RE: RE: RE: RE: Not helping Gold (GC : NASDAQ : US$1,553.50), Net Change: 0.00, % Change: 0.00%
Jr. Gold Miner ETF (GDXJ : NYSE : US$15.05), Net Change: 0.38, % Change: 2.59%, Volume: 5,269,937
S&P/TSX Venture (JX : 1026.72), Net Change: -11.90, % Change: -1.15%
My dead cat is getting tired of bouncing. With gold stocks starting to behave more and more like solar stocks, investor’s
patience for the yellow metal is waning to say the least. To investors still mired in money losing gold positions, the next
question is: what to do now? According to JP Morgan, the answer to that question is ?don’t be a buyer.? For starters, the analyst
notes that while gold prices are likely to stay within a range, the cost of mining will continue to rise. That means miners, which
begin reporting earnings at the end of the month, will continue to show declining profit margins, even as they try to rein in costs.
The analyst wrote, ?All the miners are working on cost control but it will probably take some time to reign in costs. Hence, the
upcoming reporting season could have been a catalyst that encouraged some of the selling seen in the market. The second
quarter also tends to be a weak one for precious metals, he says. That, combined with dollar strength, could limit any upside for
the stocks. The analyst also commented, ?The second quarter is typically a lacklustre one for precious metals as demand from
the world’s largest market for physical metal in India slows. We do hope that the normal seasonal strength that we expect in Q3
is not capped this year by dollar strength.? Add to that the disappearance of the institutional investor within the gold space and
the average Canadian retail investor who is smarting from too much commodity exposure in their accounts, and the question
remains ?who’s left to buy gold shares??