Not time to buy gold dip yet
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.