Producers are targetsHello all – gold is going through the roof Down Under - gold is over $AUD1230 per ounce as I finish the day and the rubber band attached to the gold stocks gets stretched further by the day. I will keep this short – we either see gold drop now and the AUD rise or the rubber band gets stretched even further. The potential energy of our gold sector increases daily as further unwinding of resource positions by leveraged investors forces ever more selling.
Something missed by most investors here – every stock sold to date was bought. Is this “deep pockets” soaking up bargains in the PM sector down under? I believe it is and we grow closer to a rally in gold stocks as they will regain reasonable value once again.
A comment from an experienced bank trader today – “the cycle bottom is in” and by this he means that we are at bottom in terms of market behavior / sentiment. The unwinding is happening and this is good because once this process has run its course we can get back on with orderly markets once again. This guy knows his bear markets and thrived in the Asian melt down. The asset bottom is not in yet however and housing is set to take a hard knock here despite the 1% drop in the Australian Federal Reserve rate today.
Investment properties and builders stock will go to the highest bidder at the mortgagees auctions that will increase from here on out until this is over.
The AUD has fallen from US98c to around US70c in under 10 weeks. Offshore vulture funds are gathering capital to pick the bones of the oversold assets. I said the UK Pound would appreciate against the AUD and got that right. When the USD was at 74 I stated it would rally and very pleased with that call too. It is tough to pick it all in times like this as things are and will remain highly volatile.
I like the emerging gold producers and the established producers so for now this is my area of interest and research. I am digging deeper just like they are and I have spoken to a few lately that are quietly confident, cashed up sufficiently for the storm and moving forward nicely. Their future is as bright as the metal they mine.
When the dust settles and we can see the whites of their eyes it will finally be time to stop playing and time to pounce for longer term leverage that will be spectacular. I see clearer indications the end of their fall is in sight – don’t mean to be a poet but I hope I am right.
The smaller explorers and developers caught without sufficient capital missed the boat and are in trouble. This will only assist the gold producers that have made it into production as there will be bargain leases and half completed projects to pick through.
Here is a chart of 20 of our emerging producers. After it I have provided a chart of the AUD gold price which is a day or so out of date so you can mentally add even more upside to over the 1230 level yourself.