NXG - Sector: Basic Materials---Industry: Gold & Silver

[Michael]

Hmmmm... I am sure I offended a few of our US members with the last post so let me just elaborate a bit.

I don't think that the financial world understands the fundamental change in the power between. Europe, US, Russia, India and China. I am pretty bearish when it comes to the economies in Europe and US but more bullish when it comes to the rest of the world.

China and Gold is a perfect example of how the balance of power has changed.

Thirty years ago China held 95% of its foreign reserves in gold. Today, China's gold reserve only accounts for 1.3% of total reserves. A figure well below the average minimum 3%-5% in many other countries. China with an estimated gold reserve of 600 tonnes has a fraction of that believed held in the US with some 8,500 tonnes.d

But here is the point: China has a trade surplus of around $20 to $25 billion dollars monthly. Till now this surplus has predominantly been invested in US securities. When China declared that they are considering to change this the financial world should wake up and listen.

One month of trade surplus could buy 1200 tonnes of Gold! This means that China could buy more gold than US have in their reserves in less than 8-month

I don't think that this will happen (even though I am sure that China will increase their gold reserves) but imagine what effect that would have on the gold price and the currency market.

That is why I say that US today is not an economic super power. In fact the future of the US economy is to a large extent depending on decisions made in Beijing, Moscow and Delhi. Now this is certainly a new situation that investors have to relate to 

For the time being it is not in the interest of China to disturb the US market so we are most likely safe but I like to invest in these "emergiing" markets just in case.

[tocitygirl]

I just received this from sharpeyed.com and it's about NXG.






Dear Sharpeyed.com free newsletter subscribers,

More about NXG (Strong Buy Alert)

NORTHGATE MINERALS TO ENTER THE S&P/TSX COMPOSITE INDEX
http://biz.yahoo.com/iw/061211/0193598.html

Strong Buy NXG and hold it for the run! NXG will be very huge!

Reasons to buy NXG:

1> Looking at NXG's chart, the downside risk is minimal compared to short term upside potential. There is very good support at $2.82 (Hit on Sept 25, Oct 11 and Nov 17) Each time NXG has had a nice bounce off of this number.

2> NXG is in a pretty tight trading range since Dec 1: $3.10-$2.99. Seems to have good support at the $3 level in an environment where copper has taken a beating back close to $3 and gold is basing in the mid $620's and in my opinion getting ready for a run at $660-675 by January 1. Needs to break through $3.21 to make a run at $3.54 and then $3.94.

3> NXG was just listed on the TSX due to happen on December 18th.

4> NXG's cash position is great going into 2007. Negative gold production costs thanks to copper.

5> Warrant expiration at end of month taking the draw of the $3 range away.

6> Lots of potential in stock appreciation should YD results come out and the settlement of KN permitting.

7> Regardless of #6, NXG still looks to profit handsomely from existing mine activity and with its extensive cash build up (sh/c)ould look at acquiring a new mine to alleviate production concerns for the future.

[mexirafa]

-Forming a nice base above $3.00...
New listing
http://biz.yahoo.com/iw/061211/0193598.html

http://biz.yahoo.com/iw/061129/0189677.html
??

[Melf Elf]

Bought NXG at 3.11.  Stop: 2.94, below the low (#1) of the Symmetrical Triangle.  Risk: a loss of 5.5%.

I'm front-running a breakout here, which would be above 3.20-3.21 basis the daily chart, but given this Symmetrical Triangle breakout basis the hourly chart, and the upside takeout of 3.11 (#4), I took the trade at 3.11 on the pullback to the breakout.

I'll post the daily chart.

NXG currently is BID 3.10...ASK 3.11

[Melf Elf]

Although NXG had a fairly hefty correction of 45.64% from the May high of 4.82 to the October low of 2.62, that's a reasonable correction for a stock that enjoyed a rally of 424% between May, 2005 and May, 2006.

Fibonacci corrections of 50%-61.8% are considered to be "normal."  Some technicians go even 74.6%, and still consider the trend to be bullish. 

As the chart stands, the pattern since the May, 2006 high is a Bullish Falling Wedge; only bullish, of course, if it breaks out to the upside.

We'll take a closer look at that pattern next post.

[Se7en]

I'm with you Melf Elf, bought some @ 3.08!

Good luck to us! 

[Melf Elf]

Highlights of the Bullish Falling Wedge:

1. There was an upside breakout of an Ascending Triangle (pattern in red) on September 6 that turned out to be a "fakeout breakout."

Those are really annoying, but they happen.

I'm front-running a breakout here, which would be above 3.20-3.21 basis the daily chart

Some technicians insist on waiting for an actual breakout, but that "fakeout breakout" on September 6 is one of many examples of how those don't always work out, and how there aren't any guarantees on a trade, even with a breakout.

2. The primary reason that I'm tedious about calculating trendlines, is that once you get a third hit to a trendline, like NXG did on October 30, that's "generally" a pretty good indication that the trendline is important.

