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goldminingXpert (28.80)

Not time to buy gold dip yet



April 24, 2008 – Comments (4) | RELATED TICKERS: GG , ABX , GLD

Last week, I blogged about how I was taking a sector bet against gold on CAPS. A mere week later, gold stocks came unhinged with top performer Kinross gold scoring me 24 points on the red thumb in just 8 days... Goldcorp, Barrick and others all got similarly hammered. I know a lot of people think it is time to buy the gold dip now, but let me tell you, it is premature. With the beginning of a dollar rally now underway gold should continue to get hammered. We are still in the high 800's on the spot price...we can easily fall to 750 without batting an eye. Due to the high oil prices, the mining companies are not making profits to back up their now-crazy valuations. Gold stocks will keep leading the plunge to the downside as the dollar continues to rally. The only way to play the large cap miners is to short the pops. I still like smaller plays such as Jaguar Mining (JAG) and Northgate Minerals (NXG) as a long hedge, but the trend is your friend, and the trend is down for the shiny metal.

4 Comments – Post Your Own

#1) On April 24, 2008 at 2:11 PM, FleaBagger (27.50) wrote:

You're brilliant on the very short term, but have you ever heard of inflation? Do you see the political environment in the U.S. and what that means for metal prices?

As to your bearish silver comment on my blog, you might be right in the very short term, but that would be an insanely good buying opportunity. Silver could easily see $50 within two years.

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#2) On April 24, 2008 at 2:29 PM, goldminingXpert (28.80) wrote:

yeah, at some point the dollar comes completely unglued and gold goes to $2,000... sure, I agree. We aren't there yet though, as the dollar rallies against the Euro, we should see gold back in the $700's, and that is the point that you load your boat up with miners. Right now, only the juniors are priced right.

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#3) On May 01, 2008 at 12:01 AM, Harold71 (< 20) wrote:

Yeah, gold wanted to go down for awhile.  The dollar wanted to rally.  Then the Fed cut rates, but worse they gave that same SPINELESS statement on inflation.  My god do these people get out into the real world?  They don't care about inflation, and they don't care about the dollar.  I've been waiting for gold to head below 800, but with Ben B. in charge I could be dead before that.  I'm DCA'ing in.  I'm tired of waiting.

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#4) On May 13, 2008 at 12:04 PM, XMFSinchiruna (26.53) wrote:

I think what you're describing sounds more like a blip than a trend.  Corrections occur over the course of weeks or months, but they do not constitute nor change the direction of the more significant long-term trend.  In the precious metals markets, there is but one trend, and it is up.  You are correct, the trend is your friend, but you got the direction backwards.  :)

Congrats on timing the dip, but over the long run I consider timing dips with any major amounts of real money would be folly.  The rest of the world's gold experts are unanimous on the subject... you hold through times like these and you hold steady.  I trade very small amounts around movements like these, but they are small enough that if I miss a major move in either direction, it doesn't bother me a bit.

Lastly, I would just say that if you're shorting gold and silver stocks in real life, even for short periods of time, then I must give you props of another kind... you have more guts than I.


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