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
The most important part of the U.S. housing market—first-time homebuyers—is missing from the action! We need first-time homebuyers in the market to see real growth in the U.S. housing market. After all, they are the ones who buy the fridges, stoves, dishwashers, and other goods that help increase consumer spending in the U.S. economy.
In December of 2012, out of all the existing home sales in the U.S. housing market, first-time homebuyers accounted for only 30%! This number was unchanged from November and more than three percent lower compared to December 2011. (Source: National Association of Realtors web site, last accessed January 22, 2013.)
Just look at sales of appliances…
According to the Association of Home Appliances Manufacturers (AHAM), as the housing market “rebounded” in the U.S. economy, the shipments of appliances to stores and warehouses actually declined to 60.7 million units in 2012, compared to 60.8 million units in 2011. (Source: Wall Street Journal, January 15, 2013.) If the housing market is rebounding, why are appliance sales declining?
The Association notes that shipments of six core appliances—washers, dryers, dishwashers, refrigerators, freezers and ovens—declined 2.3% in 2012. For December alone, the shipments dropped 4.1% compared to December of 2011.
To the mainstream media calling this a “recovery” in the U.S. housing market: you’re missing one big point…
Home prices are slowly rising, and supply is slowly decreasing in the U.S. economy, because institutions and individual investors are running to buy residential properties.
For investors, buying up single-family homes … Read More
Words of wisdom from Robert Appel, BA, BBL, LLB, our in-house gold bullion bug and “money watcher:”
“The markets seem quiet and controlled, but they are anything but that.
Among the more astute commentators (and we like to believe that this advisory enjoys the privilege of being in that category) it has been noticed that, just in the last few days, Japan’s declaration of a “currency war” (i.e., that it will print and print and print until both the yen weakens and higher “targeted” inflation is seen) has been matched word-for-word by President Obama; in his inaugural statements, Obama signaled his intent to overcome any Republican resistance, and (similar to Japan’s plan) “print” the U.S. out of its current problems. Under normal circumstances, these statements would have propelled the price of gold bullion higher.
Even in these extraordinary times, these statements have stunned politicians and academics around the world. Especially since they come at a time when Europe is still very much in the quagmire it was in last year at this point (simply getting less press, that’s all); and China is struggling to overcome the inevitable problems of too-rapid growth without a seatbelt (results which include, for example, cities where the residents are actually inhaling chunks of pollution that collect in their mouths on the way to work!).
Some writers are saying that we have now officially entered an era of chaos where gold bullion prices should boom. We agree. In the same vein, you might be astonished to see that in a world where unlimited money printing has suddenly been given the green light, both gold and the … Read More
Gold and silver are currently taking a breather on the charts, but if the global risk holds, I wouldn’t be surprised to see a rally in the precious metals this year.
I can see gold breaking to $1,800 an ounce, something that nearly materialized on October 5, 2012, when the price of cash gold traded at $1,795.78 prior to slipping. In fact, the previous time the precious metal was trading above $1,800 was on November 8, 2011. We could see a move above, given the eurozone mess, U.S. debt and fiscal cliff, and the mixed results in China.
Silver is holding at around $30.00 an ounce, but I’m not as bullish on the white metal, as the price is largely driven by the direction of the global economy.
I continue to like gold going forward, given the financial crisis in the eurozone; trust me, it is not going to get better anytime soon…it could even take years. Moreover, with a recession holding in the eurozone, the crisis could deepen and impact the global economy.
Across the Pacific, there are some encouraging signs in China; but prolonged weakness in the eurozone and Europe will negatively impact China along with the other Asian countries, like South Korea, Japan, and the smaller emerging Asian markets.
For those of you who took my advice to hold on and accumulate gold on weakness down to $1,600, it has been a nice ride. In my view, major price weakness should be viewed as an opportunity to accumulate the yellow metal in 2013, unless $1,600 can’t hold.
I favor the metal plays and continue to see opportunities, … Read More
Gold flew above the $1,700 level last Thursday to $1,712, marking 15 new highs over the past month but still well down from its 52-week high of $1,790 in February. The breakout around $1,625 is positive. There is some resistance at $1,750 and $1,600.
I continue to like gold going forward, given the massive financial distress and possible exit of Greece from the eurozone despite what the European Central Bank has said. And then there’s Spain and the other five eurozone countries that are currently in a recession. he eurozone may also be heading for a recession in the third quarter and Germany by year-end.
Any price weakness should be viewed as an opportunity to accumulate.
