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These Two Precious-Metal Stocks Are Ready to Bolt Higher

By Jeff Clark
Thursday, July 17, 2008

Silver and gold have broken out to the upside. Can palladium be far behind?
 
The past week has been good for precious metals. Gold is once again zeroing in on $1,000 per ounce...
 
 
 
And silver is rapidly approaching $20 per ounce...
 
 
 
Both charts suggest we'll see higher prices... Both have broken out of horizontal rectangle patterns. And both should now move higher and challenge their March highs.
 
Of course, we may see some short-term weakness as prices come back down to test the breakout levels. Ultimately, though, gold should be headed to $1,050, and silver should make it at least as high as $20.30.
 
Gold and silver stocks both reacted favorably to the breakouts. Many of them raced away to the upside and challenged their highs for 2008. That action, of course, has me looking for lesser-noticed opportunities.
 
Once again, I'm drawn to palladium.
 
We first took a look at palladium back in May, when the metal was at $425 per ounce. It rallied as high as $475. And the two stocks I highlighted in my article scored big gains in the days that followed.
 
Today, palladium is tracing out a horizontal rectangle pattern, similar to what we've seen in gold and silver. If it breaks out of this pattern, then palladium could run as high as $525 per ounce.
 
Here's the chart...
 
 
 
The biggest gains, however, will once again come in the shares of North American Palladium (PAL) and Stillwater Mining (SWC) – North America's two largest palladium-mining companies.
 
Mining stocks are a proxy for the underlying metal. So just as gold stocks rise when gold goes up, and silver stocks rally when silver rallies, palladium stocks climb when palladium moves higher.
 
But the percentage gains in the stocks are usually much larger than the gains in the metals. Mining companies are sitting on large reserves of gold, silver, or palladium. So a small increase in the price of the metals creates a large windfall for the companies, and an even bigger windfall for investors.
 
Gold and silver started a renewed up-leg last week. Palladium looks ready to follow in their footsteps. If it does, then shares of PAL and SWC might make for a good speculative trade.
 
Best regards and good trading,
 
Jeff Clark




Market Notes
The biotech rally begins... SPDR Biotech ETF hits all-time high.
 
Insurers struggle... Genworth Financial, Allianz, PartnerRe, Navigators Group, White, Mountains, Alleghany, and AXA make new lows.
 
The market dumps oil pipelines... NuStar Energy, Holly Energy, and Transmontaigne Partners hit new lows.
 
Earnings today... Capital One, Google, Harley-Davidson, JPMorgan Chase, Merrill Lynch, Microsoft, Nokia, Coca-Cola.
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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