Gold: I’m not chasing gold stocks quite yet

by JDH on May 19, 2008

Gold: up or down?

Long term, up. No doubt about it; as the dollar continues it’s descent, gold will rise.


In the short term, the picture is somewhat less clear.

gold 4 month chart

It appears that the downtrend that started in mid March is now over, but just barely. I assume there is resistance at $900 (we closed Friday at $899.90), and probably again at the 50 day moving average around $920. On gold, we need to wait for confirmation that in fact we are moving up again, and a close above $920 would help make that argument.

Interestingly, many of the senior gold stocks have not yet broken above their March down trend lines.


For example, G.TO – Goldcorp Inc. is now above it’s 50 and 200 day moving averages, but there will be resistance at $42, so I plan to put in buy orders around the $40 level for half of the position I eventually want to own.

K.TO – Kinross Gold Corp. is even farther away from breaching it’s down trend line:


A mini channel has formed in May, so I’ll put in an order for half of my eventual position at $20.

AEM.TO – Agnico-Eagle Mines Ltd. appears to have resistance at the 50 day moving average:

Agnico Eagle Mines

This has been a good stock for me in the past, so I’ll put in a buy order for half of the position I want at $67. Not all senior gold charts look good:


ABX.TO – Barrick Gold Corp. looks ugly, and is now back down to around it’s peak from the summer of 2006. I won’t be buying any Barrick at this time.

As for the smaller guys, I will start nibbling again on JIN.TO – Jinshan Gold Mines Inc.:

jinshan gold

There appears to be support around the 200 day moving average, but I’m not going to chase it; I’ll have a stink bid in at $2.60 for half of my eventual position.

Again, it’s quite possible that there will be a short period of U.S. dollar strength, which may keep gold low; I expect that will work itself out by the end of the summer. For now, I’ll buy bargains in gold, but I won’t chase anything.

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