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Gold Mining Stocks Benefit From Stabilizing Equity Markets

Aug 5, 2008
Gold Mining Stocks - With the Stock Market Panic behind us - for now - we are settling in for a range bound, relatively calm, second half of '08. Gold Mining Stocks should finally start to benefit as the wet blanket smothering equity markets lift.

The New York Stock Exchange indicator for new lows reached an extreme of 1304 on Tuesday the 15th of July. That was even worse than the 1100 new lows reached on the 22nd of January. Such extremes spell one thing P-A-N-I-C.

Whilst it's difficult to infer any far reaching conclusions about one day sell-offs, even panics, the odds now favour a bounce in very oversold equity markets. As for how high and how long the stock market will bounce is anyone's guess, but here again, probabilities favour the market to move higher and longer than anyone expects so that sentiment indicators return to their old complacent Bullish state!

What will work during this period of 'relative' calm?

We had noticed a very definite flight to safety since market volatility began in October '07.

Firstly, a flight away from common Dow stocks to Gold Mining Stocks because gold is seen as world wide currency which is more secure that worthless paper money. The Dow stocks have slowly been decreasing in value for the past year as gold mining stocks have been increasing in value overall. Gold stocks is were the smart money is moving into.

Within the Gold market this has manifested itself as a flight to bullion and away from Gold Mining Stocks. Yes money had been moving gold stocks higher but the majority of gold investors are buying bullion or the gold bullion etf (actual gold bars) because it currently has lower risk than trading gold mining stocks. So gold bullion and the gold bullion etf's have been out performing the price of gold mining stocks for the past year even thought both Gold and gold stocks have increased in value.

Now that there is a good chance equity markets will stabilize, the above trends will moderate and reverse. This means Junior Gold stocks prices should begin closing the valuation gap and discounting higher earnings based on $900+ Gold.

The remainder of 2008 looks set to be very bullish for Gold Stocks and Gold Stock Juniors in particular!

Often the conventional wisdom is to stay invested in the stock market and in real estate. But millions of investors following that often-touted strategy have seen their portfolios drop by half or more. "Investors everywhere have had it with staying the course only to see their life savings disappear. That's one of the key reasons highly profitable gold and oil are becoming the investor's choice for the 21st Century,".

The service is designed for active traders who insist on a conservative approach to investing. He uses the GLD Gold exchange which allows for very accurate signals when used along with the price of gold, HUI, USD and gold stocks price action. "Over the years I've found these factors used with expert analysis deliver extremely impressive yields,".

But perhaps best of all, my strategy is clear and simple to learn and use. My strategy makes your trades extremely accurate with very little downside risk.

In the current business climate where investors are quite enthusiastic about trading gold and oil, it is easy for trading advisory services to advance very risky recommendations.

Unfortunately many of their subscribers lose big.

I insist on moving conservatively. My subscribers make 8 to 12 trades per year with very little downside risk. But the potential is tremendous.

I began trading gold mining stocks and oil a decade ago, gradually refining my trading methods to achieve remarkable results. Now that gold mining stocks and oil are the hottest investment available, traders have to be careful they aren't getting advice from someone who just recently got into the game. Gold stocks and oil is not a get rich quick path for those who aren't willing to use a sound method and analysis.

Gold Mining Stocks, More commentary and stock picks follow for subscribers...
About the Author
Chris Vermeulen is a trader and newsletter writer specializing in the price of gold mining stocks, gold ETF, oil stocks, oil etf, silver stocks, Junior Mining and Energy Stocks listed in the US, Canada and Australia. Please visit my website for more information. www.TheGoldAndOilGuy.com
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