subsided or may even suppressed if optimistic. However, if the trust of gold is not firming up, gold stock could suffer another major blow to go lower. It should be noted that although the U$ is higher relative to C$, but the CGSI goes high which is reflected by the CGSI OBV and UGSI OBV. However, the change is subtle. We need more evident.
2010.06.25 Gold stocks may turn around as shown by the upward OBV. It is even more significant that the OBV cuts above the 200MA. If this sustains, the gold shares will shake off the rest of the market and follow the gold's upward movement.
2010.06.12 WTI and NG have experience an adjustment period. WTI is bobbing up and down at the 200MA. NG still hangs above 200MA. There is a very good chance to hold above 200MA during the summer. If there is another Horizon accident, you can bet both WTI and NG will shoot high.
2010.06.12 The range of the gold stock indices have been adjusted to show more details. The recent actions are good. The OBV is up to support the upward price.
2010.06.12 Gold stocks is now floating in the same direction of gold which is a very good sign as gold price ascends. The volume remains low indicates the investment is mainly the retail investor. Any spike could very possibly the short covering only.
2010.05.28 With gold getting very strong, gold stock should be strong. The strength should be reflected by the OBV. But the CGSI-I OBV has shown the weakness that indicates strong selling. But the UGSI-I is up. A discretion between two markets. One should also check the buy strength is not too strong for the American market.
2010.05.21 The action of OBV jives with the price action of the gold stock and the market. It may be meaningless to argue weather the selling action matches the price fall. The important point is that gold stocks have gain so much that they deserve a minor correction. With the strong action of gold, the gold stock could not be too far behind. But the law of physics could not be denied. The bear will push down the stock market temporary due to many factors. So far no technical levels are violated. Stay put.
2010.05.14 Technical has been improved significantly as the OBV turns higher. The ratio of gold to stock index is also declining ever slightly but very persistent. So it is time for the gold stock to catch up.
2010.05.07 It seem that this time could be different. The gold stocks may not fall in sympathy with the market. At the end of the week, they behave just like stock. So gold stocks may not be the best way to park money.
2010.04.30 Last week, there is an early sign of increase in interest of gold shares. In the past, the gold stocks are in sympathy of the stock. In the last two days of this week, gold shares are not sold in sympathy of the market. This change has been reflected by the upward direction of the OBV. The new trends has to be validated by the volume which continues to improve.
2010.04.24 Just in a week, the OBV for CGSI and UGSI are turning rapidly. Is this part of the volatility or a true bottoming? If gold stock is rising to bull, it will be counter conventional wisdom which calls for increasing trading volume. The volume for the gold stock are reducing. This is not following the rule.
2010.04.16 Gold stocks are sold when the turmoil in financial market get ugly. Still not a good entry point.
2010.04.09 As gold becomes steady, gold stock recovers along with the market.
2010.04.02 Strength of gold may be reflected by the the strength of gold share which is lacking. Although the dumping has been slowed down but there remains no buyer. Technically, CGSI and UGSI have a top head and shoulder which is hardly an optimistic sign.
2010.03.26 Gold stock dumping slows down on Canadian market but accelerate on the American market. Market internal is weak. A lot of people pull out the money.
2010.03.19 Gold stock dumping resumes.
2010.03.13 The gold stocks are not bullish. The gold bug stock index HUI shown above tells a bearish story. It is consistent with the UGSI and CGSI chart. This could either mean money out of the gold stock market or heavy short. A quick visit to www.shortsqeeze.com finds many gold stocks have reduce the short position. This is also align with the volatile behavior of the gold stocks during the day. Is this the bottom the shorties try to balance the book? This is the conjecture until gold price could be solidly bottom out which is not showing yet.
2010.03.06 With the recovering of the precious metals, gold stocks' depressing time could be turned around. There is some sign of early short covering for gold stocks. As the result, both indices return above 200MA. The bottoming process remains fragile. Unlike the precious metals forming a base, stocks have yet to accomplish this but with the help of stock market recovery, we may be closer to the bottom than before.
