Gold and Wall Street Update for Wednesday 2/6/08

Here's an update of the past two days worth of updates from the Strategy Update website. StrategyUpdate.com: Updates, newswires and 24 hour metals charts.

Start with a new closing bell update for 2/6/08: After dropping -370 points yesterday, the market rallied as much as up +125 (based on good news at Disney perhaps), before ending on a days low of down -65 points.

That's a give back of -190 points off the days high. And it's never good for the next day when you end on the days low, with a give back like that. Overall, not a lot of confidence, especially with bond insurers and credit derivatives crisis looming. Even many bulls are saying we will be hitting recent lows, again (we dropped to 11,900 range this year, so far.) However, unless some goverment "mircale anvil" falls out of the sky to save the financial industry, SU predicts lows in '08 will be in the 10,700 between now and August.) But even if it's just a drop into the high 11,900 range...don't expect to see the DOW back in the 13,500 range anytime in the first half of '08 (or longer).

NOW, some GOLD TALK, since gold was up in overnight and early morning hours. It came down, slightly, as oil prices dropped on news on increased reserves. But gold has really held it's own (closing at $903.90). And you won't believe it, but I bought ONE gold miner stock in pre-market hours, from my watchlist of 50 miners. IT CLOSED UP 8.93% FOR THE DAY!!! Most other good mining stocks were flat to up +0.00%-+2.00% (GFI, GG, ABX, GLD, SLV, AUY were all in this range.) So for Vista (VGZ) to close up +8.93 is off the hook. But ZD trusted in his Batcomputer when they picked this name off the list this morning. (We posted it this morning...see below.)

2/7/08 UPDATE: Bad news on popular gold miner Newmont Gold (NEM), which is the #2 gold producer in the world, and popular with investors due to their non-hedged gold reserves. However, bad news on the earnings call means stay away from KGC until it shakes out.

HERE'S THE UPDATES FROM THE WEBSITE OVER THE PAST 48 VOLATILE HOURS:

2/6/08: Gold and gold mining stocks are up and outperforming the stock market today. But oil inventories come out in a half hour, and there is expected to be a surplus, so that could drive down the price of oil, and gold along with it. And although there will still be many ups and downs, gold will probably be outperforming the stock market in '08.

Be careful buying gold today, because you can expect the price to drop, based on a rise in oil inventories that most likely will reduce the cost of oil, per barell. However, with recent Fed cuts, and more expected, investors may be hanging on to gold positions, so it may not give back as much as usually expected.

1:30 PM GOLD UPDATE: Batcomputer says 1:30pm will be the peak for gold today. Be prepared for short-term downward price movement based on declining oil prices. (See more below)

Gold miners: But, if you decide you want to buy gold miners today, or in the future, SU likes AUY and VGZ (a nice little engine that could) the most. Also on the list; GCGC, KGC, EGO, UXG, NG, HMY, HL and GOLD. And two safer ones; ABX and NEM. (See news on NEM posted above. GOLD, Rangold Mining, had some news we don't like last week, but it hasn't seemed to hurt the stock, otherwise it would have been our #1 pick.)

Consider the miners above to be the "StrategyUpdate Gold ETF Basket", if we had one. (Once you buy one, stay on top of news releases that may have an effect on the stock.)

PLG and GRZ are two new ones we like, but haven't watched long enough. PLG is tied to Platinum and is kickin' butt today, but see alert below. GRZ is gold reserves. (Research 'em first!)

OTHER GOLD MINERS: These are popular ones, too, that go up and down, proportionately with the others mentioned above. Most of these I just turned cautious on over power outages in S. Africa that slowed production, and may suffer more power reductions in the future: GFI, GG, AU, IAG.

PLATINUM AND PALLADIUM WATCH: Gold is more of a currency, where Platinum and Palladium are industrial metals that have been hotter than gold, this year.)However, an expected drop in car manufacturing is expected to hurt these two metals. Which is why we took PAL (Palladium) off our list, but you can still trade it, as a cowboy. Platinum and Palladium still look to still be squeezing out big gains, today, as metal prices rise, due to shortages in these two metals caused by production outages in Australia and S. Africa. So that may be offsetting the downs you should expect to see in Plat and Pal, as industrial demand drops.

GLD is a popular ETF. (IAU is a similar, lesser talked about gold ETF, too.) It's price is linked to gold bullion prices. It's less risky, than individual mining stocks, but you won't see the big gains, either. I say, forget GLD. GDX is the gold miners ETF, which is tied to gold miners, as opposed to gold, itself. Same thing though...too safe. GRZ is a gold reserve ETF we like better. (Disclosure: VGZ, UXG)

2/5/05 GOLD & DOW ALERT: No gonna be a fun day for gold. Read Friday's prediction on what is going on with gold, today. And you are crazy if you think the DOW isn't about to hit a "rough patch" (as Bush calls it) on the opening bell, over bond insurer crisis and a much worse than expected ISM number (economic number). (All we've done since November-December is warn you about February. But you still aren't ready to believe what is about to happen. Because you never heard the phrase, "historic proportions", so you think you know what you can expect.)

Gonna be a GA-REAT day for SKF...(see alert below).

