Memorial Archives

Gold Sector Update
posted Jan 20, 2005 at 09:31PM


I remain mostly out of the market with high levels of cash. My concern is that paper equities may be fighting a deflationary atmosphere. In the long term I remain convinced that energies and gold will be the place to be

Weekly Chart

Just doodling. It is just interesting to see how previous peaks become nominal support lines in subsequent corrections. Here the big strategic number is 430, which represnts the previous triple break-out point, but which was subsequently broken to the downside. It would take some consecutive closes over 430 to really start talking confidently about the bull being back

If it happened, buying at the 400 level would have a lot of technical arguments going for it. Oversold, with obvious support lines. From EWA perspective you would have 5 waves down complete, so at the least one would get a tradable bounce. Breaking the 200dma would get a lot of sellers out of the way.

But like I said..that is "if".

Convergence of moving averages usually implies a strong move in one direction or the other.

If this is an impulsive wave then some degree of wave 3 should be, or will shortly be, getting underway. Any close over 85 would confirm that.

Stock Pumping.

The only stock that I have any kind of buy and hold mentality right now is Cochrane Oil, a sub-dollar oil sands play.

A brief overview can be had by reading, Connacher Updates 2005 Activity.

In my estimation the key value to be found here is,

"Connacher was also successful in acquiring, at low cost, an additional 100 percent working interest in 18
sections (11,520 acres) of oil sands leases at the December 15, 2004 Alberta Crown Sale. This brought
the company's total holdings at Great Divide to a 100 percent working interest in 101 sections (64,640
acres). At that sale, the top price paid for nearby acreage exceeded $2,300 per acre, almost double the
previous high price paid for lands in the area in October, 2004."

A back of the envelope calculation gives $1.60 plus value for the land alone, assuming they got similar prices.

As well,

"Upon receipt of regulatory approval, Connacher would expect to commence a 10,000 bbl/d project in 2006."

That gives something nice to look forward to.

Anyways, if there is any truth to the Middle East hitting peak production, or Saudi Arabia starting to get a lot of water in their pumps, then oils sands will, (and already have) attract a lot of attention. And that's just it...if you are looking for potential percentage gains then a lot of the low hanging fruit in the sector has been picked. (Indeed I am short term bearish on the sector)

So something you may want to keep a track of. Daily and Weekly charts are below. Outside of support of the 50dma, not an optimum buy position..but it is coming close to breaking some key resistance trend-lines.

Additional Disclaimer:. I currently own this stock. I am completely biased on its future performance. I would love everyone in the world to buy this stock..tommorrow would be great and drive the price so high so that when I sell my stock I can afford an enjoyable lifestyle which includes luxury sports cars, powerful hand-guns and bevy of stunningly beautiful women with heaving breasts and low cut dresses.

I.E. Caveat Emptor.

Bullet Bullet Bullet