Thursday, September 8, 2011

Gold Stocks Hold Their Ground (& Gap Filled)

Despite a sell off in the price of Gold, which occurred before and during US trade overnight, the precious metal stocks managed to drift higher after starting the day under their breakout points.

Gold is currently trading at $1818, around $55 lower than the NY close yesterday of $1873.

I spoke recently about the breakout to new highs in both the GDX and HUI. These levels were 64 for the GDX and 610 for the HUI. Early in trade the miners opened and traded below these points, however were pulled higher by a buoyant market (Dow Jones, S&P 500 & Nasdaq all closing 2.5-3% higher). 

I am encouraged by the action in the miners, there was heavy volume into the close on the GDX (perhaps indicating traders don't want to get caught without positions in case Gold moves higher), also the gap left on the charts for both HUI and the GDX were closed.



In other news and specifically relating to a company held in the Bullion Baron Fantasy Portfolio, Silver Lake Resources (ASX: SLR) released an announcement yesterday showing some very impressive Copper grades:
Drill hole 11HODD004 intersected ~2 metres of massive sulphide at approximately 96 metres depth and ~0.8 metres of massive sulphide at approximately 110 metres depth. Handheld Niton1 XRF analysis recorded a range of 6% to 30% Cu in the massive sulphide zones.
Can't help but wonder whether prior knowledge of this release might have been the key driver of a 7.5% move higher into the close (announcement was released after close of trade). Market reaction to this news today should be interesting, will the market start to price in the potential for a high grade Copper deposit?


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