11/12/07 - The Surging Gold Market and FMM: In the News

I have not added any additional thoughts or comments to my precious metals blog in quite a long time, and I just wanted to give an update on how things are going in the gold market.  During most of the spring and summer of 2007, gold was moving in small amounts up and down in a consolidation pattern with the top of the range being about $690 per ounce. There was not much to say while it continued to consolidate. That situation is changed, it appears we have completed this consolidation period, and here are my comments:

First, the gold market is currently going through a major upward move. Strong bull markets typically have steep, major upward movements, short nasty corrections and longer periods of consolidation and recuperation.  There is no big revelation about that - it's pretty obvious to see, and we are currently in a strong upward movement phase.  Since August, which is only about three months ago, gold has moved from $645 an ounce to a current price well over $800.  Much of this upward move has occurred since the first of October.  We have reached a position we're temporarily overbought in gold, and as of today, Monday November 12, we're seeing a little bit of pullback to correct this overbought condition. Probably we will see some consolidation at this point for a week or two, before beginning another leg of the upward bull movement and maybe see a blow off top in the not-too-distant future. At this point in time, I do not think we've already seen a blowoff top, and there is plenty more room for the market to continue moving upward. The dollar continues its downward decent, and gold will continue to move in the opposite direction.   To be clear, I do think we will see a blowoff top with a fairly decent correction spike sometime in December or January.  At this point, I am projecting a top for this move between $900 and $950, although that may change depending on how this bull move plays out. When we reach that point will be critical to take most of not all of our chips off the table and book some profits.

Second, back in April I pointed out the stock of Freegold Ventures, a mining company with some interesting properties in both Idaho and Alaska.  At a time their stock was trading for about $.75 a share.  The summer has been very good to them, and the stock price is currently trading between two dollars and $2.50 per share, an increase of about 300%, which is not too bad for about seven months time.  I'm still thinking this is a great stock and I think that as gold prices continue to increase their property in Idaho will become more and more economic and that when they bring it into production, the price of the stock may well reach about $10 per share.

Finally, I want to point out another stock with some good long term potential. The mining company is Full Metal Minerals (FMM), an operation with a number of mining prospects in Alaska. I'm keen on their stock as I am optimistic about a recent discovery of some rich gold ore at the Moore Creek mine. This discovery has just been announced publicly and no drilling has yet begun, so it is somewhat speculative, but I believe the drilling will show a major new multi-million ounce deposit for Alaska and Full Metal Minerals.  If this does happen, together with the increasing gold price, the stock should be placed for significant upward move.  It currently sells for $2.50 per share. In drilling comes in next year as I expect it to, a $10 per share price would not be unreasonable. (I have no ownership in this company at this time)

Chris