-- Posted Sunday, 6 January 2008 | Digg This Article
| Source: GoldSeek.com
A Happy, Healthy and Golden New Year to all. I really believe that this year will be the golden goose that lays all the golden eggs that have been suffering from constipation for the past two years!!
Kenya has sunk into the African political mode and is being dominated by tribal allegiances. Welcome to African politics. I forgot to mention the big ‘P’ in African politics in my last issue. The first election is basically democratic. After that it is all about hanging on to power. But frankly who cares with the gold price at an all time new high.
In my special gold report I detailed that the gold shares had been in a huge correction for the past two years and this accounted for their lack of performance. I also indicated that the correction had ended and that a brand new bull trend was about to emerge. During the past week the gold shares have at last got off their backsides and started to perform.
My forecasts for 2008 remain firmly entrenched in the commodities sectors. I have been unashamedly bullish on commodities for the past three years and have absolutely no reasons to change my analysis. The only difference this year will be that the gold shares will play catch up and I am looking for at least a 100% move in this sector.
My selections for 2008 will revolve around the gold shares. I am also looking at the platinums for substantial appreciation but some of the other commodity orientated shares are starting to look like major recovery situations. I am going to classify my selections into three categories namely, growth, recovery and penny stocks.
Although some of the non-mining stocks are interesting I am looking at the commodity selections to continue to be the main thrust of the performers for 2008.
The banking sector has shown short term promise but it still has not moved above the critical resistance levels and so I will not be looking at this sector until the resistance areas have been penetrated.
Do not forget the penny stocks in your portfolios. The ALTX index of penny stocks has outperformed the JSE ALSI by a mile for the past year and I expect to see it continue in this mode for 2008.
Metal prices I expect to grow through 2008 as Far East demand outstrips supply. I have long detailed that any slack as a result of a US economic slowdown will be guzzled up by the rising sun economies. Precious metals have only just started their major move and gold should easily hit my $950 target. After that I will review the situation. The base metals should also appreciate strongly as should the softs such as sugar and coffee. Oil is a slightly different matter. I am not looking for much further upside in this item and would not be too heavily exposed to oil stocks. Gold is starting to out perform oil after underperforming dramatically for ten years. I am looking for the gold sector to dominate 2008 with the penny stocks putting in some outstanding performances.
Relative strength
Relative strength is always a key component in determining potential performers. This year I am altering my relative strength data from using the JSE Overall index as the norm and comparing everything against the JSE Gold index. If it does not have the potential to out perform the gold index I will not be interested.
JSE Gold has underperformed the general market on its weekly chart for the past 20 years. I am expecting a serious trend reversal to this situation as detailed in the next chart.
JSE Gold has underperformed the JSE Overall on the daily chart for the past two years. But there is a strong buy divergence on the RSI and I expect to see a much more powerful performance from gold shares this year after the two year corrective phase.
JSE Gold has also under performed the Rand price of gold as shown by the falling line in the middle frame. But once again there is a strong RSI buy divergence for a trend reversal and I expect to see the gold shares outrun the rand gold price.
