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GOLD: A dent in the sentiment!

The French dump gold, the Chinese take a vacation and gold prices dip below the 2oo Day Moving Average. So what?

So many chartists are hanging their hats on one support level being broken and then extrapolating this one event to predict the end of the gold bull market. If it were only that easy we would all be sipping pink champagne on the back of a yacht moored in an exotic location.

In our book this is not a time to sell. We are not selling anything. As and when the cash becomes free we will look to increase our exposure in the precious metals sector.

Sure the 200 DMA is important and breaching it is not a healthy sign. But look at the last few years we breached it last summer and summer before, so what? Was that it? Good night Vienna? No it was not!

But it was a prelude to some wonderful rallies wasn’t it?


Sit on your hands, go and hit a few tennis balls and relax a little. And if you have a favourite gold mining stock, buy a few more of them.

Sleep tight.

06 October 2006

GOLD: Will she? Wont she?


Here at gold prices we constantly wrestle with gold, the latest data for gold, the Indian season for gold, central bank selling of gold and of course numerous gold metrics with a sprinkling of anecdotal gold flakes for good measure!

It’s quit often rather difficult to understand the opposition’s objectives and how they envisage the route to achieving those objectives. The Fed for instance gives us numerous statements about what they need to do and how they are going to achieve their mission. It then takes Wall Street a couple of days to make sense of it. This all assumes that the Fed wants us to know their intentions! And that’s a debate in itself.

A World Court judge once pulled me up for using the word assume. He said when you break that word down what have you got?

Assume makes an ASS out of U and ME.

So at the risk of being an Ass we attempt to filter out the white noise and take a broad stab at what the fed wants. Our conclusion runs along the lines that they want a managed devaluation of the dollar for the sake of the economy and in order to dilute the trillion-dollar pile that is held by others such as the Chinese. They do not want a crash and neither do the holders of these dollar notes. The holders also have a need for America to keep buoyant and consuming at a reasonable rate, after all that’s a big market to sell in to.

Now if we go back to 25 years or so when gold had its run to the $850 level and ask the question ‘was gold working inversely to the dollar we can see that both of them were quit capable of rising at the same time. So it’s not really gold that the Feds should be scared of, it’s a rapid diversification out of the dollar to any other asset that is the real problem. Gold will be a benefactor of such a diversification but not the only one and not the major one either. Major benefactors will be other currencies, not because they are strong but because they are ASSUMED to be safe.

We reckon that if the Fed can manage this balancing act of slowly diluting the dollar then gold is not their enemy, it plays only a bit part in the developing trend. Its such a small market anyway that’s its hard to understand the Feds paranoia about such a tiny competitor, if that is what it is. We think that the slow dollar dilution will continue and the rise of gold will also continue although it may not be meteoric as it can and will probably be dumped on if it looks like getting out of hand. But the dumping is King Canute like as a strategy as no one can stop this golden tide from coming in.

This brings us on to the chart.


Will gold wont gold make progress? Well gold is sitting more or less right on the 200 day moving average with the other indicators more or less neutral. You could say that gold is in the doldrums. The team here at gold prices have learned that gold is at its most dangerous just when we think that she is taking a nap.

Our conclusion after much rigorous argument, role play, statistical analysis, evaluation of metrics, etc, is to sit tight with the stocks that we have while continuing to search for new faces that have the potential to generate major profits. We believe that every stock we own will double from their current levels and they will do this in the next 12 to 18 months. It will however be volatile and very uncomfortable at times. Should our research in to new stocks prove to be unattractive then we will publish and say why we are not investors. If the new stocks don’t have the potential of a Yamana or a Bema then we will continue to accumulate those gold mining stocks at opportune moments.

We have no wish to own every stock on board or more stocks than we can cope with. The retention of sufficient knowledge of each stock is very important to us, if you cant remember why you invested into a particular company then you probably have too many. A particular news event comes along and you don’t know if it will affect your stock or not! It’s similar to bull fighting when you are blindfold.

Hold on and be patient the best is yet to come.

03 October 2006


Gold prices bought Yamana Gold towards the close of business today at $9.37 per share. It was a close call as to where to invest our funds but Yamana got the vote.

From the chart below we can see that Yamana has managed to hold and bounce off its 200-Day Moving Average, which we thought was very encouraging. The RSI, MACD and Stockastics are all turning in the stocks favour. Yamana exhibits considerable strength and we expect to see it trading back at its old high of $12.0 fairly soon.


This investment is of course predicated on gold returning to higher ground. Our research shows that the fundamentals remain in place for precious metals. Add to this the end of the season for the Central Bank sales and the start of the festival season in India and we think this could be the beginning of the next up leg in gold prices.

