What I think about the goldies is very much dependent on what I think where the POG is heading and how close we are to
1) the Indian elections which start in about 2 weeks and end in mid May when the results will be known. A change of govt there could mean a USD100-150 gain in the POG (remember the POG really collapsed last year when India imposed a 10% customs tax and required that 20% of imported gold be re-exported (I think as jewelry), because they are expected to reduce/eliminate duties etc. There is a premium of around USD150/ounce that Indians pay for their gold over the USD price.
2) the release of quarterly reports - basically one needs to head for the hills around this time if we think the reports will be bad (eg PRU, SLR, SBM, KCN) etc even if the POG is not heading down
There seems to be a window of opportunity for the POG to stabilise ahead of the Indian elections, or at worst only fall around USD20-40.
If the POG does not hold and falls while US equities retrace rapidly down then the goldies will get hit fairly badly. The action of the GDX/GDXJ recently has been pretty weak, suggesting expectations of lower gold prices or just lower goldie prices.
The fly in the ointment is what is happening in China. This article has me worried - if things get bad there they may need to sell their gold and/or buy a lot less gold, although initially perhaps some of them may be switching money into gold that they may have spent on property (just my guess) - Chinese probably bought around 1800tonnes of the 4500 tonnes traded globally last year, and saved the market from falling near USD1000/ounce.
Asian/moslem demand is driving the underlying gold price, with westerners providing momentum for shorter bursts (like we had in the previous 2-3 weeks). If we can get some inflation in US than I would feel better - perhaps that will come by the end of 2014, also in Japan but not in Europe.
The SPDR Gold ETF has stopped losing its gold and gained back a few tonnes last week, so this source of supply of gold has been stemmed.
As for what I am doing, I bought some BDR on Thursday and was thinking about some others but thought they would fall further due the rebalancing of the ASX indexes. I am not sure if they will actually come down. I am looking to add some SBM, PRU and RSG for a trade (these are problem companies with upside). I may even buy some SLR for a trade. I would probably sell the non-core holding shortly before the quarterly reports are released, maybe its best to sell them just before Easter.
I want to hold my core holdings of EVR, TGZ, and some PRU, SBM, MML, GRY but I am willing to dump everything but EVR if the winds blows the wrong way.
I wonder if the fact that CNBC ran a positive report on gold last Friday is a signal to sell (actually this guy gets it right a bit more than 50% of the time so I take his trade ideas seriously)
http://video.cnbc.com/gallery/?video=3000259787
If it was not for my expectations of a positive effect from from the Indian elections I would be selling down the goldies by mid April, and not hold any pure explorers as any good news are just a reason to sell at a higher price.
Near term there would need to be some pretty extraordinarily positive news for goldies producers to move on an individual basis. This may exist in the case of SLR. I managed to get in ahead of some good news on TGZ and EVR in December/January but it is all now factored into their prices for now, and they will move up further on fundamentals if they achieve their targets even in the current POG - and that takes time. Perhaps MML is one goldie that could jump a fair bit on good news given past performance issues.
The high volume of many goldies both here and on the TSX on Friday is interesting - not sure if some of the higher prices will remain in the near future (eg KCN, which was weird).
(20min delay)