One Robin Does Not Make a Spring

Gold Stock Analyst (12/09/2009)
"We said in the November Mid-month Update we expected a pullback of 4% to 5%, to make the fifth in Gold's run higher since the low $900s in July-2009.

On Friday, December 4, we got the pullback. From its $1,205 open, Gold fell all the way to $1,148/oz, and then rallied to close at $1162, a decline of -3.6% for day and down–5.2% from the all time $1,226 high.

This action is completely in line with the prior four pullbacks. We don't pretend to be technical analysts, but even we know that: 1) Nothing goes up forever and pullbacks are healthy to create a staging area for the next leg higher. 2) Trendlines are far from being broken. 3) Gold investors have big profits for 2009; many have had a trigger finger on the 'sell' button to lock them in and were just waiting for a reason.

The cause (an early 'robin') was a better-than-expected November U.S. unemployment report, that saw the jobless rate fall from 10.2% to 10.0%. We are all for getting out of the current deep recession and seeing as many 'green shoots' as possible. But this report actually showed little improvement because the labor force shrank by 98K jobs and 291K more people elected not to be in the labor force; the two combined to account for much of the percentage decline."

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