Well according to a regular Kitco commentator(Hamilton)the above is more likely than unlikely. The link to his analysis of the HUI gold index v POG and the timing of major market price surges of gold stocks is quite compelling reading: www.kitco.com/ind/Hamilton/feb222008.html
He has done an in-depth analysis of the HUI (S&P Gold Bugs Index) and presents a strong case for unhedged and junior gold stocks to have a huge run over the next 8 weeks - in fact the 1st week has started already and I have seen KAL go from 10.5c to 14.5c in 2 days. KAL is not an isolated case either. Gold stocks have been dragged down by leveraged investors having to sell to meet margin calls and a generally very negative sentiment in the overall market. In times like these, gold stocks are dragged down as well, as they are seen as shares, not a gold investment.
What is expected now is a separation of the gold stocks from the rest of the market. Gold stocks are starting to take off and the outlook is for a short(8 week) and very robust re-rating of the gold stocks that have been way oversold. They have lagged behind the latest strong move by physical gold and as more investors/traders come to realise that the move in the POG is not a speculative spike, the more that will return to gold stocks.
Only the Materials Index was in positive territory on Friday - up over 100 points !!! Time to ignore the ASX200 and grab a slice of what could be the strongest move in gold stocks for many years.
As always, there are no guarantees in life, but as Hamilton's article was written on 22/02, the sudden move that started mid week 27-28/02 in Oz gold juniors could be the signal that the 8 week surge has already begun.
Profit taking can be expected early May, so take your profits late April.
Anyway, read the article and make up your own mind.