2010.02.26 Gold stock bottoming may have been started with the help of some buying.
2010.02.19 Gold holds up or advance slightly but the stocks are not following. There is dumping that prohibits the rise of gold stock. These selling are heavy.
2010.02.12 It is a surprise to see the recovery of the indices and the toe-holding of the OBV. The quick return is a good sign but without the confirmation of the rising OBV, it is just another mirage that may tease investor to another heart attack event.
2010.02.06 Among all these negative signs, there are a number of positive turn for indicators that shows the dumping of the gold stocks may have slow down if not stopped. The RSI has gone as low a single digit to above the 30 which is very positive. On Friday, there is a non-confirmed bottom signal which is better than continue falling. The OBV has turned up rather than falling. The 20% downward correction could be a good number to turnaround. This has been the most severe gold stocks correction since June 2009. Relatively, the indices are about 40% high since today.
2010.01.30 Smart money has dump the gold stock for awhile. Something is going on.
2010.01.22 Gold stocks have rich values. They have been swirling at the top. After losing 11-12% both indices signal an unconfirmed bottom. This may be temporary relief but could be a real turning point. Looking from the perspective of market psychology, things could deteriorate further until the financial smog is settled down.
2010.01.15 The bottom of the price line is higher. The top has H&S. Caution warrant during the precious metal is in a sideway pattern.
2010.01.09 Stocks are very fragile. Even with the Canpat deal, the effect was temporary. Gold stocks suppose to lead the market but so far it is still vey hesitate.
2009.12.31 Like the gold price, gold stock indices move up this year. The trend is strong.
2009.12.25 USD Index fell quite a bit during the last two days of a four days week after the astonishing rally from 74 to 78. Gold and shares took a hit but now is recovery time. Payment and settlement could be soon after us.
2009.12.19 We see a unisom in market psychology in the States and Canada. Buying has resumed.
2009.12.12 If stock leads the metal, it is shown by the chart. Trend is still the friend.
2009.12.04 Is this a black Friday for gold and gold stock? May be but this happens before. On Oct 28, 2009 this year, the CGSI dropped 4.3%. The volume was not extraordinary high but less than 200VA. Of course, after this CGSI started to climb from the low point of 310 up to the 390 level yesterday. Even after today drop of 19 point remains at the 370 level. There is different this time. The volume is 80% above the 200VA. This signify a significant but we do not know whether it is panic dumping or bottom buy. Next week will tell. It is important to observe the volume pattern that the volume spiked higher than the average which is usually happens at the bottom.
2009.11.28 As discussed in the precious metal section, gold stocks need a breathing moment to vent the momentum before it endanger itself. In just two trading days (one for American), the indices corrected from the overbought territory to normal although the process had begun at the beginning of the week. This heavy movement brings the indices back to a closer range with the trend line and the 200MA. The rebouncing effect of the precious metal could put a floor on the precious metal in short term until the Dubai Effect is fully exposed. Two scenarios could be unfolded. The first is positive effect on gold and gold stock. This is the normal flight to heaven psychology. The second is dump to pay margin. Dubai has one of the world's gold trading centre; small but sizible. DP World could hold a significant amount of gold. If they are flooding the market for cash, gold price will be driven down. However, this is possible but not probable because China is friend of Dubai. The gold could be sold to China at a discounted price without going through the market. But the investment of DP World may be liquidated which could crash the world equity market.
2009.11.20 Stocks are under tremendous pressure downward but still holding with some strong selling. During the last three days of the week, the dumping has been very serious but by and large, the damage is not severe. In another word, gold shares are at the overbought area but continue to go sideway.
2009.11.13 There was a divergence between the stock and the metal. Now the stock and metal is in converging mode.
2009.11.06 Gold stocks are recovering but looks like short covering more than really buying.
2009.10.30 The price says the gold stocks is holding but the OBV says distribution is very seriously. Does OBV leading the fall of the price. We have to watch and see. If not, such serious distribution will weight down the gold stocks sooner or later. The indices is now at the level of just about to breakdown.
