Comments: Gold has been maintaining a narrow channel up recently. RSI appears to be struggling to get above 50 (positive). The 200 simple MA may support at $596.
Comments: Viewing it from a longer time frame, Gold has some significant downtrend resistance at $615. Hopefully the weekend will bring in some Gold-positive news.
"To begin with, a comment in regard to our share price might be useful. As you may have noted, the price of gold dropped over the past few weeks and this affected companies across the sector. In addition, as you may remember earlier this year US Gold closed a financing for $75.15 million. As part of that financing 16 million shares at a price of $4.50 were issued that did not become tradable until about 3 weeks ago. If you look at our price history, you will see a huge increase in volume as well as a dramatic drop in share price coinciding with this. Thus the combination of these shares becoming tradable and the fluctuating gold price has affected our share price over the past few weeks. However, we are happy to say that our share price is not
due to any shift in management’s strategy or operations agenda.
As far as what we are doing to drive our share price higher, I can tell you that our two focuses, exploration and consolidation of the Cortez Trend, are still moving forward. As our exploration efforts produce results and as we move forward with the acquisitions, the share price should be positively affected."
"In regard to Rob McEwen’s current projects, he is currently at the Denver Gold Forum where he presented on behalf of US Gold to industry leaders. In addition, he is also meeting with US Gold management and US Gold directors while he is in Colorado."
Comments: VGZ is struggling to regain its broken uptrend, which is currently at around $10.00. A hunch tells me that VGZ may close right at $10.00 today. VGZ was planning to spin off its Nevada properties to a new entity by around mid September. No update about the timing of the spin-off has been made however VGZ recently filed a shelf registration statement primarily in order to raise funds for the spun off entity. I'm looking forward to the spin off as it could add another quality company to the existing trading and investment options in Gold.
Comments: I think it has to be deemed a bit of a disappointment that during the recent two Gold price decreases, Royal Gold did not take advantage of depressed prices to sign any new royalty agreements to revitalize the royalty pipeline. In fact, they haven't announced any royalty deals since last December. Technically, there is still plenty of room for the already abundant short sellers to keep punishing RGLD if Gold continues to tumble.
McEwen Loses Focus?
With a chart like the above, you gotta wonder whether USGL's shareholders are really thrilled that the CEO is in the news every other day leading a crusade for the value owned by shareholders--of another company. Rather than escalating the war against the dilution of Goldcorp shareholders in connection with the GG/GLG merger, perhaps Mr. McEwen would do better to focus his attention back on his job of creating shareholder value at U.S. Gold Corp.
Comments: Is the S&P 500 going to break out after all? Right now it looks like it is avoiding the bearish wedge and making new highs. Another day of this and I may have to close out my small short position. Even though it looks good, I still wouldn't totally dismiss the potential for a fakeout.
Sentiment: Short Term Bullish
PM Portfolio Exposure: 92% + 4% short S&P500
Comments: HUI has now slipped just under the 1 year trendline support. More downside is possible. The ideal place to bet on Gold stocks would be 260. I exited most of my positions yesterday after growing a bit cautious on whether we can actually sustain a bounce at the trendline. Two things are potentially working against Gold stocks at the moment: (i) a potentially bearish general equities market, and (ii) the fact that the USD may enjoy a brief rally as it is still far away from its 200 day MA and is soon approaching some downtrend resistance. I'm kind of hoping that Gold miners do roll over. 260 HUI would be the perfect set up. any lower and the Head & Shoulders would be activated--but that would be impossible on the fundamentals that are prevailing, thus a perfect long set up.
Comments: Gold is right at trendline support.
Comments: S&P500 looks like it's about to roll over. If it does that, chances are it may temporarily take the Gold miners down with it.
New Strategy: I'm going to be watching the general market more closely now. There's a decent chance that it may be rolling over here. Accordingly, a good strategy in this market would be to short the general market (S&P500/Nazdaq) when the general market is falling, and go long Gold miners when the general market is bouncing. If the breakdown develops, that may be my strategy for the coming weeks.
Sentiment: Short term uncertain, but more bearish than bullish.
Portfolio PM Exposure: Mostly out of PMS for the moment, but keeping my KBX position--Kimber is due to come out with its prefeasibility study results in September, so probably next week. Also a small position in SH, a bear ETF. I may build my position there and swing from bearish S&P500 on the market sell offs, and long Gold miners on the market bounces.
Comments: After yesterday's failed rally attempt, a breakdown of the 1 year trend is quite possible, which would result in another bout of selling to HUI 280-275, at least. The best that could be hoped for then in the short term would be a bounce back to the broken trendline. Overall, the action continues to be dismal. About the only silver lining that I can think of right now is that although gold broke its 1 year uptrend at $581, the Miners haven't yet broken their uptrendline, which might be viewed as a positive divergence of sorts.
Unfortunately, we can't expect Asian jewelry demand to lead Gold to new highs at this time either. Unlike September of last year when everyone had the feeling that Gold will be heading much higher, causing jewelers to accelerate their buying, now we have the opposite situation where people are suspecting that Gold's price may go lower, and are thus not in a hurry to bid prices higher. So jewelers in Asia have shown little interest in introducing a serious bid during the Asian market period since they know that the fellas working the NYMEX will just give them lower prices the next day. So it will be mostly up to New York to stem the current selling.
Comments: the USD Index remains a key question here. It could go either way and if it rallies, it will likely stick a fork in Gold for the time being. Obviously Wednesday's Fed meeting should provide a catalyst for the USD, the only issue will be in which direction.
