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Going for the Gold


When will gold get going?


Is it time to go for the gold? Recently, I've received numerous requests from Minyans to take a look at the technical picture for gold and silver and related stocks. Since you asked...

(All charts courtesy of Dorsey, Wright & Associates.)

This long-term chart of gold shows why I am long-term bullish on gold, though concerned about the near-term prospects. Essentially, gold could fall to 400 and the structural uptrend would remain intact. But this consolidation could take months to unfold.

The chart of Newmont Mining (NEM) is impossible to like. The stock violated its structural trend from the 2002 lows back in April, and has since been consolidating just below that former support (now resistance). While the metal itself has been making lower highs from the December 2004 highs, NEM failed in November 2004 to reach new highs, a bearish divergence in my view.

Newmont Mining Corporation (NEM)

Two views of Pan American Silver (PAAS), below. The first is a longer-term chart showing the full context of the recent move higher. The second shows the recent short-term technical improvement, but put into a longer-term context, my enthusiasm for the stock is rather diminished.

Pan American Silver Corp (PAAS)

Pan American Silver Corp (PAAS)

Looking at other stocks in the group, BGO, GLG, PDG, most look identical to NEM, having violated the same long-term trendline from 2002 lows. The exceptions are some smaller Canadian and South African stocks, which proves the old adage that there are always stocks to sell in a bull market, and stocks to buy in a bear market. This is not advice, but my focus is on the metal itself rather than the stocks in the group.

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Position in gold, silver.

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