2/05/08 9:45 AM UPDATE: We told yo azz!!! In the first 15 minutes of trading, SKF is UP 5.73% and the DOW is DOW-N 223 points. (See also: REW, UP 5.74%.)

10:50 AM UPDATE: Batcomputer (SU Indicators) says Dow is ready to drop a little more, below it's current down -180-200 point range And don't look for one of these, "Down 200, then up 300" rally days like we have seen recently, though. If news of the bond insurers continues to scare investors, this could be a slow boil of consecutive DOW-N days. (SKF is a good indicator...when it is up 5%, DOW will be down about 220...and if SKF hits 6%...well, you know what comes next.)

11:35 ALERT!!!: SKF HITS UP +6%...let's see where the DOW goes from here.

12:10 NOON: To those who feel gold is taking only a short term dip, now is the time to start "layering in" your buy. Some folks feel gold is taking more of a long term, downward trend to 850, or below. But Batcomputer on Friday said, Tuesday or Wednesday would be the low point on gold and metals, before they take the big rise, based on all these rate cuts.

12:24 PM -- SKF vs DOW UPDATE As SKF moved to +6%, the DOW moved to -250 points. When SKF was up +5%, DOW was down 220 points. SKF up 4.50%=DOW down -185. It's very predictable. Hope SKF doesn't hit 7% today! Now, SFK is up 6.5% and DOW down 270 points (at 12:42pm). See the pattern!

MORE PATTERNS: 1:12 PM SKF UP 7%, DOW down -285. SFK UP 7.19% = DOW down 300 points (at 1:49PM). SKF UP 7.67% = DOW down 320 points (3:04 pm) SKF UP 8.27=DOW down 360!!! SKF 8.45%, DOW DOW-N 370 points (at closing bell) See the pattern?

SRS: Here comes SRS (Short Real Estate)...

2/4/08 ALERT: When SKF (Short Dow Financials) goes UP, the DOW goes DOW-N! (Click Daily Blog Link for more)

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We Told You So Tuesday: DOW will be DOW-N Over Bond Insurer Crisis & Extra Weak Economic Number

10:50 AM UPDATE: YIKES...after opening down -200 points at the bell, and leveling off to down -180, or so...The Batcomputer started going nuts...and raised the alert level, indicating a drop further to the DOW-N -220 to -250 (or -- clears throat -- more level). Watch SFK as an indictor. When it is UP above +5%, or more...start worrying about the DOW being down 220 at that point. So if SKF rises to +6%, or more...you know what is coming next!!! With the scare the bond insurance crisis, and derivatives market has given Wall Street (rightfully so) -- could be a slow boil of many DOW-N -200 points (or more) days this month.

2/5/05 GOLD & DOW ALERT: No gonna be a fun day for gold. Read Friday's prediction on what is going on with gold, today. (See thread on this blog below.)

And you are crazy if you think the DOW isn't about to hit a "rough patch" (as Bush calls it) on the opening bell, over bond insurer crisis and weaker than expected economic numbers. (All we've done since November-December is warn you about February. But you still aren't ready to believe what is about to happen. Because you never heard the phrase, "historic proportions", so you think you know what you can expect.)

2/4/08 ALERT: When SKF (Short Dow Financials) goes UP, the DOW goes DOW-N! (See yesterday's thread below.)

Gonna be a GA-REAT day for SKF! (Price is Right "Loser" Sounder): Whomp, whomp, whomp, whomp...(deflated), Whooooooooooompppppppp.

STAY AWAY FROM GFI & IAG: IAMGOLD (IAG) used to be a good mining stock. It was hit with bad news last week that we brought to your attention, and more bad news today, as it's target is lowered -- today -- most likely based on the news we brought you last week. Gold Fields (GFI) was one of the most recommended at the end of '07. Not anymore based on this kind of news:

This conversation was conducted on February 4th 2008 from . Bellwether Report

Q: What's your professional opinion of Gold Fields Ltd.?

A: We are taking a negative stance on share of Gold Fields Ltd. as we believe the company will experience tough operationally challenges for fiscal 2008.

Q: Why do you take a negative' stance on this stock?

A: One of the biggest issues will be increases to deep level mining risks. As it stands, the company has already announced a 7% decline for its second quarter South African gold production due to health and safety stoppages over the quarter. Adding to this is the rise in the cost of capital expenditures, which will put further pressures on margins. Lastly, the recent power supply shortages that the company has been experiencing as a result of the nations rapidly increasing demand for electric power will surely put a damper on production and profitability for the near future.

Q: What more can you tell us about the Company's current position amid power issues?

A: Currently, Gold Field's power usage has been limited to approximately 90% of its normal power requirement. However, the larger threat is that there is no guarantee that this power level will be sustained. In addition, at current power levels, six of the company's 21 operating shafts will be at risk of closure, seriously putting profitability at risk.

Q: Based on this, what would you tell investors looking to position themselves in this equity?

A: Consequently, we do not advice investing in shares of GFI until we see evidence of improving operationally conditions.


(Strategy Update recommended to pull out of this stock a week ago, or more, based on S. Africa electric problems that affected GFI's production):

When it it time to buy gold, don't buy GFI & IAG.
StrategyUpdate.com for updates, news wires and 24 hours live gold charts.