Ten Points on Gold
CanadianMineAnalysis.com article
1-Many mining stocks actually made their price bottoms last summer and have groped along since then. Others are in the process of finishing making their price bottoms. It is not an “all of them at once” situation; each stock is on its own schedule.
2-The Return of a positive gold market is required to start the engine. We need $1400 to $1450 an ounce gold to really ignite investor interest. At the present, while gold is languishing at the $1250 level, many mining stocks and some juniors are so cheap based upon their in-ground assets and cash per share that they are being given away at their current prices. But at price bottoms in any investment, very few take advantage of the “sale” on the stocks, that will never change.
3-Manipulation in the price of gold bullion continues which has made it extremely difficult to forecast. Paper commodity trades dominate the manipulation which is engineered by central bankers and brokers to keep the price of gold down. When gold moves up, governments cannot easily sell bonds carrying rates at 2% to investors. But the Chinese and others use the weakness to their advantage to accumulate whatever bullion that is offered for sale. The Chinese are nobody’s fools as they see price weakness as a buying opportunity and presently are buying approximately half of the world’s gold production.
4-Gold Cycles? They are positive for gold now as they suggest that gold’s price bottom is being completed. Yes, some important cycles occurring now are suggesting that gold bullion will be starting up shortly and many of the stocks as well.
5-Cycles for the stock market? Cycles suggest that we are seeing a major top in industrial stocks. What is important is that generally a rising gold price is bearish for industrial stocks so the brokerage industry is reluctant to recommend gold and gold mining companies. The US brokerage industry does not want a bull market in gold. Their timing in gold and most other investments is pathetic.
6-Gold is now selling below the “all in cost” of production for the majority of mining companies. This indicates that the supply of gold may decline which can be very positive for gold. Supply/Demand statistics for gold bullion are excellent. That all in cost number told us last summer that gold bullion was making a bottom.
7-The United States leads the world in deficits running a $5,000,000,000 deficit per day. It will cause great pain later. And anyone who believes that inflation is in the one percent to two percent range needs a brain transplant.
8-No inflation? If we take $100,000 when Ronald Reagan was US President and value that 1981 $100,000 today, it is worth $36,600 in buying power. The dollar has lost about 66% of its value. A 1940 US dollar is worth .04 cents today.
9-If your fundamental analysis indicates that a stock(s) is undervalued, patiently accumulate the shares and try not to push the stock while buying. And do not be afraid to “dollar cost average” while buying.
10- A price bottom occurs when the last seller finally decides to “get out” of his or her shares of a stock(s). We have seen that since last July and note that many mining stocks, particularly juniors have very small offerings on the screen. When the market turns up with the strength that our analysis suggests, large moves for many of the stocks themselves will occur. Moreover, the offerings of many stocks at the very undervalued (cheap) prices will disappear; the cheap stock will be gone. Thank you, K.C. Grainger
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