2009.10.23 Precious metals are forming a peak or a base. Only time can tell. But stocks are not taking any chance or it is due to involunteered liquidation. If precious metals are accumulated, there is no good reason to sell gold stocks. Yet gold stocks could be more susceptible to inflation. Is the fall of gold stock indicates inflation is rallying?
2009.10.16 Stocks have been jumping from dumping to buying. It is trader's dream. The more interesting is the channel that the trend line travels up. Don Coxe has suggested to hold metal in the expense of the stock. He is seeing uncertenty.
2009.10.10 There was as small increase on accumulation but sold off continued on Friday. With the precious metal at new high, shorties remain in control. When we see the advance of stock by 5-10% again, this may be the short covering.
2009.10.04 After all the dumping of commodities or commodity stocks last fall, the dumping of this fall does not reduce in size in anyway. The major difference this time is the price has not been dramatically reduced. Relatively, it holds up better than last time with more dumping than last July. So far, the magnitude of dumping the stocks is near the level in October last year. But this could accelerate. However, we should also take into the consideration of more stable gold price. This could stabilized the gold stock prices. The dumping of gold stocks has been disguised by the relative high gold stock prices which is a good sign. Alternatively, if the price fall, it could be a sharp V-shape in and out case. This has occurred a couple of time last and this year. The dumping could come from the shorties. If they failed to drive down the price, the short covering will be spectacular, as usual.
2009.09.26 The share of precious metal stacks falls more than 10% in some cases. Panic is growing before October. However, the panic sell is still limited. No spiked up volume which may come next week if the G20 meeting has any material announcement.
2009.09.20 Anticlimax or top out. No matter what, some money off the table is not a bad practice.
2009.09.12 There is a major change (not necessary the game changing level) on the gold stock. Both indices advanced to a record high with OBV makes a steep climb. CGSI's OBV turned from down to up while UGSI just climbs a more steep slope. These are sign of panic. Is this panic buy for worry missing the train or short covering. If it is the later, the price will fall just as quick. In a long term, inflation or deflation will make gold stock advance.
2009.09.05 Both indices up more than 10%. If you hold gold shares of some may even exceed this. IAM Gold climbs 20%. Is gold share discounting the possibility of over U$1,000 gold. There is the possibility but gold shares has been beating up quite badly in comparison to base metal shares. The fear of inflation could trigger the short covering which will take 2-4 days to complete the covering. The more realistic status will be seen by next week. Anyhow, both indices peak this week but both are entering the overbought area. With the shorties' covering finishing, the gold shares could be in sideway which is good for future advance. But if the rally does not sustain, it will be corrected violently. It is also important to point out that the OBV for both indices have different polarity. Either there is something strange or Canadian is more careful than American.
2009.08.30 There is a revive of interest on gold stock when gold is going to no where.
2009.08.22 Canadian gold stocks can only be favorable by its leveraging property. The OBV is actually climbing back for both the C$ and U$ gold stocks. This could be the hint of early sign of escaping from the risk.
2009.08.14 Canadian gold stock has this strange distribution pattern. This pattern is different from the pattern using the conventional OBV calculation. The US gold stock is doing better and continue the climbing.
2009.08.08 Volume is up. OBV is up relative to previous peak/trough but actually down quite a bit showing distribution that makes the price metastable. If U$ turns firm, gold stock could face another hit.
2009.07.31 Canadian gold stock is doing better because it does not continue the fall. The repair has not been repaired and still in the process to climb back about the red trend line. OBV has shown distribution until last week. May be it is still too early to confirm big buying.
2009.07.25 The trend line has broken down. Now is in repair mode to recovery. The OBV does not dive along with the index is a good sign. Stronger than average bottom buy is another good sign. The third good sign is the higher than average buy on the way up. All these tell a story of brightening and worry. During this period and pendent formation, there was strong selling until the index touched the trend line. If we take the double bottom as the positive sign than better time may come.
