Morning Report Tuesday 13 January 2015
Identifying trades and investment opportunities is only half the game, we must also manage the position constantly and evaluate the evolving risk and reward. We bought the gold sector in late November and when I see financial journalists now discussing the merits of gold companies for 2015, after the recent significant strength, the cynic in me considers taking some profit!
• Since advocating buying gold stocks in late November 2013, the precious metal itself has rallied 9% (more in $A), Newcrest (NCM) has rallied 45% and Regis Resources (RRL) 56% - during the same period, the ASX200 is basically unchanged.
As I have mentioned previously, I believe the majority of market analysts are unfortunately motivated far more by not being wrong as opposed to being prepared to take a view (e.g. nobody predicting the massive plunge in oil prices). The consensus analysts’ view on the gold price is US$1,200/oz. hence adding to my confidence the precious metal can rally to $US1,400/oz.
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