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This coming week is the week to buy Gold Stocks but first let me give you the reasons why buying Gold continues to be a good investment "at this time".
1) The Fed is going to allow inflation to rise above the 2% threshold it previously had. Inflation always raises the value of Gold.
2) The dollar has been weakening and at this time there is no reason to think it will strengthen. Debt deficit continue to rise. Weak dollar automatically raises value of Gold in dollars.
3) Election insecurity regarding where to safely invest money is occurring. Gold has always been a tangible and reliable asset to own.
4) Chart action with Gold having made a new all-time high a few months ago and now at previous 2011 high, suggests this is the best "time" to buy. Risk/reward ratio totally in favor of the buyers.
Having said that, let me be specific with you and give you one potential Gold stock to purchase this week. This is my own personal opinion (on the stock chosen) but I have been trading this stock for over a year and not only know it well but have been successful trading it.
Last but not least, I am offering you this information for your potential benefit alone. I get no personal benefit to myself in giving you this information other than perhaps raising my value to you as a stock analyst. Even then, I am not expecting anyone from this site to become a subscriber, so in essence, I am doing this with the express intent of giving you a benefit. After 2 years of being here and posting, this board has become a secondary home to me.
AU is the stock. It is a large Gold mining company.
The stock closed on Friday at 26.65. The all-time high is 62.20, the 8-year high, made 10-weeks ago is 38.50. The 26-week low is 23.82 and the 8-week low is 24.35.
The stock is likely to go a bit lower this week with what I consider a likely move down to 25.85. A purchase anywhere close to that price and using a stop loss at 24.25 will offer a risk of $1.60 per share. The chart suggests that the 24.35 low will not be broken. Nonetheless, if you want to give yourself a bit more security as far as a stop loss is concerned, you could place the stop loss at 23.67 ($.15 cents below the 23.82 low, which is the 26 week low). Evidently, if that low gets broken, there are problems with the stock and more importantly with Gold. I cannot see that happening due to the current circumstances.
The upside objective (based on the charts) is a minimum rally to test the recent high at 38.50, meaning a rally at least up to the 37.50 level is likely to occur. In this scenario and if purchased around the $26 level, it would mean you could be looking to make around $11.50-$12.50 per share and risking either $1.50 or at most about $2.50 per share, which turns out to be a minimum risk/reward ratio of 4.6-1 to a max of 7.8-1. That is anywhere from 4-8 times profit versus the amount of risk you are taking.
Nonetheless, let me go one step further. It has been stated by experts in the Gold industry that Gold will reach $2300 sometime next year (above the recent $2084 high). If that is the case (and I believe it will be), it means that AU will get above the 38.50 high and given there is no resistance on the chart above that level until the $47-$50 level, it could mean that this trade could turn out to offer a profit of as much as $24 per share profit for a risk of a max of $2.50 per share, meaning a 9-1 risk/reward ratio.
That is the viable chart scenario that I see. Take it for whatever you think it can be to you.
Good Luck
1) The Fed is going to allow inflation to rise above the 2% threshold it previously had. Inflation always raises the value of Gold.
2) The dollar has been weakening and at this time there is no reason to think it will strengthen. Debt deficit continue to rise. Weak dollar automatically raises value of Gold in dollars.
3) Election insecurity regarding where to safely invest money is occurring. Gold has always been a tangible and reliable asset to own.
4) Chart action with Gold having made a new all-time high a few months ago and now at previous 2011 high, suggests this is the best "time" to buy. Risk/reward ratio totally in favor of the buyers.
Having said that, let me be specific with you and give you one potential Gold stock to purchase this week. This is my own personal opinion (on the stock chosen) but I have been trading this stock for over a year and not only know it well but have been successful trading it.
Last but not least, I am offering you this information for your potential benefit alone. I get no personal benefit to myself in giving you this information other than perhaps raising my value to you as a stock analyst. Even then, I am not expecting anyone from this site to become a subscriber, so in essence, I am doing this with the express intent of giving you a benefit. After 2 years of being here and posting, this board has become a secondary home to me.
AU is the stock. It is a large Gold mining company.
The stock closed on Friday at 26.65. The all-time high is 62.20, the 8-year high, made 10-weeks ago is 38.50. The 26-week low is 23.82 and the 8-week low is 24.35.
The stock is likely to go a bit lower this week with what I consider a likely move down to 25.85. A purchase anywhere close to that price and using a stop loss at 24.25 will offer a risk of $1.60 per share. The chart suggests that the 24.35 low will not be broken. Nonetheless, if you want to give yourself a bit more security as far as a stop loss is concerned, you could place the stop loss at 23.67 ($.15 cents below the 23.82 low, which is the 26 week low). Evidently, if that low gets broken, there are problems with the stock and more importantly with Gold. I cannot see that happening due to the current circumstances.
The upside objective (based on the charts) is a minimum rally to test the recent high at 38.50, meaning a rally at least up to the 37.50 level is likely to occur. In this scenario and if purchased around the $26 level, it would mean you could be looking to make around $11.50-$12.50 per share and risking either $1.50 or at most about $2.50 per share, which turns out to be a minimum risk/reward ratio of 4.6-1 to a max of 7.8-1. That is anywhere from 4-8 times profit versus the amount of risk you are taking.
Nonetheless, let me go one step further. It has been stated by experts in the Gold industry that Gold will reach $2300 sometime next year (above the recent $2084 high). If that is the case (and I believe it will be), it means that AU will get above the 38.50 high and given there is no resistance on the chart above that level until the $47-$50 level, it could mean that this trade could turn out to offer a profit of as much as $24 per share profit for a risk of a max of $2.50 per share, meaning a 9-1 risk/reward ratio.
That is the viable chart scenario that I see. Take it for whatever you think it can be to you.
Good Luck
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