If anyone here has thoughts on trading Gold stocks I would be interested. Especially in Today's action. I know they are illiquid and move like a snail sometimes but I think they could still make a big move before years end. I was somewhat perplexed today because normally when you get a sell off of that magnitude you get some rotation into it however today. Whats the word, "bumpkus"? Something like that. Anyway. I bought some long and it just slowly bled me all day. I usually know pretty much to the penny where I am wrong on a stock, but I let it bleed anyway because the commodity price kept creeping up and actually closed on highs I think, and secondly I kept prehaps deluding myself that if the selling in the broad market continued eventually it would get a pop. But the two gold stocks I had bought to hold into the sell off ended up selling off themselves. (gg, abx) I eventually got stopped out and they went even lower. So my questions are these. Normally what is the best thing to watch for these old school relics. Is it the XAU, HUI, then the underlying metal. I don't watch bonds or generally know what the dollar is doing intraday. Are the bigger factors that I think. Does anyone trade these for swings. It's the top perfoming sectorfor the year and I haven't made a penny of the darn things. I know there are other fish to fry but I'l like to get a better handle on them just in case (the big move comes. ;-) cheers.
guess unless you have a commodity broker firm to give you comments from the Comex floor in NYCwhere the locals trade you are doing well following what you see. another thing to try to put into the equation ... on days like today ... when the gold stocks and $xau did not stay firm with the dow tanking you could logically assume they would crap out if the dow rallied later in the day which it did who knows ... maybe some goldbugs were forced to sell their gold stocks to meet margin calls in thier other equity holdings ...
I do trade gold sometimes but I noticed that it's getting harder to tell which direction it's going during the day. For example, I used to buy them all when all the futures go down (they are suppose to go in the opposite directions). However they don't do that anymore. Look today market started a major sell off so I bought 500 shares of two gold stocks to test the water and lost money immediately so I knew they weren't going up and I turned around and shorted them instead and made money!!! There are a lot of factors such as dollar strength, the inventories etc. But I don't have that information so I depend on the futures. I guess nowadays you just go with the trend. If it ain't going up then it must go down I know this doesn't really answer your questions but I'm not an expert in that sector.