AFRICANEWSWIRE.NET (August, 18 2012) In a recent Penny Stock Detectives s/great-values-developing-as-gold-bull-market-soon-to-resume">article, editor Mitchell Clark argues that while spot gold has been consolidating over the last nine months, it will soon resume its upward trend, based on declining expectations for the U.S. dollar. Clark notes that there is a lot of good value developing in mining stocks today, particularly in gold.
“Mining stocks across the board have felt the consolidation in gold prices and other precious metals,” observes Clark. “A lot of really good mining companies with strong fundamentals have seen their stock prices take a hit.”
According to Clark, a good example of this is Argonaut Gold. The company is producing solid financial and production growth, but because of the spot price correction, it can’t get its share price moving, he says.
Earlier this year, this stock had a lot of price momentum, and the position hit a high of $10.20 per share, Clark reports. But even though the company’s financial and production outlooks remain strong, he continues, the stock corrected to a recent low of around $6.50 per share as spot gold drifted. Like a lot of other mining stocks, the position bounced back to the $9.00 per share level, then consolidated again, notes Clark.
In Clark’s opinion, silver mining companies are also underperforming and spot silver should move commensurately higher with gold prices going into 2013.
“Mining stocks move with the underlying commodity, and this is a certainty,” says Clark. “Value and great trading opportunities are created when the disparity between the mining companies’ operations and the spot price become too great.”
As a general trend, Clark notes that his experience suggests that the stock market overdoes the price action in mining stocks (both to the upside and downside). Institutional investors will speculate in mining stocks, but not for very long; they follow a herd mentality in mining stocks and will abandon the sector more quickly than getting in, believes Clark.
According to the Penny Stock Detectives editor, spot gold is actually holding up very well. Gold prices hit their highs about this time last year and have been going virtually straight up since late 2008, he observes. Clark believes a price correction was long overdue, and this is contributing to the duration of the current consolidation. Good values are now developing in gold mining stocks, concludes Clark, predicting the bull market in gold will soon resume.
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