I have every trade in every gold stock, so I can easily compute net tick volume oriented money flow. The volume has been large as the public has piled in, but in spite of this little guy buying which has been going on for at least 6 months, the flow is net out. The public exuberance is being used to distribute shares. That's what price divergence from trend is all about. Meanhwile the gold stocks have taken off without gold. I guess gold stocks don't bullion. They just need the greater fools and they're coming in boatloads from Japan as we all know.
1. Public Exuberance supplied by what? What firms/TV stations have touted gold. NONE that I'm aware of. This volume is so low compared to what can/will happen if gold starts getting some serious coverage (not 1 or 2 analysts saying they are moving 5% into PM's). 2. My biggest point though, is how can this be distribution if Institutions have been building a position in Gold? It can't, plain and simple. 3. Gold has moved 15% since August, that is 15%. The miners are leveraged against the physical gold. Though their move has been huge compared with golds, it is to be expected. Unless gold breaks supportof 280 - 290, I don't think you will see the miners go down much. 4. The SA miners who are unhedged (gold) or getting their (drooy) are going to see more movement. 5. I can go on, but I'm sure you've seen most of the reasons. Peace and thanks for your opinions, stockalo
Gold was up 4.60 today. With avg price of gold over last QTR SA gold miners have very low valuations, HGMCY pe is under 8 for example.
Your greater fool theory is based on the assumption that the fundamentals do not support the stocks price. This is in fact not true. If given even a moderate PE of 15 many of these stocks would be 2 and 3 times their current trading price.
The gold stocks can go into the tank for months without hurting the gold uptrend. The basic environment is somewhat constructive for gold but not for any of the reasons paraded regularly here. One must remember that gold is also a commodity and so it's subject to emotional swings. In a bull market which I believe gold is in, unless you only buy and hold which I doubt most do here, you have to sell when things get so "hot". The right attitude is that if it goes back down and bases, you'll retake. You can't approach this as though it was an industrial stock. Because of the volatile nature of PMs you have to protect your psychology and your bullishness by selling. You have to sit and maybe watch your play go up and stay out. That's how you play a bull market. Of course, there is always buying and holding, if indeed, it is a bull market.