Bill Cara: Different views re gold and gold stocks, Mon., Apr. 3, 2006, 4:51 PM

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April 3, 2006

Different views re gold and gold stocks, Mon., Apr. 3, 2006, 4:51 PM

Kevin O'Leary (ROBTV.com) is continuing his "story" that gold is the better deal than goldminer shares because miners' operating costs are rising too quickly. He references Newmont (NYSE: NYSE).

But Newmont is one stock. Why not compare Gold (NYSE: GLD) versus the 17 or so Canadian listed goldminer stocks (TSX: XGD)? Then you'l see what I'm saying, which is that in a gold bull, always go to the miners. In a gold bear, avoid both the miner shares and the bullion.

Kevin showed a three month chart, so I'll show the same thing. The Goldminers index is in blue. It outperforms on the upside " just like I said. On a comparative basis, the XGD would be up around 625 for the bullion.

As O'Leary says, we all have opinions. Some people even think the market is not rigged and that the Stelco shareholders got what they deserved. A judge even thinks so.

Posted by Posted by Bill Cara on April 3, 2006 04:51:23 PM | Category: Gold

Discourse

I see that the miners had a hard time getting out of bed today. That may signal some profittaking to come in gold. I always watch them for a "tell". Usually pretty reliable in a ST timeframe (day or two). But they get hit by market slides and todays reverasal was a biggie, nearly 100 points.

Posted by: MarkM at April 3, 2006 5:33 PM [link]

OT-

Position updates-

AVP reduced by 2/3 yesterday as we broke short term trend, locking in gain. Like the stock long term, poor action early in yesterday's turn.

UNH sold for small loss. Could not manage to get to a higher high before turning down once again. Poor action early in yesterday's turn as well.

Reduced various small caps which were down most of the day. Maybe they are ready to rest, one day does not make a trend but need to be alert if you play with these less liquid names, no? I personally favor small cap value plays in long term accumulation zone, but they will suffer with the index if we turn down.

Bond sentiment decline at Rydex appears to be taking a break after taking a nose dive, 20 dma continues to decline however. As Bill has pointed out bonds will likely perform better RELATIVELY SPEAKING once stocks break down. I will be looking to add exposure once we break this short term uptrend.

Posted by: stockman at April 4, 2006 7:35 AM [link]

"Tell" once again accurate as gold off today. Miners performing okay here. Let's see where they close to keep testing.

Posted by: MarkM at April 4, 2006 2:09 PM [link]