I like NEM and PAAS

[Dan Mezick]

The price of gold has declined about 30 dollars in about 30 days.

Gold stocks have not been immune, and have been beat up pretty good.

The pre-eminent gold stock is NEM. It's the one the mutuals buy, and it's a proxy for the entire gold sector. It has huge volume and is widely held.

NEM has fallen from 50 to the 41 area and sits squarely on a multi-year trendline.

As of 1/9/2005 I like NEM in the 41 area with a (tight) protective stop in 2 points below, at 39.

If it violates the trendline, the loss is around 5%. If the price bounces from here the odds are good for a run past 50.

The entire gold sector has been very beat up of late. If you are a trend-following believer, NEM may be as low as it will be for some time, based on it's trendline.

On the negative side, the oscillators are not particularly healthly and any trade to the long side may be considered speculative at this time.

Most of the above also applies to PAAS, my favored stock in the Silver sector.

Chart of NEM

Chart of PAAS

You are responsible for your own 'due diligence'.

(You know that.)

[AceHigh]

I think Greenspan raising interest rates will strengthen the dollar against other currencies and against gold so I wouldn't be buying gold at this time.

[Dan Mezick]

My views are based on the gold chart, specifically the 5-year trend. Gold at 420 sits on the support of a 5-yr trendline.

Trend followers either get on at the start (rare) or pick on entry point along an existing trend.

420 gold is a pretty good place to consider for entry, along the 5-yr trendline.

Gold is in an unmistakeable long-term uptrend.


You can view the 5-yr gold chart below:

5-Year GOLD chart