2009.07.18 The index is very toppy with shrinking volume. OBV shows buying precedes the recovery.
2009.07.12 The positive momentum is diminishing. Prudent caution may be exercised.
2009.07.04 The gold stock market is confused because of the two no trading days for the national holidays. As the result the trend line is violated. The RSI in pointing up. Could this be recovered above the trend line next week? May be because Friday trading was very thin. It was only 7.5% of the 200 day volume average.
2009.06.27 The American and the Canadian gold shares have been behaving slightly different. The UGSI has a succession of peak to demonstrate a strong upward momentum. The CGSI is restricted by the increase in value of the Loonie that the peaks are marginally impressive. Three peaks although one higher than the others but remains showing the sign of top out especially 200MA is quite below. The only support is the bottoms are returned to higher level. Should Loonie has a runaway rally, it may not be to CGSI's advantage. Nonetheless, the strong rebound before the weekend is interesting. In order to calibrate the representation of UGSI, HUI is used. An ICKOPF chart of HUI shows same characteristics of UGSI, strong upward momentum. However HUI does not show volume. The rise can be due to small group's speculation. The shrinking of the volume is definitely needed some close attention.
2009.06.20 It is really funny to see the index made a sudden turn higher on Friday when gold price is being suppressed. Now the index end the week without violating the trend line. Without the turnaround, it will. We also see the sudden increase in volume (40%) on Friday. Looks like some one is doing some short covering.
2009.06.13 Gold shares took a beating this week when the financial and other stocks rally. Flight out of the traditional safe heaven to more higher risk adventure. This is enforced by weaker precious metal but silver is definitely not weak.
2009.06.06 The gold stock is definitely in favour of the metal because it has been leading. The 200MA is a very important indicator. Its current trend is up for both Canadian and American gold stocks. It may come as a surprise for the Canadian gold stocks because gold price in C$ is on a slippery downward slope. So should we trust the chart or not? It should be noted that, when the gold future is down to U$944 on May 28, there was about 68,000 traded at NYMEX. It looks like a bottom buy.
2009.05.29 CGSI has been topy. Finally we have a break up but it has to hold next week. It has to point out that although gold in C$ does not move but the Canadian gold stocks move just as exciting as the American counter part. This is contrasting the price of gold in C$. Anyway, the break up is very powerful.
2009.05.21 Gold shares are moving long but the participants are still small crowd.
2009.05.18 USD Index collapse has a positive effect on the gold stock. While the U$ is high relative to gold but C$ falls to make the stock more attractive in C$. As such, the CGSI recovers from the breakdown. Yet we see the movement is very pedestrian as indicated by lower volume.
2009.05.10 The down trend of the gold stock took a reversal, a big one but the interest is low. Volume is not high. If nobody sells, the volume is low. Again the investor is not rushing into the gold stocks.
2009.05.02 The trend is not your friend. Gold stock 200MAs dip. It may need 6 months to repair.
2009.04.24 Finally, the down movement has a break. The recovery is slow buying but it still a turnaround.
2009.04.18 Gold stocks follow the cue from the gold metal moving downward. The correction is about 25-30%. This is becoming very challenging when the financial stocks are doing very well. If there is any comfort, we see the volume increases as the index lower to RSI 20 area. However, no momentum change. The interesting point is that last trough there was high volume but last peak was no high volume. Accumulation?
2009.04.10 The gold stocks attempted a recovery before the weekend but not very convincing. Wait until next week to see how the U$ performs. It may need a few more days to finish the U$ for quarterly trade settlement.
2009.04.04 There was a gold stock sell off before the weekend due to the rise of the financial and the fall of the yellow metal. However, we see there was not top sell but there is accumulation on the decline. The selling is also dried up a bit on Friday. May be the correction does not go too far. The only significant factor is the double top. Lets see how far this correction goes.