On October 30, NXG tagged the top of the Bullish Falling Wedge, within about a penny, then failed on a Bearish Island Reversal.

It "should" have some significance if NXG get take that trendline out to the upside.

3. NXG just broke out of a Symmetrical Triangle the hourly chart (shown in the first post this morning), and is working on a little Ascending Triangle breakout, short-term (pattern in purple).

We'll take a close look at the Ascending Triangle (pattern in purple) next post.

I'm with you Melf Elf, bought some @ 3.08!

Good luck to us! 

Yes, good luck to us, Se7en! 

[Melf Elf]

The top of the Ascending Triangle is 3.21 - 3,20.  It's not a very strong pattern (not very wide), but if it's taken out to the upside, it's automatically a breakout of the 7-month Bullish Falling Wedge.

[tokyopua]

This looks like a good risk/reward, thanks for the tip as always Melf.  Joined in at 3.07 

[la-onda]

okay, you have convinced me; I have joined you.

NXG presentation link:
http://www.northgateexploration.ca/presentations_files/presentation.html

[Melf Elf]

Tok and Oliver,

Okay, guys, good luck to us all! 

My feeling on the stop is that if NXG  closes below the Ascending Triangle, there's a good chance the it will go back to the bottom of the pattern, but I'll go ahead with the 2.94 stop in case it "morphs" into something else.

I'd use the 2.82 low for a stop, but that's a risk of 9.3%, and I don't want that much.  I'd rather look to re-enter it at some other point.

Just my thoughts on the stop.

Overall, that big 7-month Bullish Falling Wedge looks like a Bullish Continuation pattern after the 424% rally into May of this year, so I like NXG from that standpoint. 

The longer-term trend still is bullish, it's just a question of how much risk we want.

Thanks for the info, Oliver!

[Melf Elf]

I'll go ahead with the 2.94 stop in case it "morphs" into something else.

This already is looking like it "morphed" into an Ascending Triangle (the highs both are 3.14).

That's a "fractal" (repeating pattern) of larger Ascending Triangle on the daily chart, the pattern in purple, with the highs of 3.21 and 3.20.

Given that the metals stocks are getting smacked a bit today, NXG is holding up reasonably well.  We'd like to see the Ascending line (#1...#3) hold.

[Melf Elf]

Of 21 metals stocks that I looked at, only 3 closed in the green yesterday: GBN, TGB and NGX.

Last I looked yesterday, the POG was down almost $12, so the close in NGX was good relative strength against  both the commodity and other metals stocks.

The good relative performance is consistent with NXG's 13/21 RSI chart, which has been flashing Buy Signals since December 5 (listed on the chart below).  When there is a bounce higher out of Bullish Synchronicity, a penny above the prior day's high is the Buy price.

Oliver, you will remember when IMOS had similar repeat Buy Signals in the 13/21 RSIs, when IMOS was trading in the high 5.80s to low 5.90s.  Those signals produced a rally, but only to 6.30 resistance.  Hopefully, NXG will do something better than that.  (BTW, IMOS had a nice 10% gain yesterday, after another 34/55 RSI Buy Signal at 5.97 was issued on Thursday.  IMOS closed at 6.62 yesterday).

Next post, the MACD chart.

[Melf Elf]

MACD has been noodling its way higher, to the zero line.  It crossed above it by just a nose.  The reading is 0.00039, just barely positive.  Maybe that's by "just a hair on its nose."

But, it's a close above the zero line, nonetheless, and some technicians use that zero line for buy and sell signals, so in addition to the Bullish 13/21 RSIs, that could help us out.

The technicals are looking good, and NXG needs that kind of help to break out and thrust higher through nearby resistance.

Ichimoku Kinko Hyo chart next post.

[Melf Elf]

At the same time that the 13/21 RSIs began to flash Buy Signals, the 8-Day Tenkan-sen (solid green line) made a Bullish Cross of the 22-Day Kijun-sen (solid red line), and since that Bullish Cross, NXG has been finding support at the 22-Day (solid red line), and also has been forming an Ascending Triangle (purple).

That looks very nice, and now NXG is right at the top of the Kumo (Cloud), which is the vertical green lines.

The top of the Kumo (Cloud) came in on Friday at 3.1275.

The high was 3.14.

The close was 3.12.

So, we're right there, "champing at the bit" for a breakout, both structurally, and based on the technicals.

You can see now why I'm using that 2.94 stop, and only wanting the 5.5% risk on this trade.  If NXG can't capitalize on all of this good stuff and breakout, I don't want it.

2.95 was the low of the FOUR 13/21RSI Buy Signals, so if that gets taken down, I won't have a clue what NXG is trying to do (other than breaking that support  ), so I'll want out.

Daily chart, featuring resistance levels, next post.

NOTE: We're at the top of a new page now, so check the last two recent posts at the bottom of Page 3 if you missed them, if interested.