Gold: I’m not chasing gold stocks quite yet

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.

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:

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.:

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.