re: What do you think/Alpha Hi Alpha,
Looking at LHG, it's clear that this is a stock that is highly leveraged to the POG irrespective of what is going on internally with the company itself. I'm sure you're aware of that anyway.
Perhaps a more important question then, is which way will POG go? Reading the tea leaves of the chart, it seems to me that POG is pretty close to good support at around US$309-310. At current levels, gold is still above the 200 day moving average (though below the 50 day MA) and above the long-term trend line which I have at around US$299 at the present time.
The danger would be that gold could drop to the next support at around 305-306 which would put it below the 200 day MA and implicate a testing of the 300 level which was last tested in early August. Even if this happened tomorrow it would still (just) be holding the long-term trend. A break below 299 would set up a lower low and would seriously threaten the long-term aspirations of gold in my view.
OK so what might make make POG weaker than it currently is? Given that last night the US dollar gapped up as gold dropped, we need to fear that a continuation of this trend might have some further negative implications for POG.
I suppose it really all depends on how long this bear market rally can hold out. Russell suggests (but does not necessarily believe) that it can run for 4-6 weeks at best. Even if it does, does that necessarily mean that the greenback will follow it up? I don't know.
Being the type of gold bug I am, I'd be surprised to see gold drop below 309, not far from where it is now and hence, reckon LHG or any other gold stock that follows POG, is probably not a bad buy.
AnnaP
LHG
unknown