From what we have read it would appear that the Central Banks have not sold their full quota for this year, though the figures vary in each new publication. But, if this is so, then we see it as being bullish for gold as there is a banker out there who has seen the light and wants to hold onto his job. Unlike Gordon Brown who got it wrong big time and is now in line for promotion! How many times have you seen that happen?

As usual don’t go too mad on this one.

27 September 2006

CAMBIOR INCORPORATED: 36% profit in 3 months!


CAMBIOR INCORPORATED: 36% profit in 3 months!

We have decided to take a profit on Cambior Incorporated. The takeover by Iamgold Corporation has worked out nicely but we feel that there is now better value elsewhere.

From our research we can only conclude that our cash will do better if it were placed in Agnico-Eagle Mines Limited, Kinross Gold Corporation, Yamana Gold Incorporated or indeed a new face.

We are in no hurry to invest this money as gold is in ‘tease mode’. There are a few respected analysts out there who are sticking to their predictions of gold going to moon, etc, and we are in that camp. However there are also a few who have calculated that it is all over for gold! This synopsis we do not agree with, but it will serve to make investors nervous and some will run for door. We at gold prices did not see the last pull back as a selling opportunity, we saw it as part of the oscillations of a bull market that will produce 'gut- wrenching' down turns and shake a few off the tree.

For the time being we will hold and observe the economy in general and gold prices in particular, looking for those tell tale signs that give us all the clues we need before making any investment.

For the record we bought Cambior at $2.61 on 28 June 2006 and hope to sell at $3.56 on 25 September 2006 making a profit of 36%.

Please feel free to put your opinion into the pot and send us a few comments.

Go gently.

25 September 2006

Note: The following links to these gold mining websites may be useful:

Agnico-Eagle Mines Limited
Kinross Gold Corporation
Yamana Gold Incorporated
Cambior Incorporated
Iamgold Corporation

THE GREAT GOLD DEBATE: Different argument, same result!

Where are gold prices going? What's in store for gold? Why invest in gold? Which gold stocks to purchase? Three of the precious metals industries heavyweights battle it out.

Last night we managed to catch 'The Great Gold Debate' via the web on It was good to see Paul van Eeden and John Embry on the same stage. For good measure they also had an Elliot Wave analyst called Steven Hochberg. The only let down was Lou Schizas, who managed to select plonkers from the audience to pose questions, shame!

The point that got us was that for different reasons both Embry and Van Eeden came to a similar conclusion; that gold was going up. Their predictions ranged from the gold price now to $1650 per ounce by Embry and up to £1350 per ounce by Van Eeden.

John Embry is in the GATA camp and produced data confirming central bank manipulation of the gold price and Paul Van Eeden referred to various metrics to suggest that this was not so.

Its well worth a watch if you have the time.

John Embry, chief investment strategist, Sprott Asset Management
Paul van Eeden, president, Cranberry Capital
Steven Hochberg, chief market analyst, Elliot Wave International

21 September 2006

Kinross Gold Corporation: $500 million loan agreed

Kinross Gold Corporation have just announced the agreement of a loan facility to support their gold exploration and development programme, which is great news.

No matter how good the story might appear if you cant raise the cash to finance the scheme then you are dead in the water.

Approximately $200 million of this loan is allocated for the Paracatu mine expansion in Brazil which Thomas Boehlert the chief Financial Officer for Kinross said; “The project will begin delivering significant new production in 2 years”. It will be interesting to see just how significant, in terms of numbers, this will be when more details are revealed. The main providers of this facility are Scotia Capital along with Export Development Canada, Societe Generale, Royal Bank of Canada and some international financial institutions.

Lenders prefer to spread the risk and the rewards with other lenders just as we as investors prefer to spread our investment funds across a number of gold mining stocks. The effect on the stock price may not be felt for some time however it is reassuring to know that Kinross has secured the means to progress a 'pipeline' of gold mining projects.

If you believe that gold prices have bottomed then this is a buy in our humble opinion. This gold stock is currently trading at $11.95 at the time of writing.

Kinross trades as K on the TSX and KGC on the NYSE.

20 September 2006

US GOLD CORP: Take a chance?

We are holders of this gold explorer but the stock price has fallen badly recently along with gold prices. Is it time to dump them or average down?

The fundamental reasons that enticed us into investing in US Gold Corporation are still intact. Investors, however have ran from USGL leaving the share price at a very low level. Rob McEwen is still a top class professional and we believe that he will turn it around.

