Tuesday, December 22, 2009

All In on Gold Stocks

Dry powder is now spent on the spike lower in Gold below $1080. I thought the bottom was in, but I was wrong (again). Just got all in on Gold stocks. Now holding long-term options on the new GDXJ junior mining ETF, Goldcorp (ticker: GG) and Royal Gold (ticker: RGLD) as well as a basket of individual junior Gold mining stocks. Yesterday was not too bad of a day for me because a few of my junior Gold miners had significant up days despite the down day for the price of Gold.

Here are a few examples thru yesterday's close demonstrating how well some stocks have held up thru this correction. Following are 12 day intraday 15 minute charts thru yesterday's close to show how well these miners have weathered the Gold correction, which started the same day these charts begin (December 4th). First up, Paramount Gold and Silver (ticker: PZG):

Next, Richmont Mines (ticker: RIC):

Great Basin Gold (ticker: GBG):

Northern Dynasty Minerals (ticker: NAK):

Lastly is Rainy River (ticker: RR.V), which I am not as happy about since I had liquidity issues on this one when I went to sell it. I still hold 5% of my shares in this one since they failed to sell at my limit price.

These stocks, which are all flat or up over the past 12 days, have helped me weather the Gold stock correction. I am also seeing a nice divergence between Goldcorp (ticker: GG) and the Gold price here. Following is a 4 day intraday 15 minute chart thru part of today's action to show it:

I wish I could get bearish here (sorry, Dacian), but I get more and more bullish as prices go down. I took profits and sold protective calls just before the plunge and now these profits (as well as money from my most recent paycheck) have all been re-deployed at lower prices. When I look at a weekly Gold chart I see 4 weekly red candles. That should be enough to end the Gold correction.

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