Gold has had a short term rally over the last 2 weeks. Is the commodity going to sustain its momentum? I suggest not. I think it will fall back and consolidate before making a sustained more. In most cases I would be willing to hold on to existing positions. There are cases however where I would not be inclined to do that.
Adamus Resources (ADU.ASX) is a case in point. The stock is currently at a strong point of resistance. This point will eventually be broken. The question on my mind is - how much institutional support is there in this stock and at what price? The company did have an issue to institutions. I question how many shareholders took up the renouncement issue, and whether they are prepared to exercise the stock, or whether the underwriter will dump this stock. Given that the current price is a good margin on the issue price of 40c, I would expect some dumping of the stock in the short term in the 45-50c range, however it will recover.
Northwest Resources (NWR.ASX) is up 20% already today. Interesting to see what announcement is coming there. Very illiquid stock, so might be a bit of trader manipulation, however already there is over 1mil stock traded. Interesting!!
The rest of the gold stocks are looking ok. AMX, PRU are doing well, AAM is at entry given that its currently absorbing an overly-discounted issue. I think there is no rush to get back into the gold stocks.
-------------------------------------------Andrew Sheldon www.sheldonthinks.com
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