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September 26, 2005
Is goldminer strength really surprising?, Mon., Sept. 26, 2005, 1:25 PM
Reader mail today: I can't believe the move in gold miners and bullion today. I was almost sure that gold and oil would be down throughout this week. I am not complaining as I am long all of the above.......but I am surprised and I usually don't like surprises. Hopefully things will stay bullish. Regards, /B""
I've found that nobody has all the answers in capital markets, especially on rainy days. :-)
But the biggest surprise I usually get is when a couple hours after I write my opinion, and markets are found to go my way, that readers express surprise. Maybe I need to put my words in BLOCK LETTERS?
Here is what I wrote in the Saturday Week in Review:
(About Gold) I find it a little disheartening " although I bask in the adulation " when readers write me to ask what's going to happen next in gold. Maybe they only partly read. A few weeks ago I wrote gold was ready to rock and roll, and it did. Then, with people asking, I wrote it would do more of the same to the 475 level, but if ... well, let me put myself in quotes: Remember, what Alan Greenspan's FOMC decides to do on Tuesday will impact the short-term trend of gold. The price has broken out, but just like last December, it could come off by $5 to $8 if the Fed tightens. Good-oh if they do. And Good-oh if they don't. It's kind of like win-win."
So, what happened to Gold? It soared to 475.50. Then what happened to the Fed? They raised the Fed Rate, and Gold came off. It closed down "$2.00 on the week, but $12.25 off the cycle high. So you were warned of the likely spike, then the weakness, and the opportunity. I can't do more."
(About the $XAU and XGD U.S. and Cdn Goldminer Indexes) TSX: XGD was down his week "3.78 pct W/W to 54.45, but if you look at the Daily data chart you'll see the damage was done Monday and Tuesday. As the bullion was flying high because Rita had just come on the scene, going from Tropical Storm to potential Category 5 hurricane headed straight for the Texas oil industry, the share traders were mindful that Greenspan was going to tighten on Tuesday afternoon, as he did.
Now, here's the key: the dissenters in Washington are starting to add up the billions it will cost to clean up and rebuild after K and R. Billions...billions...billions...numbers bigger than any of those people have ever seen before, and they are going to tell us about it. And some of us are going to start to realize what that does to the value of the USD.
So if gold drops from here, it's not going far. Eventually it's going up over $500. So this is the time to be watching the best quality gold stocks, and buying on weakness."
I don't think I can do more in this blog, which means to say that I cannot follow the gold stocks (or any other stocks) by the hour for readers. If I could, I would, but there are only 24 hours a day.
Here is the screenshot of my gold monitor at the present time. Yes, it does reflect strength in goldminer producers on a day that the gold bullion and futures were soft at the open, but just now starting to move higher, up +2.10 on the Dec-05 futures.
Posted by Posted by Bill Cara on September 26, 2005 01:25:59 PM | Category: Goldminer Producers