The silver chart appears to be rising very nicely in a channel. Its near the top of the channel, but if it can make it thru $12 the fibonacci break targets $14. I'm not as jazzed about the silver fundamentals as I am about gold, but the technical action is very admirable.
First Majestic (FR.TO) and SLW trade in a very correlated way with silver. They are both highly leveraged as the difference between 8$ silver and $11 silver is roughly the difference between genuine trouble and making money nicely. The FR chart is very interesting in that FR is in a strong up trend and its just broken the last fibonacci which means its targeting $3.25. I'm holding at least until then and will then reevaluate.
The USD dive-bombed to reach its head and shoulders pattern target and since has bounced enough to reach the first fibonacci. If it continues to rise it should be bad for gold, silver and the related miners. I'm watching this carefully.
The gold weekly chart shows a lot of hope and also shows that if $900 can be breached (with its fibonacci number) that the all time high is targeted. There are a couple of trendlines to be overcome as well on that ascent to a retest of last years high.
The daily chart is looks reasonably bullish with recent moving average breakouts and the last fibonacci being broken targeting $930. This would be enough to break the weekly chart's fibonacci and trend lines and target the all-time high. Gold is in a nicely rising channel.
On the bearish side, technically gold has formed a bearish rising wedge. Fundamentally, Indian and Turkish gold buying has collapsed recently, gold is due to be sold off by index commodity funds as part of annual rebalancing and the US dollar is showing some strength. Finally, things have stabilized, short term, in the middle east and some of that flight to safety buying may have dried up. In addition, the TED spread has fallen to the lowest levels since the crisis started, so there is less of a flight to safety fundamental right now. There are thus some bearish fundamentals. Most of these fundamentals are short-term fundamentals.
Of course, the theme of inflation following deflation due to all the money supply growth aided by bailouts and stimulas spending is, long term, very bullish for gold (and more so than ever). There's room for renewed flight to safety gold fundamentals in both the financial and geopolitical fronts as well. Falling mine supply and central bank selling further the bullish long-term fundamental outlook for gold.
From an interventional standpoint, if the general market can pop a bit, the Cartel may lay off gold and just try to keep it from making headlines.They have not done too much lately and could not prevent gold from ending the year higher than it started, so the Cartel seems to be less of a factor at this point.
By the way, LeMetropoleCafe.com (where I got the Indian and Turkish buying fundamentals) remains the best source for precious metal investing that I've found. The Midas daily commentary is where most of the juicy tid bits are found. If you've got a significant amount of money in precious metals you'll want to pony up for a subscription (or at least give the trial subscription a twirl).
All in all, I'm cautious on the price of gold at this point for a couple of weeks and wouldn't be too surprised to see some range trading for a couple of weeks while the gold mining stocks continue to make progress. That's my best guess at this point.
Semafo (SMF.TO) is a turn-around, mid-sized, multi-mine producer in West Agrica which took a political hit a couple of weeks ago. The smallest of its three mines is in Guinea which just suffered a military coup. At first, the new government announced that all gold extraction should cease until mining concessions were renegotiated. Since then the military has backed off and mine operations continue at SMF's mine uninterrupted. This set of events has given Semafo a technical flat tire. Prior to the news, SMF was on a tear, having broken moving averages, long-term downtrend lines and the last fibonacci and targeting $1.60.
My fundamentals spreadsheet says SMF is an exceptional value with a price to operating cash-flow ratio of ~2 at a gold price of $800. I'm planning on sticking provided the technical outlook for both gold and SMF do not degrade too much further. One of the most admired mining analyst message board posters I know (name withheld pending permission) has Semafo as his second largest holding and is undeterred by the Guinea news. This stock is also recommended by Toby Hansen.
I find Minefinders to be a stock that I can trade. Its price action recently has been well correlated with the price of gold (but leveraged) and its liquid enough that I can get in and out with a reasonable trading position without perturbing the price. Its not as undervalued as Semafo (for $800 gold) and is not nearly as undervalued as the true Jrs I'm holding and looking at, but it does seem undervalued with an estimated 2009 price to operating cash flow ratio of 4.5 at $800 gold, provided the mine production meets guidance.
Its weekly chart shows that it has broken its downtrend.That's bullish.
The daily chat shows that its having trouble making it thru that 50% fibonacci resistance. I'm in the process of taking profits (a rare occurrence) and moving that money into some smaller, more undervalued gold miners.
Gold Resource Corp (GORO.OB), my largest holding, is in a strong uptrend. It targets $4.44 if it can decisively stay above that $3.50 fibonacci number. Monday's action will be important. GORO is financed, building its mine and the size of its high-grade resource continues to build. The management continues to be more "stockholder friendly" (more interested in helping the stock holders make money and less interested in selfishly taking care of number one) than other managements (partly because they hold 30% of the shares).
Metanor closed on its flow-thru private placements and, while not popping as much as others, has weathered a Jay Taylor downgrade and broken thru trend line resistance. It completed its first full quarter of production on 12/31/2008. A satisfying production announcement or good drill results could really get this stock moving. My spreadsheet estimates a 2.5 price to operating cash flow ratio for 2009 at $800 gold.
Finally, New Guinea Gold Corp (NGG.V) had a good week on news that the financing closed that it needed to ramp up production to being cash-flow positive (avoiding real trouble) and on a Jay Taylor recommendation reiteration.
The stock popped 50% on roughly $300K of stock trading (1.4M shares). This shows how illiquid these stocks can be and how much they can move if the fundamentals move in their favor. If you are swinging position sizes of 100K$ you are going to have to realize that getting in and out is going to cost some serious money. But there is also a good chance for spectacular results. Jay Taylor says this is a potential 10-bagger. It looks like a five to ten-bagger to me provide gold can stay above $700 for a couple of years and provided they can get their starter mine working and get a decent price for their main exploration project.

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