ShareProphets favourite technical analyst Jordan Roy-Byrne has been a bit of a hero over the last few months, correctly calling the gold price higher and higher. But he seems to be getting a little nervous as the yellow metal continues its surge towards $1550 per ounce. He has noted that the gold market tends to look overbought in large moves and still continue higher but having moved from below $1300 at the end of May to the current mark of $1523 (last seen) he sees near term risk increasing the closer we move to $1500, according to his latest free column on Thedailygold.com. His long term view remains ultra-bullish on a multi-decade view, but there does seem to be some risk of a wobble or two if and when we get to $1525-1550 per ounce in the short term.
Nothing is certain, of course, but the reasons for the re-emergence of gold - which is really some way from hitting the headlines (which suggests to me there is still some way to go here) - are pretty clear: a global slowdown in growth, the trade war, falling interest rates, negative yields on government bonds…..it is a long list. And whilst it is not yet near its all-time high against the US dollar, against almost all other currencies it is at all-time highs. It may be blue skies going up, but there will be a correction at some point. Jordan advises that now is perhaps not the time for aggressive bets on gold or the senior gold stocks which could be hit hard if there is a correction, although he notes that silver and junior mining stocks are not as extended. For my part - and this is certainly not a formal tip! - I take the view that we’ve had a great run and perhaps a bit of trimming will be needed as we head seemingly inexorably to the $1550 per ounce mark.
My recent play in Centamin (CEY) has worked out brilliantly (thanks again Gary Newman!). I don’t know what Gary thinks now, but I will be showing a few more in the shop window if we get anywhere near the 150p mark – and with gold again marking highs not seen since 2013 that could well be very soon. I also had a dabble with the Junior Gold unit trust. This is a volatile affair but when it performs it really performs. I am nicely up here too and am tempted to say thank you very much for now – but there is a small caveat that it has some exposure to silver which although it has performed, the rise is quite a way behind that of gold. The case to sell here is perhaps less clear-cut but if the precious metals keep on going then I will wield the knife in the hope of getting back in after a correction. My biggest holding, and the one formal tip, Ariana (AAU) has not yet rediscovered the form which saw its move to a shade over 2.5p - a point at which I have formally advised another top-slice - and slid back down to 2p when I said buy again. We are now about halfway between the two and I hope that the next quarterly report (due any day) as well as a stack of drilling results and more clarity over production levels will arrive soon and get the shares back over the 2.5p mark so I can offload a few once again. Blackrock Gold & General unit trust has produced the goods but I will leave that one alone for now, whilst I said before that I was looking for 15p from Pan African (PAF) and we are now toying with 14p. One more small push and I will happily sell some.
Whilst gold may not be to everyone’s taste I do believe that investors should have some exposure. The recommended mark is perhaps around 5% although mine is far higher than that (and rising fast). With all manner of reasons to expect gold to continue to perform I will be keeping the vast majority of my gold stocks where they are, but will be looking to cash in on a few bits over the next few days. After all, the insurance policy is great but it is no good if you can’t enjoy the proceeds! In other words my personal view is that it is time to get the pruning shears out to put a little aside for any bargains that come up in a correction, which - granted - may or may not happen soon. But either way, get a little cash in the bank.
Woodford revolutionary washing machine cash-hungry dog Xeros announces an attempted related party fundraise as predicted. So much for the Going Concern – it’s Ouzo for breakfast. Read more from Nigel Somerville, the Deputy Sheriff of AIM, HERE
Filed under: Gold, Nigel Somerville, Lucian Miers, Burford, Napo, Muddy Waters, Bermele, Xeros
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