Comments: S&P 500 looks like it may be at very tough resistance. A bearish wedge is forming, with a negative RSI divergence, with strong lateral resistance right there as well. It's not a sure bet, but shorting the S&P500 might be a pretty decent bet. I added some SH (the new short S&P500 bear ETF) in the amount of 4% of my portfolio, to complement the 96% PM Exposure. Good risk to reward on this trade. In fact, I can't help but wonder if I just caught the very top of the 3 year US Equities bull right here with this short.
Comments: SLV, the Silver ETF, is bouncing from 1 year trendline support. Target might be $12, which was the beginning of a gap on the weekly chart.
Comments: Looks like USGL is trying to bounce as suggested a few days ago. Target may be $5.50 to $6.00, where USGL would fill a recent gap down.
Comments: Despite VGZ's nice 6% rise today, VGZ still needs to get back above $9.80 to regain the broken uptrendline. Wonder when they're planning to spin off those Nevada properties. If you know the time table for that, leave a comment below. Thanks.
Comments: SA still strong. 1 Year uptrend alive and well judging by today's spectacular 9.26% rise.
Want me to put up a chart of a precious or base metal company? Contact me by writing a comment below or by e-mail.
Comments: Getting back above $580 spot Gold was critical today, as that was the 1-year uptrendline. that was briefly broken yesterday. It certainly helped that the U.S. trade deficit for the second quarter was the second highest on record, coming in at $218.4 bil, bringing the U.S. within striking range of beating last year's record breaking annual trade deficit of $791.5 bil.
2. Asian Jewelry Demand Key: Regarding the gold market, a key issue remains whether Asian physical/jewelry demand will resurface. There has been some anecdotal evidence of fresh buying in South East Asia and India. India and China remain keys for Gold to find some support. So far, despite anecdotal evidence of fresh physical buying coming out late last week, there just hasn't been enough demand to stem the tide of selling.
3. Cash Costs Up 10% to $306/oz. According to precious metals consultant GFMS, gold mining cash costs rose 10% in the first half of 2006, to a weighted average of $306, due to increased energy, labor and mine consumable costs.
4. The Yogi Berra of Gold: I don't know what to make of conspiracy theorist Bill Murphy and his over the top tirades against the Anti-Gold Cartel, but I am certain that Murphy is definitely the Yogi Berra of Gold. Bill came out with his latest Murphyism while commenting on last week's steep sell off in gold:
"The only solace on a day such as this is that if you are watching CNBC, or listening to other Planet Wall Street apologists, you have no clue as to what is really happening here."
Apparently, not having a clue as to what is really happening is a source of solace according to Murphy.
5. Visit to the Local Jeweller. I stopped by the local jeweler here in Seoul on Saturday and inquired about purchasing some gold bullion. They are selling and buying ingots of 37.5 grams of 99.9% pure gold at a fairly reasonable 5.26% buy-sell spread (in comparison, Kitco.com's spread is 5.87% for 1oz Gold Eagle and 2.71% for 1oz bar).
Comments: The weekly HUI chart is bearish for the intermediate term with the break of the 1.5 year RSI uptrend foreshadowing an imminent break of the uptrend. 260 HUI looks like a likely target after the break occurs, which would then create the possibility of a very large bullish (falling) wedge to end the intermediate term bear market.
Sentiment: Medium Term Bearish.
Current PM Portfolio Exposure: 90%; been buying into the weakness in hopes of a bounce...
Gain/Loss for the Week: -11.73% (at this rate, I might as well be thinking in terms of a 30 year retirement plan, rather than a 3 year...)
"I read your analysis, and you make some good points on your blog site. But I'd like to know your opinion on why this merger is a good idea now that we're using a ratio of 1.6 to 1 in favor of GLG when we (GG shareholders) voted down a merger with GLG a couple of years back with a ratio of 1.1 to 1, before we merged with Wheaton River. According to this, that would mean that the Wheaton River acquisition had a significant negative asset value. I am not aware of a significant change in the ratio of proven and probable resources between GG and GLG (except for the significant addition of resources in the WHT acquisition) during this time frame.I just don't get how we voted this merger down a couple of years ago, and now Tefler supposedly has so much support that only two shareholders disagreed? Something here just isn't passing the smell test. Well, I guess including me, take the total dissenters to 3.Can you help me understand how my logic is flawed?As an addendum, it was announced today that IAG will acquire CBJ for a 31% premium in a stock swap transaction, which premium is just a little less than the original premium in the proposed GG/GLG merger.
I've been a long-time holder of GG, and have to confess, although the items that you point out are true, IMO, I don't think it justifies giving that much of a premium to GLG, especially considering the points above. I think GG can get to the same point by buying some much more reasonably valued juniors that are struggling due to poor management but have good assets, and they can do that without basically giving away almost 1/2 the company. We're paying a premium for the good mgmt in place at Glamis, and I don't understand why we want to do that when GG's management doesn't need any bolstering (or so I thought). We want cheap assets, especially any that we can utilize existing infrastructure that we have or another potential takeover target owns. I'd like to see the response and debate that would hopefully stir up if you posted this to your blog. I'd really like to hear some opinions that challenge the logic here, because so far I haven't heard any."
Comments: The Chart just looks sick. There is no end in sight to the selling and unclear whether there are any supports until HUI goes lower. The interesting thing is that the USD Index hasn't gone anywhere recently, but gold still continues selling. In a sense, it's like last year when Gold decoupled around September from the USD Index, only this time that decoupling has meant that Gold falls while USD stays roughly the same. The crazy thing about today's crazy $20 sell off in Gold is that the USD Index also was marginally lower.
Comments: A bounce may be developing as anticipated. A price target may be 320 for a bounce, though it could conceivably go higher or simply fail. The above chart considers the possibility that the current pattern is a less bearish rectangle rather than a failed ascending triangle, however, that seems a bit unlikely.
