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Conversation With GoldContributed by Olaf Sztaba In 2003, we published a popular
series, "Conversations with Gold". *** Just the other day we were lucky enough to talk to Gold itself. NA-Marketletter (NAML): It's been five years since we've had a chat. Many things have changed since then. You've run quite a marathon! GOLD: You don't need to tell me! The last time we met,
I was hovering near the $350 level, but I recently arrived at
$1000 - nearly a 190% gain, just in 5 years! NAML: Not at all. The mood was best described as dense ignorance. Market pundits viewed your early advance as a bounce in a lengthy bear market. We remember that one analyst called you an "old relic." So it wasn't surprising that people were sceptical about our bullish report - but we're used to that by now. Amazingly, many people still don't get the point that we're in the middle of a "hard asset" cycle. These are times when you, along with Energy and Metals, usually kick up your heels. GOLD: You guys are right. Just recently, I came across
the latest results of the Hulbert Newsletter Sentiment Index,
which measures the sentiment of gold newsletters. I couldn't
believe it - minus 17.2%. The all-time low is minus 31%. NAML: It's all music to our bullish ears! However, you have to admit that since you reached the $1000 mark, your performance hasn't been so great. GOLD: Come on! Don't you think that people want too much, too fast? I'm in the middle of a perfectly normal, seasonal pause. I think I deserve a little R&R. This resting time allows me to gain strength before the next up-leg. I also need this pullback to shake out over-excited bulls who jump on me each time I am about to complete another up-leg. Believe me, it's hard to move when you have these nervous Nellies on your back. And oh, what a run I had! I rallied from $650 in August 2007 to $1000 in March 2008. It was a very long and tiring move, so I need lots of rest. Although I've decided to extend my "vacation" at the $850-830 level, I'll feel fine in the long term. You should use it as a buying opportunity. NAML: You've done very well, but how about Gold stocks? GOLD: I have to admit that most of them have been lagging in the last few years. But again - it is perfectly normal behaviour and similar to what we've done together in the past. Let me explain. I usually start. Then the big-league stocks, such as Barrick Gold, Agnico-Eagle or Goldcorp, sense my turnaround and begin to show their strength. However, during the first phase of my advance, most Gold stocks underperform. It is helpful, in a sense, because everyone sees it as a weakness - - - read "wall of worry." Then, in the later part of my advance, Gold stocks join me. The first ones to come along are the big-caps, and then middle-sized producers show their muscle. At the end, you see junior stocks joining the buying stampede. But we're not there yet. NAML: Do you have any particular stocks in mind? GOLD: I would single out Barrick Gold. This stock has been an underperformer for many years and it may be time for it to catch up to its peers. Technically, the stock has had a breakout from a massive multi-year trading range that points to a huge upside potential! Goldcorp, Kinross Gold and Hecla Gold are also doing well, among others. In smaller stocks, Eastmain had a decisive breakout from a large trading range. Eldorado Gold, Great Basin Gold and Farallon Resources (even though it is not strictly Gold) are ready for a major breakout. There are many more but your BUY&SELL covers most of them. In general terms, focus on the strongest stocks with multi-year bases that can support much higher targets. Look for stocks that are trading at or near their 52-week highs. And of course, avoid the typical mistake of "bargain hunting." NAML: Are you aiming at $1500? GOLD: Give me a break! Let me rest up first. For individual gold stocks recommendations sign in for a free trial at www.na-marketletter.com Written on About NA-Marketletter 321gold Ltd |
Apr
14, 2008