Taking a look at the gold price, yes it is down in almost every major currency. At the moment, its nothing to worry about, but a correction in gold and the mining shares has started. It could last a few days or longer, but eventually this mini correction will be done and we will most likely see higher prices soon. At mid day 1:30pm, I think we are close to the bottom on the Price of Gold POG and the mining shares. A good solid base needs to build from here before we can test the higher end of the trading range, it could take another day or 2 before the POG and Index starts moving up again. If not, we are stuck in a trading range for awhile.
We also, made a call late last week about KGN-T Keegan Resources and it moving higher this week. We predicted that if the $9.00 overhead was taken out, it would test the all time highs of about $9.30 or take it out. This morning, it traded as high as $9.59 making new all time highs on very strong volume, this is bullish action on the stock, especially on a day with the whole gold sector is down, at 1:30 the price is consolidating the breakout above $9.00 and is trading at $9.10. I mentioned in the Golden weekly review 09 12 2011, that some mining companies (Keegan included) will continue to make all time highs over the next month, even thou gold can sit and consolidate the higher price range we are in. Take a look at the 1 year chart of KGN below, its looking really good for a major breakout higher later this fall and early next year. If KGN continues to correct, I would start adding new positions in the mid $8.00 range if it every comes back to that price, which it could easily do in volatile markets. If you still have share and bought it under $8.00 earlier this summer, hold on to them for now.
2:00 PM update on PPI-V
Well, sometime we have winners and sometimes we have losers. PPI-V, a recommendation made over the last few weeks, became much cheaper because of new release questioning it's deposit size claim made in the marketing materials. While we knew there was no official 43-101 yet and it was coming soon, the BC securities agency decided to make PPI update is marketing materials to reflect that there is no resource calculation just yet. I think this is a temporary miscalculation by the management when it came to marketing materials but I did email the Investor relations guy for any possible explanation and will keep readers informed if anything materializes and we need to make adjustments on our holdings. It seems there was a disgruntled investor being very picky about the wording in the marketing materials. The company has complied with BCSC requests and is moving forward with releasing the 43-101 and trying to progress the project forward. We are still holding on to the shares we acquired and are watching the trading action over the next few days to see if this price dip was just a temporary setback.
3:00 PM update
This is an interesting development with the British Columbia Securities Commission (BCSC), they are getting hit with tons of claims to investigate. There seems to a lot of questions surrounding the quality of assets in China and there valuations, legitimacy and resource claims. Look at Sino-Forest, the stock is halted for a long period of time. The number of requests for reviews of companies listed in Vancouver to the BCSC is concerning for the whole mining sector in general. If things get really ugly in the markets, there may be calls for additional reviews of the claims made by mining companies, which will keep BCSC busy and the sector almost hostage by fear of which company is next on the review list. Unfortunately, this will lead to more bureaucracy, rules and regulations, something we will watch for over the coming weeks. Read article : Silvercorp says cooperating fully with BCSC investigation
4:15 PM update
Taking a look at the 1year chart of the TTGD index (S&P/TSX Global Gold) vs the TTFS index (S&P/TSX Capped Financials), we can see that the gold mining shares are holding up much better than the financials sector. While the TTFS financials index is sitting a 1 year lows, the TTGD Global Gold index was close to trading at the 52 week high made last week. While we expect some continued sideways action in the TTGD Global Gold index, support should come in at 420 over the next few days. In fact we may have seen this weeks low today at 426 and we could easily test the upper side of the range at 455. Later next week or the following week, we suspect the TTGD global gold index could reach a new high and trading range of 480, this could mean another 10-20% increase in the quality gold mining stock, something we will watch the development of over the next few weeks. I would suggest looking at exiting trading positions in our favorite stocks over the next few weeks, we should have a better opportunity to buy back the trading position later this fall.