Monday, May 23, 2011

Don't cry for me, Argentina


9:42 am (Hawaii) XG finally pulling back from enormous new high (11.26). XG was at 9 last week, and when I eyeballed it on Thursday, was in the 9.50 area. I still didn't pull the trigger like I wanted on Friday, though I was bullish enough on gold to get a little bit of physical.

From Friday's closing price (10.17) to today's high (11.26), XG is now 10.76. It has already retraced 50% after touching 10.72 a few minutes ago. Interesting level. Sure, maybe Brian Kelly is right and the Fed will roll out some press conference news that will stabilize the Euro, etc. Maybe gold will cool off tomorrow. But overall, there is no real happy solution for Greece and the PIIGS and the US currency crumble-thon.

That's what makes XG compelling in a strong market for the yellow metal, especially with the rest of the market generally in the red. All three indices are more than 1% down after rallying a bit earlier. I'm inclined to wait this out and let XG drop more, but a partial position might be a proper approach. Extorre's execution in Argentina the past several months have been very good. In fact, with a fourth mine on tap, the price may stall out here. The $2 move in the past two sessions means a stall-out could result in normal profit-taking and a move back to 10.50, so there's no rush to to all in.

And there goes XG ... now at 10.66. By the closing bell, this could be at 10.40. I will wait and watch. Still 100% cash.

Posted this video last week, but worth watching again. This is exploration success and marketing at its finest. No hype, just facts presented in a fluid, informative fashion.


Update 9:55 am (Hawaii) From Thursday's close in XG of 9.60 to today's high of 11.26, a 50% retrace is 10.43. Not a strong or overly bullish sign when anything gives up 50% of its gain, but not bearish either, of course. A retrace of 31.8% and no lower would tell me this is still on fire. XG came down to 10.66 a few minutes ago and is holding ground there (10.73). Tough call.


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