2009.03.28 The CGSI's one day decline did not form a downtrend. But the two days down may be. We have to agile about this due to a temporary correction in gold which most probably already happened.
2009.03.20 The CGSI has a first day of decline. It takes two days to confirm the peaking. The pull back could be safe action before the weekend. Next week will be interesting to see if the trend line holds.
2009.03.14 The gold stock collaborate with the gold bullion story: financial rally is temporary. No body selling off gold stock.
2009.03.07 If volume tells the buy/sell pressure we see the buying/selling pressure must increase at the due course of gold stock volatility. In the big picture, the volume continues to rise. There are a few major volume contraction below the 200MV immediately before or after the fall. The current situation is that the volume action is above the 200MV on a upward trend of the 200MA. Is this the tour de force of buying pressure? The PF of CGSI is different story. The average volume of the period is higher than the peak or trough. The trend change when sell or buy exhaust. A characteristic of bull top or bear bottom. Or the top or trough are illusion. We should focus on the average which is the major trend.
2009.03.01 Strong upward trend for gold stock has not change despite the pull back. The index chart seems a pullback but the P&F shows the up trend is intact.
2009.02.21 On October 27, 2008, CGSI corrected to 129.58 which is only 26 points above 103.69 on May 16, 2005. It would be a brave soul to invest in gold shares because the return for 3 and a half years was wiped out. If you are not on margin, even you buy it at last high around 300, it is better off than holding other classes of equity because you do not lost money. We could see a 20% correction in action which may span a few days. This is violent. According to Richrad Russell, these violent movements are typical for bull action. So does a crumbling market. This time it is very important that gold share does not fall in sympathy with the the financial which is showing in this bank chart.
2009.02.15 Dow is coming down to challenging the low resistance. The approach is ferocious. In the last few months, when this happened, gold stock was in sympathy with the Dow. Not this time. The trend line is clearly pointed up. Last Friday's pull back is the typical behavior after an all time high of CGSI at 318 on Thursday. With CGSI breaks its double top last year, this break out is significant to support the gold bull trend.
2009.02.08 Strong U$ continues to help the CGSI to perform while the UGSI is not really impressive. If the hypothesis that gold share will shot up to catch gold when gold holds above U$900 is true, we still have to consider the U$ rally have to finish otherwise no one has the spare change to buy gold share. The U$ carry trade has to continue to unwind. It is important to see the up volume is not peaking but continue to decline at this catchup mode. At peak of price, there should be top selling. When rally, there should be up volume to show the demand. At this stage, there is no big sell off to damp the share rally is a good thing. Nerd theory does not apply. Complement of Murray Pollitt, you may want to read his excellent analysis on gold share today.
2009.01.31 The gold stocks may be rallying without attention. The index chart and P&F chart shown a deep V recovery. Waiting for the break up or break down. It is much more likely to the up side than the down side.
2009.01.26 CGSI is testing the top. A true break up will be very bullish. A p&f of CGSI is shown this week.
2009.01.17 Can gold stocks have another free fall? It is possible. If so, we have ask the reason why gold stocks rally from the recent low. If gold is a commodity, demand for it seems has not changed. If gold is the barometer of economy, it should rise. There is another reason gold stock could fall: bad company management. Other than the hedge book, gold producers are pretty much well behaves. What about profit? This is the sore point. But remember that gold is higher year over year. So profit is reasonably healthy especially energy price has dropped.
2009.01.10 A very sharp pullback for the stocks from the hell and recovered more than 50%. A pullback is in order. Yet both 200MA is showing positive signs, little by little.
2009.01.02 Gold stocks are making a deep V recovery. Gold:stock relative strength is weakening. It is also falling fast. Both gold stock indices are crossing above the 200MA which is very assuring. The next positive sign will be breaking up above the previous top. This rally looks genuine because it has passed the mid-point already. The other supporting fact is that it happens when the U$ is strong. The only concern is low volume. On balance volume will show there is not enough buying.
