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The Commodity Investor Q&A

By Matt Badiali, editor, S&A Resource Report
Wednesday, October 28, 2009

Q: I'm concerned that the gold price got ahead of itself. Should I sell my mining stocks? – J.A.
 
A: The gold market today reminds me of the oil market in 2006.
 
Oil climbed all the way through midsummer 2008, when it peaked at $145 per barrel. Few people expected oil to go that high – including me. But my S&A Resource Report readers were in it for the whole run.
 
Oil Stocks (XOI) Soared During Oil's Last Bull Market
 
We held on to our winners, banking 27 double-digit gains. We even made 165% on Brazilian oil giant Petrobras before our trailing stop kicked us out.
 
The key to bull markets is to hang on to your winners.
 
The investing classic Reminiscences of a Stock Operator, by speculator Edwin Lefevre, tells the story of Mr. Partridge, who is advised to sell a stock then buy it back when it's cheaper. He says, "I couldn't possibly do that."
 
When asked why, he says, "Well, this is a bull market, you know!"
 
By the end of 2007, the price of a barrel of oil had climbed 90%, hitting $95. It seemed outrageous to me. But we had no reason to sell. It was a bull market.
 
The same is true in gold today...
 
In 2000, not many people imagined gold would run from $275 to over $1,000 in less than 10 years. And, yes, that's quite a run. But it's a bull market. Who knows how far it can go? I certainly don't.
 
 
Bull Market in Gold Stocks (XAU) is Still Young
 
When the trend is up, you should ride along. Enjoy your gold stocks and the run in gold. Let the market – through trailing stops – tell you when to exit. It's a bull market, after all.
 
Good investing,
 
Matt  




In The Daily Crux
Market Notes
Blue-chip steel producer U.S. Steel breaks down to three-month low.
 
Brazil reverses off recent high... fund EWZ falls 6% from peak.
 
High-yield corporate debt continues climb... fund PHK touches fresh 52-week high, yields 13.9%.
 
Earnings today... Aflac, ConocoPhillips, First Solar, Goodyear, O'Reilly, Symantec.
Market Watch
Symbol Price
Change
52-Wk
S&P 500 1221.53 +1.3% +10.1%
Oil 37.77 +1.5% -2.8%
Gold 135.20 -0.1% +13.4%
Silver 27.93 +0.4% +47.9%
US-Dollar 80.67 -0.8% +8.1%
Euro 1.32 +0.6% -12.1%
Volatility 19.39 -9.2% -8.2%
Gold Stocks 564.53 +1.3% +10.6%
10-Year Yield 3.00 +1.4% -9.6%

World ETFs
Symbol Price
Change
52-Wk
USA 122.56 +1.3% +10.2%
Canada 30.44 +1.3% +13.8%
Russia 21.63 +2.3% +16.7%
India 37.73 +1.9% +20.0%
Israel 16.47 +0.9% +9.7%
Japan 10.58 +1.0% +7.4%
Singapore 13.88 +1.0% +19.2%
Taiwan 14.72 +1.6% +17.8%
S. Korea 56.56 +1.7% +22.8%
S. Africa 70.85 +3.9% +22.9%
China 45.06 +1.4% +0.1%
Lat.America 52.82 +1.4% +6.7%

Sector ETFs
Symbol Price
Change
52-Wk
Oil Service 136.18 +1.5% +14.8%
Big Pharma 64.13 +0.6% -3.3%
Internet 72.13 +0.7% +22.3%
Semis 16.03 +2.1% +28.9%
Utilities 31.21 +0.3% +1.6%
Defense 18.51 +1.3% +10.1%
Nanotech 9.99 +1.3% +0.0%
Alt. Energy 9.95 +1.4% -4.4%
Water 18.31 +1.1% +12.2%
Insurance 16.07 +1.2% +18.3%
Biotech 20.58 +1.1% +27.1%
Retail 19.65 +0.1% +28.4%
Software 24.59 +0.9% +24.1%
Big Tech 53.73 +1.0% +21.9%
Construction 12.99 +2.1% +13.3%
Media 13.57 +1.1% +25.0%
Consumer Svcs 67.26 +0.8% +23.3%
Financials 54.87 +2.4% +5.2%
Health Care 64.22 +0.7% +1.3%
Industrials 63.25 +1.6% +19.7%
Basic Mat 73.57 +1.6% +21.6%
Real Estate 55.24 +1.4% +23.8%
Transportation 91.17 +1.4% +25.6%
Telecom 22.48 +1.1% +17.1%

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