Sulliden Gold Corporation Ltd T.SUE.WT

RE: RE: RE: Over 7,000,000 in volume?

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I have been on the fence lately about the summer slow down. I am still 100% in equities at the moment. Right now based on the action I am seeing in the good, undervalued juniors, SUE and AVR too name two, I think that we will see some of the stocks close the gap over the summer in light volume. Then the institutions will sell back to the retailers in september when volume picks up. I have noticed some good institutional accumulation at reduced levels the last few weeks of May as institutions took advantage of the typical sell and may and go away mentality. People need to remember the market doesnt stay flat over the summer every year.

To elaborate on closing the gap I mean when gold moved from 1400-1500 the junior golds went down or stayed flat. Some people said this is becaues oil ran up simultaneously which would cause production cost to increase. In reality a 10% increase in oil and gold, would result in a 2.5% increase in production costs for most companies. I say this because the cost of oil, for a company producing power by diesel generators, is one quarter the cost of production, so that 1/4 cost would increase 10% (2.5% total increase in costs) while revenue would increase 10%. Netprofit would still increase despite the rise in oil prices. Regardless, oil is back down to what it was when gold was trading below 1400$ so that excuse as to why the juniors didnt run up with gold is out the window. 

 The other reason people are saying the juniors didnt run up with gold is that institutions who went long gold and shorted juniors. A type of spread. I believe this to be more accurate. People became extremely frustrated with the lack of movement in gold juniors and following the sell in may and go away mentality sold them at what ever levels they where trading at. Institutions took this oppertunity to close their short positions and accumulate long.

My personal belief, right now, is that gold juniors will outperform the summer. Assuming gold stays flat, and will continue to out perform as gold breaks out in September. The technicals for gold right now also show that the consolidation at these levels needs to end soon with a breakout or a break down, as the technical support trend is quickly closing in on the techincal resitance at 1550. My guess is we see a break out based on fundamentals like inflation and the greece situation.

Hope that helps.

GLTA