2008.12.27 CGSI has been out perform UGSI due to the rally of the U$. But the pattern signify a significant recovery. However, the rise is too steep and too fast. The only positive sign is low volume on the rally, i.e. no selling, but no buying too.
2008.12.20 The index has started to slow down the fall.
2008.12.14 The gold stock is now no in sympathy with the financial. The Canadian banks continue the toilet bowl trip. See the chart.
2008.12.07 Short covering and shorting continue to be the main causes of volatility. Yet, there is a very strong upward movement until the margin clerk works overtime. The chart above could be misleading as it shows a very steep V recovery. Retrospectively it could be true. But for the meantime, it could just be part of a downward channel. The 200MA is not leveling at all.
2008.09.20 The turnaround is not without incident. On Wednesday and Thursday , gold and gold stocks were ambushed. GLD ends the day with 65M and 60M shares changed hands which is about double of the previous high volume and 5.5 and 6 times the 200 day average volume. The huge sell off using GLD as the vehicle trigger the fear of the falling when Fed announced the series of bailout actions which fundamental fixes nothing or liquidifies nothing for consumers. Will the bailout bless by the creditor from China and Russia and Japan? Possibly. But the attack of gold is simply a mean to allow some investment house to cover their short. Such volatility will continue. The question needed to ask is the jump in volume meaningful? Partly. Yet it is important to see the continue climbing of volume and price which shows the true rally. In comparison to bank stocks, both have price and volume up. But the unproportionally up in volume is just panic buy (for short covering) that equivalent to panic sell. There is another point that Richard Russell says about bottom: no body know it has arrived. Now everyone talk about the bank and hardly anyone talk about the gold (and shares) bottoming, it could be it. The classic technicians' rule is to buy on the confirmed change of direction not at the change of direction. This could only be reviewed afterward not at the moment.
2008.09.14 Is this a turning point for gold shares that it does not sympathize with the financial? As long as the financial sector holds the gold share, it is the only thing they could dump to cover their margin. Gold stocks are still vulnerable. JP Morgan and Stanley and Goldman Sachs hold huge amount of gold stock and precious metal contract future and they can short as much as they like. There is no protection until they are drained.
2008.09.07 Are we repeating last August? If so, things may be getting better from here on. But the election would mean bad news for gold sector.
2008.08.30 The heavy volume at the bottom may be a genuine valley. The worry part is the shrinking in volume. There is no short covering for sure. The low volume does not support a quick rally yet the indices continue to recover.
2008.08.24 When Gold Eagle announces the great >40 g/t discovery the gold stock was led the downward gold price momentarily. This reflect nothing change for the fundamental but the psychology is in play. For months gold stock falls in sympathy with the financial, investors have no confident and have to stand sideline. When we see the volume and the price trend tilts upward, this would be the sign of bottom.
2008.08.16 Stock led a short lived pop up before gold and then lagging the fall of the metal after weeks of amplified fall. Volume spiked after the first low of the week but the second low show resistance to the strong down draft of the metal and stay just above the low. If the first low create capitulation, the second definitely show some contro. Repairing will take time.
2008.08.11 Gold stock continues its amplified sympathy with the gold's fall. Like Don Coxe said enjoyed the weather but did not give up.
2008.08.03 Consolidation and higher production prices scare any one have not faith to store wealth away. Only a small group of insight investors are holding on. After reporting earning for 2008Q2, Goldfield's share dropped 15%. Stock selection is much more important than any time in investment history.
2008.07.26 This is not necessary the happy week of gold stocks investors. The stocks firm up a bit before the metal. The volume is starting to look an up trend which is a precursor requirement of rally but it could also the precursor of a sell off.
2008.07.21 Gold stocks decline may not be escaping money to buy financial. Last week, GS, JPM, and many others were falling. It could be margin call. Anyway, it has been stabilized. A trend of less volatile when financial falls has established. Money may move back to gold stocks as Canadian banks are peaking. See this chart.
