Gold Investments – A Technical Long-term Perspective
Written by: Dudley Pierce Baker, Editor, Precious Metals Warrants and InsidersInsights.com
With the big $27 an ounce sell off in gold stocks this week, many investors are ready to throw in the towel, again.
Every time the stock market has a significant sell off, on any given day, investors gets panicky. We have seen this numerous times in the past and we will continue to see days of panic in this long-term bull stock market.
If you are a stock trader, and most of us are not, you are already out. If you are a long-term investor with positions in mining shares, take a deep breath, relax and keep your eyes open.
Those of us with a long- term investment perspective realize there will be days like this and investors need to use this time to add to current positions in the junior mining sector which is our favorite choice for making substantial gains within the next 24 months.
Remember it was only last November that gold stocks hit a record high of $1218 and with Wednesday’s close of $1111 that gives us a retracement of less than 9%. Big deal!
We do acknowledge that this consolidation may take a few months to play out and we could reasonably expect a further decline.
But, let’s step back and examine what the charts are saying for gold using a daily, weekly and a monthly basis.
Daily Gold Chart for Last 12 Months:
View Larger Chart
Weekly Gold Chart for Last 5 Years
View Larger Chart
Monthly Gold Chart for Last 9 Years (Beginning of This Bull Market)
View Larger Chart
Personally, we follow numerous analysts and sometimes it is difficult to wade through all the noise. Our assessment is that a substantial amount of the gold stock decline is behind us but we are mentally prepared for a further decline around the $1075 level. We don’t want to see this but it could happen and it that level does not hold, we could possibly see a test of the 65 Week Moving Average around $995 as identified on the last chart above. We see this $1,000 level be our worst case scenario. Whether we hold at $1075 or drop to the $1000 level, it will then be the last great buying opportunity before gold makes a monster run and takes the entire mining sector up with it.
We would encourage investors to continue searching for great buying opportunities in the junior mining sector. Search for those companies with great management, great properties and be alert for those companies which have long-term warrants available and trading.
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About the Author
Dudley Pierce Baker is the owner and editor of the natural resource companies warrants trading database and site which tracks the junior mining and natural resource sectors.
Originally published January 25, 2010.
Disclaimer/Disclosure Statement: Neither PreciousMetalsWarrants.com or InsidersInsights.com is an investment advisor and any reference to specific securities does not constitute a recommendation thereof. The opinions expressed herein are the express personal opinions of Dudley Baker. Neither the information, nor the opinions expressed should be construed as a solicitation to buy any securities mentioned in this Service. Examples given are only intended to make investors aware of the potential rewards of investing in Warrants. Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions involving stocks or Warrants.
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