Hated Gold Stocks May Present an Opportunity


Author Larry Berman

Posted: 4 May 2012 re-posted from etfcm

It’s amazing how hated gold stocks are. History has taught us that when valuations are cheap and a sector is hated, it is time to back up the truck. The only major challenge to this thinking is that when we look at fundamental analysts targets on the sector 12-18 months out, most are 50-100% higher than current levels. Sadly, in many cases, that would not take the sector to new highs.

In the past 2 days, it appears we were right on the money with the energy sector bounce being on very weak footing. We expect another test of the recent lows for XEG before we would consider buying them back. We have also exited our long trading position on the XIU, but given the oversold nature of the key sectors of the TSX, shorting the market with HIX does not make as much sense at 12,000 as it does at 12,500 looking out over the balance of the year. We see 11,000 to 12,500 as the range and we’re not sure it goes as low as 11,000.

 

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Comments

  1. Very usefull blog. i will follow this blog. keep up the good work. 402401

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