oxiana gold, page-3

More on the Ox from ABN AMRO...


Gold up some more, OXR looking good technically… keep buying and stay long for a re-test of previous highs at $4.30.

The US economy is once again looking pretty shaky after continued weak economic data indicates that the Fed may continue to cut rates to try and keep the economy going. Bernanke’s comments overnight seem to support this view that rates are going down. This will lead to a fall in the US dollar and increasing demand for gold. Last week saw international gold stocks stage a big rally, which was followed by more buying. OXR is one that has not staged a big rally but is starting to look good. OXR has significantly underperformed NCM and LGL of late.

The chart above demonstrates the underperformance experienced by OXR compared to NCM and LGL. This is unjustified in our view and OXR has some catching up to do.

Given the recent rally in the gold price close to $900/oz… and with more upside expected, OXR looks like a great place to be putting some money at the moment, especially given the performance of other gold stocks. Having said this we are also happy to be long other gold stocks to play the overall long gold theme.