2008.07.12 Gold stocks are less sympathy to the financial this week which is a change. It is the energy stocks that suffer. Could it be the end? Some very powerful group can keep on selling without cover the short. Nothing is for sure except playing it defensively.
2008.07.06 Gold stocks are under pressure again when the financial is in trouble which should not be the case according to Don Coxe. However, the market can be in solvency longer than we can.
2008.07.03 EIA published the numbers. Oil backed off a few hours and made new record yesterday and today to just under U$146. NG consolidates to prepare for its ascend to U$16 by the end of summer. The strength of the U$ does not reflect on the commodities but the stocks. If the commodities represent the wealth why the stock is being sell-off? Margin call could be the answer. With the weakness of the U$, export to American could be in question. Canada is under the grip of NAFTA, NG has to export to American with a reasonable price, i.e. cheap. But others do not have to. There is a good chance to break the old $15 old record helped by Katrina if there is any interruption caused by weather.
2008.06.29 Gold stocks get a shot in the arm or should I say the gold stock Popeye eats the green spinach (U$). As a general rule of thumb, playing with momentum is dangerous. Newton's Law of Physics: action equals to reaction.
2008.06.22 Gold stock investors are in agony again. While gold price recover 2-3% by the week but there is less joy for the gold stock investors. It is only up 1-2%. Where is the leverage? The cupid is the American financial again. The broad sold-out of the financial stocks drag down gold stocks and energy which is counter-intuitive. This is the reason why we have to have some powder dry for these moments or may be not.
2008.06.15 Gold stock investors are in pain two way. Gold price is suppress when inflation is surfacing. Traditionally gold will just do its faithful duty of getting higher price. Those producers have reserve in ground would literally grow money in the ground. The second painful thing about gold stock is that it is being short when the Financial is down. There will be one day short covering will be called just like delivery will be called in the future market. By then the price will not be parabolic, it will be vertical which is unhealthy.
2008.06.07 Gold stocks are the sympathizer of the American financial stocks on the down side. Even with the excellent gold action, they are pulled back along with the American financial stocks at the end of the day. As long as someone can short the gold stocks, I guess there is nothing you can do it until the naked guy caught with no pants not just down. Structurally, the gold stock is not entering an explode or bust critical situation. I think it is more likely to explode after some struggle. Just a chorus to yesterday's note on not all gold stocks are created equal. Newmont has been left out for this boom so far. But it does not mean out of the game yet. Barrack seems leading the pack after come clean with no more hedging but in fact its hedging book still huge. There are too much hidden information that make the investors confused and vulnerable. It is just a mine field.
2008.06.06 ** All stocks are not created equal. Gold Field did not end up any gain today while Goldcorp gains more than 4%. Selection and patience is important. Gold Field's day may come later but currently African producers are suffered. **
2008.06.01 Gold stocks have a very rough ride in May. The volatility may not finish. Buying opportunity may be vanishing as the metal/index ratio 200MA is flattening. Could this be a foresight or is this just a statistical illusion? Gold stock has been performed badly due to the rise of cost (i.e. labor, energy, transportation and xyz inflation). If you buy this story the price of gold has to go up which means the value of those producers have large reserve will worth more. Similarly, those junior producer or explorer will have more in the bank.
2008.05.23 It may be slow but the turnaround continues when the yellow metal continues its volatile recovery. Both indices are recovered above the 200MA. The ratio has also closer to the 200MA. The 200MA of ratio says the metal still out perform the stocks. It is very comforting that although the American financial stocks have been hampered the gold stock did not do too bad. Perhaps these American big banks are close to finished selling the majority of their holding. These people are clever. If they recognize the value they will not dump the stocks.
