Gold finds its mojo
Jess G wrote to ask: Does the action in gold today make you bullish again on gold stocks?
I’m getting there. While I had some serious concerns that gold’s rally was coming to an end, the action today and yesterday show that the bulls still are in control. The pullback I anticipated turned out to be both mild (about 4%) and short (lasting only weeks between fresh highs). At the same time, most commodity indexes have hit new highs, crude is bumping $100, and copper has returned with a vengeance.
Those signals indicate that the path of least resistance for gold is up. To answer Jess’s direct question, I’m not fully bullish yet because the bottom I noted in the U.S. Dollar has held and many commodities in the ag complex look toppy, but I am dangling a foot into the bullish camp. I have no short positions in either the metal or miners, and may rebuild long positions in select junior and mid-tier miners.
UPDATE (3:50 ET 2-20-08): Over at Minyanville, the always sharp Lance Lewis reminds us that major gold miners report tonight and tomorrow. Unlike most earnings this season, upside surprises are more likely than disappointments. A few good reports could really light a fire under the complex in the short term, and this catalyst is enough to get me involved. I’m now long Goldenstar Resources [[GSS]], U.S. Gold [[UXG]], Goldfields [[GFI]], and Gammon Lake Resources [[GRS]].
UPDATE (4:10 ET 2-20-08): Agnico Eagle Mines just released record 4th quarter results. Hat tip to Lance Lewis.
DISCLOSURE: No positions. Long GSS, UXG, GFI, GRS.
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