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November 4, 2005

Buying opportunity for gold shares, Fri., Nov. 4, 2005, 3:38 PM

I received a note on gold from Levi who says...

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Bill, I thought you might find this interesting from Briefing.com:

12:44 Floor Talk: Gold

We're hearing the move lower in gold prices has been driven by two main
drivers: 1) the strength in the US dollar; and 2) the weakness in energy prices. It's worth noting that the US dollar is at its highest level vs the euro in one year; and at its highest level vs the yen since Aug 2003, possibly on the belief the Fed may continue raising rates (something that has already been in the market for some time). We're also hearing that the slide in gold prices was largely exaggerated by institutional sell-stop orders being triggered after gold fell below key technical levels " namely $463 and $460 -- and some contacts are looking at this sell-off as a buying opportunity. In respect to energy prices, some believe gold will benefit from an inflation play by funds as the seasonal bull market in heating oil
picks up, especially as cooler weather hits the Northeast (the region w/ the most exposure to heating oil/natural gas).

Best, Levi"

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At the start of the week I opined (which is slightly different than pining and yearning) that gold would come off for the near-term, possibly to $460 from $474.50. It did.

Then I had readers asking if it was going lower imho, and I said that I didn't care whether $455 or $460 was the bottom, that now was a good time to accumulate, because you might miss the boat otherwise.

So gold today has dropped to the $455 - $458 level. But I still feel the same. It's time to accumulate.

If you are Nervous Nelly, you buy the GLD (bullion spot price), or if you are willing to take a bigger risk you might consider the goldminers.

And if you already have a smattering of gold shares, or the TSX goldminer index, you might even wish to pick up some of the second tier gold miners. To find them, simply go to Yahoo Finance industry list for gold and look down the list sorted by revenues, etc. The big names like Newmont and Barrick will be at the top.

And yes, if you haven't been watching: Gold stocks are on the move again. This chart is 15-20 minutes delayed, but is interactive.

Posted by Posted by Bill Cara on November 4, 2005 03:39:44 PM | Category: Gold

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