Some analysis in yesterday Goldman Sachs afternoon report..
The Tax loss selling fits in perfectly with the selloff in golds in the last month & why I think they’ll all bounce from here...
This was what I said yesterday.. I bet you never thought you’d see me saying this ?? ? I’m off on holidays at the end of this week, but before I go this is my last – and I suspect highly controversial call. ? Having been an enemy of the gold disciples for years - who only ever thought gold would go up, up up & US$3,000 was where it’s be by now. This has seen many tell me I don’t understand the conspiracy theories (about Central banks holding it down) going on, the money printing ect (basically ‘you just don’t get it) – but despite all there “noise” it deflated (when I called it a Ponzi Scheme “ many sent me emails – telling me I was a ignoramus who “just doesn’t get it ) – well we all know how it played out & it wasn’t the fairy tail end they all said it was – instead it was a terrible nightmare . ? When gold crashed - it was the gold stocks that really felt the pain as golds stocks crashed between -50% to -80% (they have 4x the leverage to gold price) .
But .... Maybe that nightmare is almost over... ? So ironically after 4 years I’m going to wave the gold flag for a trade (well gold stocks that is). They are oversold & gold looks ordinary – but if it bounces US$100 from here – which is not that hard to see - then gold stocks will have a big run. There will be some +30% moves... ? This is not a trade for the conservative – its high risk, high beta – high return (or a small loss) – but I’m still going to go for it. ? The gold bugs will be confused – there greatest critic has just joined their side – but as I have always I would invest in gold when I felt the froth was out & many gold bulls despondent and now looks like that time... Golds may be finally – after 2 years of misery in for a good qtr... Gold’s usually have a cracker over the next 3 months ? Over the years Gold Stocks have been stands out as the best performer in July with a gain of +7.1%, also Gold since 1987 has in August averaged a rise of +0.14% & then follows on with a +1.90% rise in September. ? I’ve been negative gold for a number of year – I never got seduced by all that garbage that it would be trading at US$3,300 by June 2013 – but right now for the first time in a long time I think it looks like a trading buy opportunity may be opening up and I think we could see a decent bounce in the next few months after (1) Its had a massive collapse but has not gone on with it (2) The US$1330 level has been touched twice & both times it bounced off that level – so we have seen a “double bottom” & that normally can be a bullish signal. (3) Gold is not liked & many have moved away from it – the love affair for many ended in tears… (4) No one would seriously suggest buying gold now given how bad it’s been in the last 9 months – so sentiment is positioned for further falls... (5) Gold has fallen for 8 out of the last 9 months (falling from US$1773 to a low of US$1324 & now at US$1390)... The last time we had 8 down months in 9 was 14 years ago, where gold fell from US$300 in Sept 1998 to US$253 in July 1999. Over the next 3 months it rallied +0.16%, +16.4% & +0.30% back to US$300… (6) a big seasonally strong period is about to open up – the September Qtr tends to be an absolute boomer – in the last 5 years we’ve seen the Sept Qtr 2012 +10.60% & Sept ,Qtr 2011 +7.95%, Sept Qtr 2010 +5.11%., Sept Qtr 2009 +8.8% & Sept Qtr 2007 +15.23% (7) Since 2001 in the 12 Sept Qtrs – gold was up in 10 of them…
? This is the best 3 month period of the year is July through to September, with an average 3 month gain of about +14.2%. ? Seasonally, the best time to sell gold stock has been in late September, with the following 5 months October through to February bad months….
RMS Price at posting:
12.0¢ Sentiment: LT Buy Disclosure: Held
(20min delay)