3SOF

wht?

PMU downgrade:

PMU: BMO Nesbitt Cuts to Mkt Perform from Outperform; Analyst Notes

Tuesday , September 20, 2005 08:11 ET

Issuer: Pacific Rim Mining Corporation (AMEX: PMU)

Analyst Firm:  BMO Nesbitt Burns Securities Inc.
Ratings Action: DOWNGRADE
Current Rating: Mkt Perform (from Outperform)
Analyst Comments: The firm is downgrading PMU due to the longer time line for progress at their El Dorado project.


I´m holding GOLD, CDE and DROOY

RANGE pulled back to the trend line and my favorite 9-day EMA today so bought there and it has run up so far. It is still below the 20-day EMA but looks good to go.  I also got AUY today as it was back to support

DEZ is another that has pulled back close to support with 9-day and short term trend line just below

Gold futures are pulling back some today  YG05Z  and the 9-day is at 464 and 454 solid support. Many stock are down 3-5% and near their recent support areas. Ones like AUY that made a high of 4.70 is back to 4.20 and has support at 4.17 so I like to take partial positions and they see - if they drop more I can add some more or if they have increased volume I can sell for a tin y loss if need be.


Another nice thing about buying on down days is you have time to watch the stocks a while and puck entry points near support.

Like BGO that has had support at the 9-day EMA or CAU at its short trend line at 0.72


NEM seems to closely track the sector so watching a 10 min chart of it can give you an idea of short term moves to come.

This is the gold futures December contract - the one currently the front month. today it pulled back to the 9-day and bounced a bit as expected but with the weekend weather unknown it is hard to say - it may rally form here next week - expected but it could fall to the are of the two blue lines. Anyway several gold stock are now at  decent buy points



An example of the type of place I like to buy is with CLG - yesterday it dropped to the 50-day EMA and also the bottom of its trading channel so I bought for a low risk entry as if you buy close to support you can sell if it does not hold and loose little.

http://tinyurl.com/dsr99

IT is similar to the EGO chart that I have shown and traded many times buying the bottom of the channel and selling the top... one day it will break out of the channel and then I will buy and hold.

http://tinyurl.com/cz7gh

I agree that the current pullback is a buying opportunity and if it establishes a base at or above $450/oz,it is a bull signal...Greenspan's increases in interest rates will continue,but not to prevent inflation...I believe he is desperately trying to support the dollar in the face of Japan's and China's reduced  purchases  of U.S. treasuries...The smart money will ignore interest rate increases and buy gold miners...The interest rate increases are doomed to fail in supporting the dollar due to runaway personal debt and government deficit spending...It is dollar devaluation that will enrich the gold bugs...

This is a fund on the NYSE and it is heavily weighted with Sough African gold stocks and you can see the break out on the weekly chart.

One thing to note is when the South African Rand is weak compared to the US$ that this is good for SA gold stocks. They sell in dollars but pay most of their bills in Rand so they make more profit on a weak Rand to US$. That is why some days you see stocks like HMY  AAUK AU DROOY GOLD and GFI move more or less then other gold stocks.

Gold had a pullback today but nice bounce. The comercial traders are still net short a pretty high amount so more pullback may come.

Gold has been pulling back and it is near the break out price so if this rally is going to continue then we should see a reversal.

If playing the futures the the price is higher by $2.80 (The December time difference) so the point would be 497.67)

DROOY, nice consolidation on low volume - lock and load

Gold did move up but I would rather see it to to the break out point just to get that taken care of. It is of course not needed.

Most all golds stocks up and many have flag formations or bounced at 9-day EMA. I like to buy at support as it is lowest risk short term. The ratio chart here shows that gold stocks outperforming the metal and it is also in a nice flag pattern.

As long as this stays above the trend then gold stocks look good to go.

hi metro,

you seem like the only gold bull round here right now, as David has sold out of his entire gold position for reasons that are not entirely clear to me.  i was of the opinion that 3SOF was long term bullish on gold

Now I understand that David has to follow his technical game plan on his trades, and that DROOY broke his trendline, but I am in at $1.50 still.  Your consolidation range is pretty wide there - do you see it bouncing around here for a little while?  If so, I may try to sell in the mid-1.50s to buy back lower at arround 1.40, but given that gold looks to be holding suppport, do you think we could see a run from here in the short term?

I know, lots of questions but I'm new to gold, and understand that gold stocks trade a little differently than others, but you seem to have this sector nailed pretty tight...

cheers for your insights 

ScottishTrader -

Gold is in a bull market that started in 2001 and it still has not returned to where it was on 1983. The rally may last many more years so all depends on your holding period.


This chart shows the last 5 years and note that the 65 week moving average has given support on each pullback. And note the recent break out.



You may see that stochastics do not look very reliable at pointing to the action as often when it was topping above 80 the price went up for weeks more. But the MACD has been a good tool - see below.

In the shorter term there may be some topping in a month to 6 weeks.

The gyration of gold are not so easy to predict as so many issues effect it. The two right now that are of concern is the current rally in the US$ as it may go to 90 cent area and also the commercial traders have a high short interest in gold at the moment - maybe they will just keep adding contracts as gold moves higher. Those issues are there but the charts still look very good.

One thing is the MACD on the gold chart has been accurate at predicting pullbacks and now it suggests a pullback is to come.

http://tinyurl.com/dg6zp

I suggest diversity in your metal stocks holdings and taking some profit on rallies due to the question about the shorter term. I have for years found it better to buy pullbacks and not break outs in gold stocks. One I sold  some of yesterday are SA and NXG and the stocks look great but when they go above the top Bollinger band it is nice to sell into strength while other are buying. I like to buy when other are selling. Other gold stocks that made new recent highs yesterday include FNX LIHRY NEM  OZN PMU RTP SSRI . A god indicator is to use the NEM chart as it often is a good indicator of other gold stocks.

The 9-day is often a good place to buy - like CDY yesterday nice bounce from there. Then if you are a short term trader just sell the stock if the 9-day does not hold. There are many strong stocks consolidating near their 9-day and in uptrends that have pulled back on lower volume.

In regards to DROOY remember that as a South African company its stock price will fluctuate with the price of the Rand in comparison to the US$. On the long term chart is shows it has been a weak stock while gold has rallied for 5 years though it is now back in a channel
http://tinyurl.com/an77v

Compare that chart to one of CDE that instead over the last 5 years is up 700%. I like to buy the stronger stocks

http://tinyurl.com/aqsjr

and look at the longer term chart just to see what could happen if gold does a good job in the years ahead -

http://tinyurl.com/bdfhm

NXG and PMU so far the top gainers and both were break out patterns as was GFI so some partial profits can be taken of stops moves up  only for short term traders when the candles go above the top band - most gold doing well today while gold itself only up $2

the HUI and AUX made 50 week highs today

I guess I will start a thread at some point in the premium service section instead of keeping this going here.