Posts Tagged ‘mining stocks’
Gold is currently looking somewhat dull on the chart, losing some of its luster following the bearish move of the spot price to below $1,600/ounce on February 15. Gold has since rallied back to above $1,600, but it continues to show extremely weak relative strength.
We are hearing more whispers predicting prices could falter more; but while I’m neutral at this point, the ability of the yellow metal to bounce back from below $1,600 was a positive sign.
The jury is still out on the potential of gold. The situation in the eurozone remains fragile, but there have been some signs of improving sentiment, which is what traders want to see.
In early January, Marc Faber, also known as “Dr. Doom,” in an interview on CNBC suggested gold could correct 10% or more to as low as $1,550 and $1,600. (Source: Belvedere, M.J., “‘Dr. Doom’ Faber Sees Possible 10% Gold Correction,” CNBC, January 8, 2012, last accessed February 20, 2013.)
In my view, gold continues to be a place to park some capital. For this reason, I feel the metal will likely continue to hold above $1,500 after 11 consecutive up years.
For the investor, accumulating gold stocks or positions on further weakness below $1,600 makes sense.
The chart below shows sideways trading with major support around $1,550 and upper resistance at $1,800, as indicated by the horizontal blue lines. Within this trading band, there’s a downward trading channel as indicated by the downward-sloping blue lines. We saw a similar situation in February to May 2012, prior to a rally back to the upper-band resistance. I’m not saying this will … Read More
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