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Sunday, May 31, 2009

Gold Miners Update

Gold Miners have been on a tear in the last few weeks. A seemingly unstoppable bull market. I felt compelled to show the difference 9 days since my last post.

From my previous post, I expect the gold miners from my initial recommendation price have gain of 1,000% to 10,000% return in the next few years.
Click on my past entry to full explaination.

Forecast: Gold is about to make a huge run up to a new level or about to have a major pullback. That is helpful isn't it? Well, at times of "breakout" patterns that's the way it goes, high risk, high reward. If you are considering buying, get 100 shares of some if not all the miners below, and average more shares over time. Then you are always "right" when you buy more. (Buy more if cheaper, good job!, Buy more as you double down on your gains)

If you read my blog entry on 5/20, you probably said, I'll wait for a pullback. Heck, I didn't double down on 5/20, I just kept my same positions, so I understand the fear. The main point here is ALL PRICE purchases are winners in the 1-2 year time frame. That is not to say a couple of these miners may go bust, but that is why I spread out my investments. The one or two blow ups will be well compensated by the winners.

Look lower in this post for GDX & Gold chart commentary:

ALL of these stock plays assume you are LONG the stock. Click on stock symbol for link of recommendation.

Stock 10/22/08 5/29/09 Percent Gain 5/20/09 Gain
GDX 19.50 44.16 126.5% 107.5%
NAK 2.00 8.11

305% 285%
Stock 10/27/08 5/29/09 Percent Gain 5/20/09 Gain
AAUK 9.13 14.35

57.2% 36.6%
ABX 18.14 38.08 109.9% 99.7%
AUY 3.74 11.77 214.7% 167.4%
FCX 23.75 54.43

129.2% 110%
GG 15.06 39.73

163.8% 144%
GSS 0.73 2.28 212,3% 176.7%
HMY 6.16 12.10 96.4% 74.7%
IAG 2.47 11.27 356.3% 311.3%
NEM 21.54 48.87 126.9% 111.5%
PAAS 9.6 23.42 144.0% 118.6%
RGLD 23.15 46.57 101.2% 84.8%
Stock 12/16/08 5/29/09 Percent Gain 5/20/09 Gain
FNARX 19.16 24.87 29.8% 22.3%
IVN 2.43 5.48 125.5% 139.9%
NXG 0.93 2.41

159.1% 111.8%

Now, here is where the "risk" comes in. GDX, the gold miners, has just broken above historical resistance. This indicates, but does not guarantee, GDX to move up to 52 price target. The rub is, this past week just broke above this level. Also, as from my rantings that the market is about to tank, well, the miners won't be cut in half, but they will likely pullback with the market.
So at this level it is much riskier than buying GDX than it was 8 weeks ago from a chart perspective, or 4 months ago. On the plus side, all of this really is pennies on the dollar, since I expect GDX to easily hit 170 in the next few years. (10X from the low) But each person has to be comfortable with their entry point and to have the strength to hold on as the market fluctuates.

Gold is on a tear, driving miner stocks up as well as the market rally driving miner stocks up. Gold doesn't seem that over-extended from the bull trend line, but is about to hit a historic new high. Once that new high is broken, I would expect a very very hard pop up as a parabolic blow off happens before returning lower. Unfortunately, I doubt I'll ever see gold at 750 an ounce again for years, if not ever. That just makes trading so much tougher, since now we are entering "chase" mode rather than "buy while cheap".

So if you are watching on the sidelines, do yourself a favor, promise yourself to buy GDX if it ever comes back towards 38. Look at the graphs, see the trend, that will be a low risk entry point. Use your fear of purchasing today as strength to jump in when the world seems to be collapsing all around us. All purchases at all prices involve risk, but a pullback for GDX to that level would seem like an opportunity. Conversely, for that reason, we may never see it. Trading is tough, you got to be tougher.

From WebSurfinMurf's Financial Blog

From WebSurfinMurf's Financial Blog

As always, I HIGHLY recommend spending the money and paying for Gary's "Smart Money Tracker" blog for true insight and expertise on precious metal miners and other resources. Don't listen to me about how great gold miners are as an investment, listen to Gary. After all opinion you pay for is worth than my free one.

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