Our current position on the gold sector
First, a simple analysis.
Commercials have further decreased their net short to 80k this week, the lowest number in over a year. While this number is still higher than previous major bottoms, but with gold at $200 higher now, a significant rally can begin at this level.
Newmont is to the gold sector what Intel is
to the tech sector. It is heavily weighted within the $HUI and
$XAU, and therefore, its performance greatly affects the entire
gold sector. A positive development these past two weeks is the
fact that NEM has found support at the weekly 200ema again. Last
time it did that was May 2005, which triggered one of the best
rallies in the gold sector and lasted into May 2006, the best
rally since Dec 2003 for the gold sector. Much work and time
is still needed to confirm the weekly BSBS, and the first thing
NEM must do is to begin outperforming the price of gold. No substantial
rally has occurred for the entire gold sector until this happens
since this new gold bull market started in late 2000.
The signals and set ups
GDX - our trading model has already given us a buy signal on 10/13, with US traders buying the GDX at $35.43, with stop at $33.71. That original risk of 5% has now dropped to zero as we are moving stops to breakeven, or we will exit upon a break of support, which is currently at the $36 area. Therefore, we may make a small profit even if we were wrong or early.
XGD.TO - Canadian traders bought XGD at $70.29 with stop at $68.44. Original risk was under 3% and has now dropped to zero also, as we are moving stops to breakeven, or we will exit on a break of support which currently lies near $71.
Disclosure: These updates are time sensitive, market conditions may have changed by the time you read this. Only paid subscribers receive these buy/sell alerts in real time.
End of report