This week brings a new moon, a new trading month, and a new upward trend for precious metals. Instead of focusing on the Fed’s decision to leave rates untouched, think about its intention to tame the inevitable upward momentum of precious metals.
Today we found more indications that point to gold’s positive long term direction. George Soros also thinks the crude oil market is overbought and if he’s right, and it’s hard to doubt a billionaire investor, the money in oil investments needs to go somewhere else. The banks are still reporting losses, with news of Wachovia’s CEO firing, and analysts expect a profit loss for Lehman. Furthermore, the housing industry is still in decline, airlines are having serious financial difficulties, and automakers are reporting slower sales. Apart from investing in precious metals, there really aren’t too many other high-yielding alternatives.
In our last commentary, we discussed how rhodium and platinum supply concerns are going to push metals prices higher in 2008. While rhodium and platinum have already surged, Gold is up by only 5% this year. Well, our predictions about gold supply concerns were affirmed this morning. South Africa, one of the world’s main precious metals producers, reported that gold output fell by a whopping 15.6% during the first quarter.
Undoubtedly, this new moon will take mining stock prices significantly higher.
This morning, RBY (Rubicon Minerals) showed signs of reversing the downtrend that began along with a full moon just 2 weeks ago. This morning, its price dropped down to $1.24 before quickly bouncing back to 1.35. If anyone picked up shares below 1.30, then consider yourself fortunate. Presently, RBY is following the moon’s trend with precision and expect prices near $1.60 by this month’s full moon.
AGT (Apollo Gold) had done quite well between a $0.60 to .61 support range, but dropped today to about .59. Expect upward momentum tomorrow or by Thursday at the latest. The stock should increase to about $ 0.70 in two weeks.
Oh ROY! The metal royalties stock saw its largest increase in months after our May 13th buy alert. All the investors and traders who doubted International Royalty Corp got quite a surprise during the start of last week’s downward momentum. Its price corrected from about $6.00 to about 5.79– just above its 200-day moving average. Expect more sideways action this week and a reversal next week along with ANO. Certainly wait until next Monday or Tuesday before buying.
ANO (Anooraq Resources) is still in the midst of a downtrend and we could see continued negative momentum until we reach a price level between $ 3.10 and 3.15. It lags RBY and the moon’s trends by almost a whole week, if not more. Expect movement between $3.20 and 3.30 for a few days, but wait until its price moves below $3.20 before entering.
PLG (Platinum Group Metals) recently saw one of its largest single-month increases in years. Its price increased from about $ 2.20 to 3.30 or nearly 50%. It has corrected to around $3.04 but expect further downward momentum as this stock’s trend is even lagging ANO and ROY. The stock should settle at a support level between 2.60 and 2.80 by next Wednesday or Thursday at the latest. PLG and ANO are two of the only platinum stocks on the AMEX, but we don’t usually trade the former because it just doesn’t have enough volume. Low volume could mean difficulty filling your buy and sell orders.
Remember that every stock’s trend is unique and nothing is perfect. Although negative news is bound to surface, technical indicators and market fundamentals point to higher metals prices in the end.
