1/14/2005 William Schmidt, Ph.D.
Conclusion:
===>Buy on Tuesday morning AU (55.42 +2.41), EZA (108.70 +2.31).
Both are running in all-time high territory without any points of overhead resistance.
===>Buy ASA - 62.25 +2.26... Very, very strong. This company invests mostly
in South African gold stocks. This has outperformed the DJI by 30% over the
last 50 days. It is shown at bottom of this page. Charts of ASA daily weekly
It is running in all-time high territory and just made a short-term pattern breakout.
Buy MDG (25.62) on pullback to 23 or if it closes above 26 for quick move to 28.5.
With a weakening dollar expected for the next six months,
gold stocks are enjoying a surge. The gold stock index ^XAU
closed up 3.18% on Friday to 141.97. It is charging back to
150-152 to test its all-time high peaks back in late 1987
and 1996. Below is 21 year chart of ^XAU.
A breakout above this would be extremely bullish for
gold. Prices move up much more easily when they escape the
selling from those who peg their sell orders at old peaks.
No one knows where to sell strong stocks in a strong industry
when all-time highs are being made. Without sell orders
concentrated at any price point, we may be amazed at how fast these
stocks will go up. Gold stocks already making all-time highs are
favored as well as ABX and NEM, since another point or two from them,
will bring them into all-time high territory.
Tiger has built its own Gold Index of twice as many stocks
that are in the ^XAU. Its current chart shows a very bullish
breakout on Friday.
It should be stated that gold is usually considered a hedge
against inflation of the dollar. Its long-term performance has not
kept up with the SP-500. After periods of steep rises, it may
slumber for years. Use the 50-day ma to note trend. When the
trend turns down, it is probably best to go elsewhere with
investments.
Conclusions: Buy on Tuesday AU, ASA and EZA (South Africa IShares Exchange Traded Fund) Buy ABX and NEM if they can make new highs. Buy PAAS on next red Buy signal.
Weekly charts are helpful in seeing where overhead resistance lines might cross and to see what signs of long-term institutional accumulation exist. Compare NEM's mediocre daily Accumulation with what the weekly Tiger chart shows.
Methodology:
I examined 23 gold and silver stocks.
Longer Relative Strength was a key criteria. I excluded stocks that seriously underperformed gold stock leaders NEM (Newmont Mining) and ABX (Barrick Gold). Unseasoned EGO was considered too new.
This left the following:
Stock Captialization Tiger All-Time OBV%- 1/13/06 Conclusion in Billions Accum.Index High Pr% ------ -------------- ----------- ------- ----- ------- ---------- ABX 41.75 101 31 -42 29.77 +.63 Wait for High Vol Barrick Gold On Tiger Buy - 21-day OBV ma. ITRS=.13 Close over 31.
.................................................................................... AU 14.7 122 at it! -1 55.42 +2.41 BUY! Anglogold Ltd. New high Friday on high volume. IP21>.25>rising Tisi On Buy from 50-day ma turns, gain=53.8%
.................................................................................... FCX 11.1 142 making them -4 60.75 +1.60 Wait to buy. Freeport McMoran In extremely steady uptrend. Has not violated 50-day ma since June. At upper band. Wait for retreat to 56. .................................................................................... MDG 2.6 110 making them. -17 25.62 +.72 Buy! Meridian Gold Making all-time highs since November. Data goes back to 1996. Outperformed NEM and ABX by 350% since then.
.................................................................................... NEM 26.8 60 61 would be ATH 59.87 +1.91 Wait for All time high Biggest gold producing mining company. 60 was peak in 1996.
NEM when viewed from a weekly vantage point shows considerable Accumulation. See below. The flat topped breakout at 50 was a Buy. There was no pullback. The 15 point range sets up a minimum target of 65.
.................................................................................... EZA 166 making them 2 108.70 +1.70 Buy IShares MSCI South Africa Bulging Tiger Accum. Index values on daily chart. Note bullish breakout at 94 in Nov. brought our nightly recommendation as a Bullish SPecial Situation. The weekly chart shows how powerful EZA has been.
