Gold targets, invalidation levels and the miners:
This is the daily line chart of Gold. We have shared this chart before. At the lows, we were not very confident of a clear bottom, but we went long anyway on the gold miners as we felt that the $3920 target purge was very close but never happened. Although not very obvious there was divergence between gold and DXY near the bottom. We will share the chart below. we have to be looking out for these divergence to build the case for a particular long or short idea. we have done a standard deviation projection of the lows. The 2.5 standard deviation is the q2 high around $4850. And the 4 standard deviation is the all time q1 high at around $5500. These are our potential liquidity targets. The invalidation level lies below $4300. If price goes below this, then the case for the bullish bias should be called into question and adjustments made depending on the market action at that time.
the chart compares Gold and DXY and we see a clear divergence with gold making new lows and the DXY making lower highs.. These divergences on the daily chart although can not be used as absolute can help solve the missing pieces of the puzzle.
These are the gold miners that we are interested in. Now as the gold price was going up, the bigger players like Newmont have outperformed and made new highs. But if Gold continues to rise, then the price of the juniors will start to go up. So on our radar, centerra gold came up and we are quite happy with it. So our recommendation for people who have no exposure to gold miners and wanting to have exposure should research centerra gold and coeur mining. Why Coeur mining you may ask- Because it will give the highest beta if gold continues to rise and it is also a significant copper producer and i do not think that the market prices that in.
Between Agnico Eagle and Newmont over the next 6 months which one would Muffett choose?. Muffett will choose Newmont and believe that even though Agnico Eagle have the best performing mines, it has no copper exposure where as Newmont ahs 30% exposure. Copper unlike gold has made new highs recently and we believe it will continue to go higher.
There is one more reason which will cause Newmont to outperform. This we keep it to ourselves and only friends of Muffett will have this access. You see we need to collect all available information and then attempt to connect the dots.
Muffett is travelling and is in Southern Europe. So we have taken the easiest post that can be made and posting it. Over nice glasses of Gin, Muffett will contemplate on what to write on the Part 2 of the core thesis.
All Analysis done in good faith and not investment advice.
May the Lord God bless you and give you peace.
