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Pershing Gold Corporation Message Board

  • investora2z investora2z Jul 20, 2013 9:23 AM Flag

    Gold near crucial hurdles

    After the recent bounce, most gold stocks are 15-20% above the recent lows. The price of gold has appreciated by about 7-8% from the lows. Gold is now close to crucial hurdles (~$1300), and the stocks have perhaps moved in anticipation of a move beyond that. A sustained move above these levels may lead to an even stronger reaction in the mining stocks. The big names have also done well, with some of the stocks moving even 25% from the lows. Marc Faber had stated recently that a 20% rise in gold prices would lead to doubling of select stocks. So far that ratio has not been achieved in any stock, but the stocks have surely moved much more strongly than the gold prices. More voices are being heard in support of better prospects of gold, but the sentiment is still bearish. It will require several weeks of stability for increasing the confidence. Many analysts have pointed out that the cost of mining is higher than the existing price of gold, and hence lower prices would lead to reduction in production / lower supplies. That would lead to automatic adjustments in prices, and hence it may not be easy for the prices to go much below the recent lows. However, it is always good to be cautious. Some legendary investors are expecting stability in gold due to ultimate devaluation of the currencies. There was another article on SA which stated that next few quarters may turn out to be better for precious metals. The author had mentioned that the large net long positions by banks in both gold and silver indicated that they have a growing interest at these levels. He mentioned that these were the largest net long positions since 4Q 2001 when gold was $270/oz. For Pershing Gold, the recent purchases by Honig definitely provide some positive indications.

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