Gold Stocks On The Move
Brad KoteshwarWhat is old news? It is that gold is in an uptrend. Everybody now knows it and wants to be a player. What about gold stocks? Yes, that is also old news. The move is definitely on. Many times when the move is definitely on and the trend is strong a reaction comes about. On the other hand, many times a further strong move takes place after the move has definitely been started. What looks good? This is a question asked often. The move is on. Folks want to be in on the move. But what to buy and when to buy? That is the tricky question.
The GoldCorps and the Royal Golds of the Gold Stocks group have become houshold names. The funds are buying gold and gold stocks. Talk is about $850 gold and then $1000 gold prices to come soon. The wild bulls are predicting even $2000 gold prices and beyond. I tend to be a little careful in making predictions because it, more often than not, tends to make folks to get fixated on a price potential that may or may not come about. Wish becomes the father of the thought...which has been the downfall of many a great trader.
I prefer to look at charts and let the price/volume action show me the picture. So, I checked for some low priced gold stocks which have shown interesting price/volume action over the past few months and I came up with Northgate Minerals (NXG). Below is a 10-year yearly chart of Northgate Minerals.
The picture is clear to even to the uninitiated. The move is on. How to trade it effectively? Everybody has a different take. My view is to buy the stock only if it clears to new highs at $4.93 with a stop-loss at $3.99 to protect me if I am wrong. Time makes money and sitting with a holding through reactions and shakeouts makes the big bucks. It takes enormous conviction and patience to work with a trending market. To sit through shakeouts, one must be willing to place a stop far enough below a trending stock so that any single reaction will not take out the position.
May 14, 2006
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