Thursday, September 21, 2006
It’s absolutely heartbreaking to watch the Oakland Raiders football team.
An undefeated preseason had us diehard Raiders fans thinking, “This could be our year.” But when San Diego shut out the Silver & Black (on our home turf, for crying out loud) during the season opening game, a little bit of reality started to trickle in.
The faithful fans, however, remained optimistic.
“It was a fluke.” We said, “We’ll come back next week.”
But the next week brought in an even larger dose of reality. In the early minutes of last Sunday’s game against the Ravens, the Raiders committed the second of what would be six turnovers in the game. The Ravens took a 16-3 lead into the locker room at halftime. And, I had to agree with my five year old son who was watching the game with me when he said, “I’d rather watch Spongebob.”
And, that brings us to the precious metals markets...
Like the Oakland Raiders, gold stocks had a fabulous preseason. Summertime is often a bad time of year for gold stocks, but this summer was quite mild. In fact, the Gold Bugs Index (HUI), which was trading around 340 or so at the beginning of June, actually gained more than 20 points by early September.
This terrific performance during what is typically a seasonally weak period had many gold bugs thinking, “This could be our year.”
But two weeks ago, after a failed breakout attempt, gold stocks were shut out by the market. The stocks have fallen – and fallen hard – and a little bit of reality has started to trickle in.
“It was a fluke.” Yelled the gold bugs, “We’ll come back next week.”
But just like with the Raiders, the next week was nothing more than a series of fumbles and missteps in the gold sector.
And, just like Raiders Fans, it looks like gold bugs are in for a long season.
The unwelcome reality is that recent carnage in the gold sector is going to take several months of consolidation to shake off. Gold stocks are far more likely to stagnate or trend lower over the next few months than they are to turn around and shoot higher.
Of course there will be the inevitable sharp rallies that create excitement and get everyone thinking that we’re off to the races – just like the Raiders are bound to win a game or two.
But the bottom line is that right now, neither gold stocks nor the Oakland Raiders are ready for the Super Bowl. At least, not yet.
Of course, there’s always next year...
Best Regards & Good Trading,
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