The chart looks pretty ugly but there are signs of an upturn on the cards.

My 'gut' feel is to buy now, but patience is not my strongest point. So, we will wait and watch a little longer for some clarification with the direction of gold prices and this gold share in particular.

18 September 2006

GOLD: The transfer of real wealth from the West to the East

The Feds and the central banks continue with their programme of selling gold and driving gold prices lower. So who are the real winners?

Gold has made continuous and steady progress over the last four years. The banks have an arrangement to sell a stated amount each year and they religiously stick to their programme of selling despite gold prices going up. Why? Surely one of those bankers is bright enough to say hang on, I think we should be holding for the time being. I don't expect Britain to do so as Gordon Brown has demonstrated just how thick he is by selling 60% of the British gold reserves at the bottom of the market. Is the demand for currency by each individual government so great that they have no choice but to sell gold in order to feed their ill thought through budgets plans? We know that the public sector is expanding as though they believe that they actually produce something, but just how long can this go on?

In any business enterprise your capital most be preserved for future investment. If government spends its reserves on merely supporting itself then we are in bigger trouble than even we at Gold Prices could have imagined. But I guess you all new that. I read Peter Grandich the other day and he is talking about the next recession in America making 1929 look like a walk in the park. I try to be positive at all times but I'm starting to wonder if we are actually getting close to the edge.

Anyway lets consider the timing of this recent sell off. Gold has been sold down from $640 to around $577 as we write. In two weeks time the window for the central banks to sell will have come to an end for this year. Over in India the harvest season is reaching its conclusion and the wedding season is about to begin. The worlds biggest consumers are about to load up on gold, and what a wonderful opportunity for them. Gold, thanks to the west is now $100 cheaper than it was only a month or so ago. If we keep doing this then we are transferring real wealth from the west to the east. Are we doing this by accident or have I lost the plot? Good luck to the new owners for they have acquired a good bargain.

What will these bankers say to each other when gold hits $850? or $1000? 'My word, who could have predicted that'?

15 September 2006

Yamana Gold Inc.


This is one of Canada’s intermediate gold producers focusing its gold production in Brazil, where it has four operating gold mines along with various exploration interests.

Yamana also has mines in operation in Honduras together with a number of concessions in Nicaragua.

We looked at this stock sometime ago when it was $4.04 and a new addition to our Watch List. For various reasons we did not get around to making an investment.
Warren Buffet and Bill Gates give a talk at Washington University in 1998, during which, Warren said that one of the barriers to success was that we get in our own way. I guess we got in our own way when analysing Yamana and not buying the stock then.

At the time it was added to the list another favourite of ours was Agnico Eagle, which was $13.65 at the time and got the vote ahead of Yamana. Interestingly, as of yesterday, they have both increased in value by 140% since then. So, may be it is time to revisit this quality gold miner again.

Yamana is ambitiously targeting annual gold production of one million ounces by 2008, not bad for a so-called intermediate gold producer. Geographically, there are a lot worse places than Brazil so we would be happy to be there. Yamana’s gold production is all unhedged, which is a ‘must have’ on our selection criteria. As we believe that gold prices will rise, then this stock should respond accordingly. However, they have hedged 50 million pounds of 2007 copper production and 90 million pounds of 2008 copper production. We would have preferred Yamana not to do this, although a pull back in base metals has been widely forecast by some analysts. We, ever the sceptics remain to be convinced that the global economy is slowing down. If you live in New York and house prices slip you tend to think it’s all over. The world outside of New York is a huge place, China will be the next super power and what happens in the States will have a lesser impact on the markets going forward.

From the chart below we can see that this stock has suffered in the recent pull back, however that is the time to buy a stock, not when all the indicators are banging their heads on the ceiling. It should also be noted that Yamana didn’t get dragged down as far as a lot of other gold mining stocks so this stubbornness could be considered as a sign of strength. Anyway, the volume is still strong, the RSI has just turned up and the MACD is fairly flat. It should also be noted that each low is higher than the last low, which is encouraging.


We conclude that this stock is a buy. However, we don’t have the cash to buy at this point, may be we will have to examine the Cambior situation and decide if the cash is better invested in Iamgold or Yamana. Decisions, decisions!

Yamana is listed on the TSX: YRI; AMX: AUY; LSE (AIM) YAU

14 September 2006

CAMBIOR: Up 18% today

Cambior Inc to merge with Iamgold Corporation in a $3 billion merger making the new Iamgold Corporation the tenth largest gold producer in the world. As a Cambior shareholder is this good for me? Well Cambior has opened 18% up!