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Randgold Resources Limited Message Board

  • investora2z investora2z Jul 20, 2013 8:32 AM Flag

    Next week will be important

    Randgold has rebounded about 16% from the recent lows, and the volumes have been 25-30% higher than the 3 month average. This is good considering the fact that the volumes during the fall in June were pretty high on several days. Now Gold is in striking distance of $1300, and any sustained move above that is likely to give another boost to the gold mining stocks. It may lead to a relatively stronger technical reaction. A part of that reaction has been seen over the last few trading sessions as some traders may be anticipating that move. The sentiments are still far from positive, and many traders remain negative about the outlook of the sector. However, several voices are coming in favor of better prospects for gold over the next few quarters. The cost of mining gold is higher than the existing gold prices. This will be true for a majority of the mines if the prices fall below $1200. As mentioned in a SA article, there are a few companies with expected lower cost, like the development stage company Pershing Gold (PGLC), but a dip below $1200 will force most of the major producers to cut production. Even RandGold has done that by reviewing all its operations and projects, and reducing the capex /opex. So a price below $1200 is not so easily sustainable. Further, as stated by many big investors, gold is expected to make a comeback if there is devaluation of the currencies. So while it may not be possible to change the sentiments decisively within a few weeks, the recent lows may not be easy to breach either. Marc Faber had stated that a 20% rise in gold prices could lead to doubling of select stocks. So some specific stocks could do better in case of a rebound. In case of a sustained rebound, it may be a stock picker's market for long term investors.

 
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