"...Remember the NASDAQ top in March 2000? “Tech stocks have gone up for a decade now so they will probably keep going up forever. We are in a New Era now.” Whenever one condition lasts long enough for traders to assume it is permanent, the markets tend to quickly change and crush that flawed perception.
I suspect we are reaching a similar inflection point regarding gold and gold stocks. Gold has outperformed for a long time now so traders assume this new status quo is going to last forever. But in reality, relative performance is very cyclical. Gold outperforms for a while, then the stocks outperform for a while. After long periods of gold outperformance is actually when the stocks are the most likely to suddenly rocket higher."
Full article "HUI/Gold Ratio Trends" at
http://www.kitco.com/ind/Hamilton/dec212007.html
Comment:
Sentiment about gold shares from most has become so negative, yet gold is over US$800 and looking good. This surely indicates a bottom for gold stocks.
You only have to look now at the typical posts on Hot Copper about gold companies: "It's no use proving up more gold resources. They have to produce gold. The market's not interested unless they produce."
Well, have I got news about that sort of sentiment. When gold shares run the market is all over gold companies that can be years away from production, but are proving up gold resources.
My favourite gold shares:
1. PRE - This spec will become really hot imo as it proves up substantial gold resources.
2. PRU - Many millions of ounces of gold resources. By comparison, miniscule market cap. Impending TSX listing. Set for a massive market rerating imo.
3. NAV - Proving up significant reserves. Substantially undervalued imo. Plenty of negative posters in the NAV threads - an added bonus imo. All they look at is the current share price and FAIL to understand that NAV is now in a FAR BETTER position than when the share price was higher and gold lower!! A screaming buy imo.
4. CTO - There is every indication imo that this company could become the Australian gold story of 2008 based on continued success developing and mining the Charters Towers gold field. Slowly ramping up mining, which is already profitable. Resources of 10 million ounces with huge upside to that. Goldletter International in November described CTO as a "Special situation" and mentioned that "Citigold’s next phase will include the re- commissioning of the original existing Central Decline and a further move towards the Company’s long term goal of 250,000 ounces of gold sales per year at an estimated cost of A$85 million. Long term exploration upside targets 50 million ounces (1,600 tonnes) of gold." Only a few days ago CTO released an excellent market update which was pretty much ignored due to negative gold sector sentiment.
5. KCN - It will imo finally get its long delayed Thailand mining leases in the first half of next year. Blue sky from then.
6. TTR - A cheap spec with 650,000 ounces of gold plus base metals.
7. TRY - I have been posting to myself in the TRY threads, so I have stopped there. Now in an expansion phase. Cashed up. Has paid a divdend for years. TSX listing about to happen which will increase profile. Should finally become a big mover imo.
8. CQT - The gradual sell down has been irrational imo. Once market sentiment turns should run very hard.
