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Gold stocks continue to disappoint

The recent major rally in gold is now experiencing a correction, so it is time to take a look at how gold stocks compared to a number of other gold trading vehicles.

The market dynamics that sent gold past $1800

Given that gold has hit our target of $1800 we feel it is appropriate to review our outlook on the gold market, the state of key factors that influence gold prices and possible trading strategies going forward.

Are gold stocks the real barbarous relic?

In 1924 John Maynard Keynes referred to the gold standard as a “barbarous relic”, but we think the new barbarous relic is using gold stocks as a trading or investment vehicle in an attempt to benefit from rising gold prices.

The downside to gold is limited

Despite some calling for an explosive summer rally in gold, prices fell again this week on the back of easing concerns over Greek sovereign debt as the Greek parliament successfully passed the austerity legislation required to access additional bailout funds.

Think silver has gone parabolic? 1980 was 5 times faster!

Asset price bubbles have occurred since the beginning of financial markets and will continue to do so as long as there remains a marketplace for assets to be traded. A key property of a bubble is that is it near impossible to identify with certainty before it pops, but once it does pop the bubble is apparently obvious to everyone. In our opinion, only those who risk capital and profit betting against a bubble can claim to have correctly identified one.
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Gold seasonality: can we can profit from it?

Seasonality is observable in a wide variety of variables. In business, sales, production, inventory, man hours and the best time to discount can be at least partially predicted by seasonal effects. Gold is no different.