Gold stocks have fallen 20% from recent highs

My cautious views about chasing the gold price had merit and today (albeit my timing was off by a month) are justified as the reward didn’t out-stack the risk being taken of being long Gold and gold stocks following what I viewed as the “fat part of the trade” was already had and the tail was wagging during a euphoric move driven my media and the herd.

In other words, my work suggested that initiating a long position in May, June or July was a marginal proposition.

Now, ASX listed gold stocks are 20% below their recent highs, but more interestingly some are trading at the same price seen in January, February or March of 2020.

If you are a “trader” and you managed to “pick the eyes” out of the peaks and trough, I’m certainly pleased for you but as an investor, that’s not my bag.

As prices in gold securities continue to make weekly lower highs and lower lows, over the weekend, clients will be receiving my entry price suggestions for selected stocks at the lower end of this mean reversion and trend correction.

I’ll continue to post notes on various assets and securities when I see extremes (at either end) of price action or sentiment.

August 28, 2020

by Rob Zdravevski

rob@karriasset.com.au

 

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