2008.05.16 Which one is leading this time, the metal or the stock? The stock market continues hampered by the bad performance of the American financials. Other than the occasion that metal falls, the rally of the gold stock is suppressed. This is no exception last week. But the most important event for last week is the return of the Jedi (back above the 200MA). The integrity of the stock bull maintains during the last few months; it still trends upward. Speculative activity in the American market is again high. This is a puzzle. The recent rally of financial has been singled out by Richard Russell as the indicator that the market has discounted the worst because no low is created. The same happened in January until March. According to the Dow Theory, it could not be back to a bull unless you better the previous high. We have not seen that yet. I would be more cautious to treat the financial rally as the bear market rally. This means the opportunity to buy cheap gold stock.
2008.05.09 The most recent head and shoulder spell may finish the work.
2008.05.02 The gold stocks show very good recovery on Friday but the USD continues to rise which is a contradicting picture. Someone has to give.
2008.04.28 The chart has been rearranged to show information better. Last week, both indices were hit by the up turn of financial stocks. Yet the volume is not very high which could mean money are moving out but not everyone. Gold stocks are dumped when the market fall. Gold stocks are dumped when other sector rallies. The stock nature and out of favour situation makes gold stocks vulnerable. Anyway, the inflation will kick in soon. With that gold stock could be back.
2008.04.20 The head and shoulder does not show on the stock index. If stock is the future time machine then it shows precious metal is in a trading range while stocks are trading in a very steep upward channel which explains the big swing of the stock price; a signature of bull market. Even with the incredible return of the financial sector, gold stock remains its strong trend.
2008.04.13 It has been proven that gold stocks are the store of wealth for many investment banks and hedge fund because whenever they have a fall, gold stocks have a fell off when it should be up. So the blood has not run clear when the sub-prime venom is still at high concentration.
2008.04.05 Gold stocks are shown strong sign of recovery but not everything created equal. Like Prof. Ron Meisels said selection, selection, selection.
2008.03.30 Gold fell from U$1,030 to U$903 but closed the week at U$930.
2008.03.22 Correction is a normal function of the market. Technically speaking the indices were too far from the 200MA. If it breaks down then there is another story. The critical event will be the pass of the 200MA.
2008.03.14 Finally the gold stocks have it life when the bank stocks falls; no more fall in sympathy with the financial. But be careful, desperate situation calls for desperate action. Some banks may still have some gold stocks. Among the pack, IAG, HMY and ELD suffer at different level. NMC is just not responding at all. ABX's book is not really clean but it moves anyway. So stock selection is very important.
2008.02.29 Gold stocks continue in sympathy with the stock market but with less dependency. The relationship is waning until all the trouble financial institutes' gold stock holding dry up. There is sign for the dry up as the metal to index ratio is going down. This week it is sunk below the 200MA but not much. The channel of the indices remain upward strongly. If there is a black swan, what is it?
2008.02.23 Cost of gold production has haunted gold producer for last couple of years due to the inflation of labour, energy and material (like truck). The 30% gain in gold price in 2007 could improve the margin well to those extreme high production cost producers. The recent quarterly and annual results are show the effect. However, you still have to manager the company profitably.
2008.02.18 Gold shares has been moving in sympathy with the financial which is counter-intuitive. When financial is in trouble why would people not move to less risk gold shares (I am making an analogy of gold to cash as gold shares to financial shares). Yet John Budden persistently emphases not to confuse the bull market with brain. By picking the right stock it creates the opportunity to buy the gold share at discount. Among the gold stock index members, we observes some have trouble because of either geographic or production or labour problem. But it is not all created equal.
2008.02.10 Gold shares again pulled down by the American financial sector's weakness. This week the co-relationship is fading as gold shares are significantly lagging the yellow metal. However, investment in gold share should take into the consideration of many other factors. IAM Gold falls more than 10% because it's French project permit was not approved without explanation. The location of project plays a heavy factors on the value.
2008.01.26 Gold shares are unreasonable beaten up as the American and European market tanked. The rescue style selling may be stopped when these hedge funds and margin accounts collapsed. Gold ETF is not immuned from the selling. It is sold in discount.
2008.01.18 A few days, the gold stock moves nicely independent of the overall market. The strong gain makes the gold stocks more vulnerable when margin call comes in. Involuntarily sympathy.
