Back Up the Truck Now
By Neil Charnock
I have been warning you all for several weeks that a buying opportunity for gold shares was approaching during December and here it is. I want to take a near term look at this gold rally in this article. I do apologize that I missed my normal release of an article last week it was due to some rare and unscheduled time off with a tooth abscess.
Well gold has retreated for a breather and so has the Australian gold sector as expected but this is not the end, barely half time in this up-leg for gold. I have drawn a few ellipse shapes on the 5 year gold chart below because I want to point out the pair of up-legs during 2007 and 2008.
The chances are that a second act is set to follow just like then and therefore we should see a high level of support around this level now and over the coming weeks. Then we launch towards the US$1,400 level with a possible overshoot. Share action has been strong as we predicted and therefore my current expectation is for this to be an excellent buying area right now for Australian gold stocks.
Each company is to be taken on its own merit and I have noted at least two under performers that should shine as we pull out of this dip. This will produce a significant upside and I am pleased to say investors are selling these too creating an even better buy opportunity. Many of the strong performers are likely to follow through as well.
There is still plenty of room for upside in this sector and I have been pointing to a rally progressing strongly into early February and possibly to May 2010 for many months now. I have not changed my view at all no matter how it looks short term. There were many doubters when I announced a powerful break out in this sector many weeks ago. There were many doubters much earlier when I announced that the indicators were pointing to upside and that was months ago.
Here is a chart showing the upside potential in the emerging producers sector. Support could be further below yet for some of these stocks but look at those highs because that is where we are headed.
The Australian gold sector looks every bit at profitable and vibrant as it did in mid 2008 when this index was up at the 150 level. There is potential for a parabola to form after this brief correction sending this index up to the levels seen in 2007 at almost 160 when gold first hit $1,030. This seems to indicate that the best is certainly yet to come and it will be a sharp exciting rally.
Load up the truck and use this minor correction to pick off the lows. More conservative investors should watch this sector after Christmas and into early January for confirmation. I will be looking to supply ample warnings of the next pull back amid the excitement that will surely follow because there is more to success in this game than buying intelligently. You have to be willing to sell and take your profits after they have run without fear that the rally could continue without you.
Of course we have to be on guard that the early New Year rally to late January early February may be a top because the global banking and credit crisis is still the rabid Tyrannosaurus Rex in the corner. Forget about the elephant in the room this is far more serious. I have been warning about the lack of a debt securitization market and how this restricts credit particularly in the USA.
If this turns out to be the case we will be following the market down looking for the next mother of all gold stock buying opportunities. Forceful down trends are generally sharp like final blow off tops and you have to move fast so let’s keep a very close eye on this situation.
We see a strong need to increase our output with several special Gold Member reports on companies of interest that offer both fundamental and technical timing opportunities and have recently developed a special area in GoldOz to deliver this.
I have been busy writing a special report over the past two weeks that will be released to Gold Members before I launch it to the open market early in the New Year or just prior to Christmas. We released a special educational report back at the end of August and it was a huge success making many investors a great deal of money with more to come.
I have posted a chart below to illustrate how successful that was however I have had to remove the company name to be able to post the chart in this article. Note the point on the chart where we released the report.
I have decided to run a special on Annual Gold Membership only so I have discounted this down to AUD$275 for a couple of weeks running up to Christmas. Call it a gift opportunity for current Members and Gold Members to top up or renew their subscriptions and take advantage of our Rewards Program as well. New Gold Members are also welcome of course.
We will have to raise the cost of subscriptions next year as we continue to ramp up the increased services at GoldOz. This will allow me to complete the hand over of administration and certain product features and concentrate more on special situation reports. If the market does correct into a major fall we will hold prices and just follow the fundamentals to stay on top of the gold sector and maintain a greater communication and special situation service so we can make some profits in the down turn.
Either way we see an exciting start to the 2010 year and will watch this with you to see how things develop. Stimulus spending and the carry trade could keep things going along this path for longer than most analysts realize and produce a handy second high into May. We will keep you posted.
Good trading / investing.
GoldOz has developed a basic Member area (news only) and a Gold Members area with substantial investment tools. GoldOz web site is a growing dynamic resource for investors interested in PGE, silver and gold companies listed in Australia, ASX share quotes, Aussie Gold Index charts, brokers, bullion dealers in addition to the company research + investment tools via our paid Membership services.
Neil Charnock is not a registered investment advisor. He is an experienced private investor who, in addition to his essay publication offerings, has now assembled a highly experienced panel to assist in the presentation of various research information services. The opinions and statements made in the above publication are the result of extensive research and are believed to be accurate and from reliable sources. The contents are his current opinion only, further more conditions may cause these opinions to change without notice. The insights herein published are made solely for international and educational purposes. The contents in this publication are not to be construed as solicitation or recommendation to be used for formulation of investment decisions in any type of market whatsoever. WARNING share market investment or speculation is a high risk activity. Investors enter such activity at their own risk and must conduct their own due diligence to research and verify all aspects of any investment decision, if necessary seeking competent professional assistance.