I favor precious metal plays and continue to see opportunities here, especially in mining companies and junior gold miners. You want to ignore the fluctuation in gold, silver, and copper prices and understand that these mining companies will continue to mine.
China and India continue to be the world’s top buyers of gold, and this is expected to continue. The Chinese have also been buying mining companies around the world in an effort to increase its reserves. This is a reason why I like some of the smaller mining companies, especially those with a massive reserve of proven metals in the ground, waiting to be developed and needing a cash-rich partner to get the ore out of the ground.
You can buy the major gold players such as Freeport-McMoRan Copper & Gold Inc. (NYSE/FCX), Barrick Gold Corporation (NYSE/ABX), and Newmont Mining Corporation (NYSE/NEM), but for the real big gains, you need to own some … Read More
Gold and silver prices are rising, and this is exactly what mining stocks need. After a well-deserved correction in gold prices, gold stocks were hit pretty hard as institutional investors abandoned the sector. Just like the spot price, speculating in gold stocks isn’t for the weak-stomached; volatility is standard in precious metals. But with volatility comes the opportunity for greater returns—if you buy the right companies at the right time.
Silver prices are currently moving nicely high—much stronger than gold. Silver prices have lagged spot gold for quite a while now, and some of the best values that recently developed on the stock market are silver stocks. Everyone says silver prices have more room for advancement, but I’d still own both.
Gold and silver prices are going up in anticipation of a third round of quantitative easing (QE3), or some form of monetary policy, by the Federal Reserve. Most Wall Street investment banks are now predicting that spot gold will be well over $1,800 an ounce by the end of the year. With all the turmoil we’re going to have to deal with next year, owning some gold and silver will likely be a good bet. What’s required for gold and silver stocks to really advance is the return of institutional investors to the sector, which will happen if gold and silver prices keep ticking higher.
I want to repeat my view that there are actually very few attractive gold and silver mining companies on the stock market at this time. Costs have been rising substantially at many precious metals companies, and profitability at a lot of companies has been … Read More
When it comes to getting a feeling of what’s happening in the global economy, starting with the basic commodity firms is a good first step. The global economy depends on mining stocks to extract valuable inputs, such as iron ore, that go into making things, such as steel. If the global economy starts to slow down, as it is now, less demand for the final product means lower prices that mining stocks can receive for the extracted materials.
BHP Billiton Ltd. (NYSE/BHP), one of the world’s largest mining stocks, announced that it is not approving any new projects until June of 2013. The company went on to include a delay of its massive $20.0-billion Olympic Dam mine in Australia. With a massive decrease in income to $5.5 billion for the first six months of 2012, ended June 30, as compared to $13.1 billion in the year-earlier period, the company and other mining stocks are feeling the pinch from a slowing global economy.
With China being a major buyer of raw materials that’s now slowing down rapidly, the future is not bright for mining stocks of basic commodities, at least not in the short term. The company cites costs that are continuing to rise and buyers are reducing the level of orders for iron ore, copper, coal, and nickel among other base materials.
Chart courtesy of www.StockCharts.com.
Investors are somewhat pleased with this news, as you can tell by the recent move up in the stock price. With the stock sitting near the 200-day moving average, one should be cautious, as that has been an area of resistance in the … Read More
With the growth of the world population, the impact on the global environment increases as well. As more goods are being made, this in turn means more energy use. With sources like coal having a negative effect on the environment, uranium investing through mining stocks still appears to be a solid idea for the next decade.
China and India, among other emerging markets, are continuing to ramp up energy demand. This is where uranium investing comes into play. These nations need the energy and only through uranium investing can they keep up with their growing needs. While they do use traditional fossil fuels like coal, the amount of pollution in some parts of these countries is extremely large. Not to mention that nuclear is more efficient than coal. Emerging markets have extensive plans to grow their nuclear facilities, from which uranium investing and mining stocks should benefit.
The Japanese disaster hurt mining stocks for investors interested in uranium investing. Short-term moves can hurt total portfolio returns if they are only temporary. For those with a bullish view on uranium investing, starting to research and having a watch list of mining stocks for future accumulation might be a good idea in this environment. I previously wrote another article on this topic called, Rising Demand to Power Uranium Industry. One thing to note: with the sell-off in commodity prices, one market that hasn’t sold off much at all is uranium. While it’s not a highly traded commodity, it is still quite bullish for those interested in uranium investing to see prices remain stable.
Cameco Corporation (NYSE/CCJ) is a huge firm involved … Read More
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