| may 27 2007 | | Barrick Gold Corp. | Instead of just offering my tips on MSN I thought I would put one up here for a wider audience and where I can go into more detail.
Barrick Gold ABX on the TSX is a compulsive buy at this level based on fundamental and technical grounds.
First the numbers. 27.2 billion dollar company. 52 week range CS29.68 – C$38.11
Closed Friday C$31.16
Support at C$30.75 next major support C$29.68
Technical’s indicate share price falling on decreasing volume.
Stochastic oscillator indicates oversold.
On balance volume indicates near term accumulation.
Fundamentals include the recent acquisition of Placer Dome and Atacama Copper which are being absorbed and will be a drag on the company near term.
Barrack paid C$557M to exit its hedge-book completely. This will be a major consideration going forward. Barrack produces gold at C$313 per ounce and now sell it at spot US$655.20 per ounce an enormous change. The copper it produces is an added bonus.
If you believe, as I do, that the US Dollar is in a multi-year decline, then gold will continue to increase because of the inverse relationship they have. Also, as with oil, production world wide has peaked and is decreasing down 8% last year. Gold is therefore a one way bet for around ten years out. That is not to say there won’t be fluctuations and trading opportunities. These become more exaggerated as the price increases for obvious reasons. A precipitous drop can be expected with any default in the general markets as assets are liquidated to cover positions. Even so, those with a longer time horizon will weather such temporary blips.
This price is a good entry level. Market timing is impossible, this level represents good value and although Barrick could continue to drift lower for a while it will soon be back.
First exit would be C$33 which should happen within two months for a 6% return. When resistance at C$33 is broken it becomes support and C$34 is the next resistance for an exit of 9%. This stock can be traded or held for the long term.
I will be placing an order for 150 shares on the open Monday 28th May at market price.
I will continue to update this topic so we can monitor progress.
Just to reiterate the warning on the Home page. Any financial comment should not be construed as a recommendation to use for the basis of any investment decision. Please do your due diligence. Remember playing the stock market is gambling and you should only risk funds you are willing to lose some or all of. If you are like me you enjoy the game for itself. The money is an added bonus.
The Source adds: may 28 2007
got filled this morning at C$31.30
ABX closed today C$31.37
The Source adds: june 9 2007
Although nothing has happened in the market, except noise, I thought I would comment on the past 13 days.
Gold spot closed Friday $645.60 if it drops lower it will present major buying opportunities of the index and individual stocks.
ABX closed $29.98 still above a major support level. Including costs I am down 5.5% if it is knocked lower by the general market I will double up.
Bear in mind this happened while the markets were in a funk following an 8% drop in the Chinese stock exchange and a 400 point drift in the DOW. I think gold held up well. Expect more volatility in the markets with bonds reasserting their authority.
I will add further when there is real news.
The Source adds: june 29 2007
ABX closed Friday $30.98
Gold tested $640 and was predicted to slip into the chasm. What a week, more trouble in the Chinese stock market(bubble) and Bear Stearns hedge funds going belly up. Their CDO’s are valued based on the ‘marked to market’ scam where they decide the value of the product. The bail-out begins behind the scenes. This is the beginning of the melt down in the derivatives market. As Buffet called them “financial weapons of mass destruction”. The Spanish and Swiss central banks are intending to make gold reserve sales into the market, as well as the World Bank who want to sell the gold on deposit by their members. This money can be used to support the falling dollar. Germany has said it won’t make any sales as this will compensate for the swings in the dollar. Wow the Krauts are astute. Taking all this news into account I think overall gold held up really well. Don’t forget in any financial liquidity shock gold will drop with all easily cashable instruments. But will recover when confidence is lost in alternative havens. There is no industrial nation whose countries money supply is not being inflated at less than 10% per year. What goes up must come down and then where will the flight to safety take people. In conclusion gold may still drop down which would create a brilliant entry point but in light of the impossible task of trying to time markets it is best to stay invested as any spike in the POG would be missed. Long term the dollar is going down and gold is going up. As Peter Grandich, one of the commentators I respect, has always said “the only party that doesn’t know the dollar is dead, is the dollar”. The other parties involved in keeping it on life support are the Fed in concert with central banks that have a vested interest in managing an orderly decline in its value. They are caught in a catch twenty-two as they watch the value of their reserves decline but are unable to sell. Doesn’t say much for their steward-ship of their people’s money and future. depends if you believe they are there to safe-guard their peoples or other vested interests?
The Source adds: july 06 2007.
ABX close Friday $32.16
Gold closed $652
We are in the money.
Great news released this week that Newmont is taking a huge hit to close their hedge book. This shows enormous confidence in the POG going forward.
Once again the USD Index is heading towards 80 or more accurately 80.39 you can bet your last dollar that the PPT will be working behinds the scenes to defy gravity.
The US Statistics Dept. again thunk up some well massaged figures that pleased the markets.
No banks failed, so all in all an uneventful week.
I thought I heard the bell rung for the bottom for gold this week. Let’s see if it takes off from here.
The Source adds: july 10 2007
ABX closed today $33.06
We have reached my first target exit price in only 31 trading days. Reporting will end on this stock. Hope you made some money.
I am staying in for further profits but will need to move stops up to protect gains.
I will be looking for my next stock to tip, in the mean time enjoy your trading.
The Source adds: july 24 2007
Epilogue: got stopped out today at C$35.50
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