Gold Mining Stocks: Major Uptrend in Progress

Although they’re more volatile than Gold, if you can position yourself on the ‘right’ side of their dominant trend, investments in fundamentally sound Gold mining shares can be even more profitable than investing in physical Gold. Here’s a look at the major trend move underway in the Gold Bugs index, one of the most widely regarded indexes that scores of precious metals equity traders and investors rely on.

My, how times do change. Less than a year ago, the share prices of virtually every senior and junior Gold mining company were on the proverbial ‘ash heap,’ and some market analysts had doubts that the bull run in the precious metals sector would ever regain a solid footing, much less soar to new highs. And yet, that’s just what happened - a complete recovery across the entire sector (including Silver and Silver mining companies, too), with Gold now at all-time highs and Silver up more than 100% in less than 12 months. Even better for those who trade Gold mining stocks, the Gold Bugs index (which tracks the performance of some of the biggest and most fundamentally sound Gold miners) is up a mind-jarring 200% since October 2008 – and the uptrend doesn’t appear to be waning yet. Let’s have a closer look at the weekly technical chart of the Gold Bugs index and examine the key trend indicators as see what they may be telling us about the future trajectory of prices for this volatile and potentially profitable sector of the market.

Dollar still looks weak in the short-term

With unemployment still at historic highs and the state of the economy still fragile, most top economists expect Federal Reserve Chairman Ben Bernanke to announce Wednesday (November 4) afternoon that the Central Bank is keep its key interest rate at its current low point.

Central Bank members conclude their two-day policy meeting later Wednesday. Along with the announcement on interest rate policy, analysts and investors are going to watch for commentary about the board’s perception of the overall economy as well as various key sectors.

The Fed has maintained a low to no lending rate policy for banks for several months as part of an effort to reduce lending costs and to encourage home, auto and other purchasing. This policy has helped mortgage-strapped homeowners to refinance in some cases and it has helped struggling debtors with lower credit card and loan financing costs.

One effect of a lower interest rate policy is that it has helped hold down an already beat up dollar. The dollar has been in a relatively weak position on the global front for sometime, and with little interest yield, no change appears on the horizon.

The perception of dollar weakness has not been as much because speculators believe the US economy is in that much worse condition than global counterparts. It has been created more as a result of investors fleeing dollar positions for safe investments like gold, which is currently closing in on $1,100 per ounce.

As the economy has improved, another reality has been speculators jumping into oil positions. The correlation between improving oil prices (currently over $80 per barrel) and positive sentiment on the economy has been real and obvious.

Despite holding firm in recent weeks, the dollar is still under short-to-medium term pressure against the Euro, Pound, and other major currencies. One Euro is worth just shy of $1.48, and looks poised for a surge past $1.50. One British Pound fetches $1.6531 and a retest of the medium-term high over $1.70 also seems likely.

The dollar has been especially weak against the Japanese yen of late. Global perception seems to indicate that many expect the world’s second largest economy to rebound and thrive more quickly than the largest. One dollar is currently worth only 90.83 yen.

Most analysts seem to agree that a low interest rate policy is still important until the labor sector improves. American consumers and businesses need all the help they can get. However, the dollar is likely to pay the price until it is freed from the binds of no yield.

Neil Kokemuller is an Associate Professor of Marketing at Des Moines Area Community College in Des Moines, Iowa, USA. He has a MBA from Iowa State University. He is also in house stock market commentator at Live Charts UK, where you can find real time charts and share prices.

Please note: The information provided in this article is intended for informational and entertainment purposes, and not as advice for financial decisions or investments. Actions taken on the basis of the information shared is at the sole risk and discretion of the individual. Currency investment poses significan.

Euro May Have Established Corrective High

The EURUSD and USDCHF have held their 61.8% retracements of impulses towards US dollar strength. The NZDUSD pattern from its high is also bearish. Patterns suggest that dollar strength will be the next significant move.arallel channel support and the 50 day SMA have held in the EURUSD, which keeps the larger uptrend intact at least for the time being. Still, momentum diverged during the rallies from 1.3747 and 1.4480, which is one reason I feel that the 5th wave labeling (2 different degrees) is correct. With bigger picture bearish implications, I must respect this bearish count. 1.4900/20 is serving as resistance. Coming under 1.4800 would bolster confidence.

GLOBAL MARKETS-Stocks jump, gold off highs on U.S. jobs data

The number of U.S. workers filing new claims for jobless benefits fell more than expected last week to a 10-month low, while worker productivity surged at a 9.5 percent annual rate, improving the outlook for both the economy and inflation.

The more stable dollar put a damper on commodity prices in general. U.S. crude oil prices dropped as much as $1 per barrel, snapping a three-day rally, as investors adopted a cautious tone before Friday's key U.S. employment report.

Short-dated U.S. Treasury prices rose on the benign inflation outlook, which resonated with the U.S. Federal Reserve's pledge a day earlier to keep interest rates low for "an extended period."

Long-dated Treasury prices fell, however, on concerns about upcoming supply of bonds and as the positive news on the economy curbed the safe-haven bid for government debt.

Wall Street stock indexes closed about 2 percent higher, with the Dow closing about 10,000 for the the first time in two weeks.

The surprising drop in new claims for U.S. jobless benefits helped, and created "some anticipation that maybe tomorrow's employment report may be better than expected," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.

Subodh Kumar, chief investment strategist at Subodh Kumar & Associates in Toronto warned that Friday's key monthly U.S. employment report will be the real test for markets.

"Unemployment is already close to 10 percent, but if it comes out at 10 or above, then there will be worries that the consumers are not there for spending, and that will hurt the market," he said.

Wall Street was also supported by a rally in technology shares after Cisco Systems the network equipment maker, posted a stronger-than-expected quarterly profit. [ID:nN04515993]

The Dow Jones industrial average . ended up 203.82 points, or 2.08 percent, at 10,005.96, while the Standard & Poor's 500 Index .SPX climbed 20.13 points, or 1.92 percent, to 1,066.63. The Nasdaq Composite Index. rose 49.80 points, or 2.42 percent, to 2,105.32.

MSCI's all-country world stock index .MIWD00000PUS rose 0.8 percent while the pan-European FTSEurofirst .FTEU3 ended up 0.6 percent at 990.53 points

Public Storage 3Q Profit Up 73% On Forex,Stock-Offering Gain

Public Storage Inc.'s (PSA) third-quarter profit grew 73% on gains from foreign-currency exchange and an equity offering by PS Business Parks Inc (PSB).

The real-estate investment trust, which has interests in more than 2,000 storage facilities.

WORLD FOREX: Dollar Edges Down Vs Yen Before US Jobs

The dollar edged down against the yen in Asia Friday as some short-term players sold the U.S. currency on the view that a keenly-awaited U.S. jobs report later in the day may show the country's employment conditions worsening.

The U.S. non-farm payrolls report, due at 1330 GMT, may show 175,000 jobs cut in October, economists surveyed by Dow Jones Newswires said. While that would be an improvement on the 263,000 jobs lost in September, the unemployment rate is tipped to rise from 9.8% .

UK company liquidations up 14.6 pct y/y in Q3 - govt

More than 4,700 companies in England and Wales went into liquidation in the third quarter of this year and 35,000 people succumbed to insolvency, official government figures showed on Friday.

The Insolvency Service said company liquidations rose 14.6 percent on a year ago to 4,716. Personal insolvencies rose 28.2 percent on a year ago to 35,242.