| The price of gold and the trading of gold stocks are | | | | further discussion. Kinross Gold, KGC on the NYSE |
| hot topics in recent times. The price of gold is a | | | | (New York Stock Exchange) and K on the TSX |
| well-studied area with plenty of information and | | | | (Toronto Stock Exchange), is a HUI component. K on |
| opinions on the secular bull trend in gold. The | | | | the TSX was at a low of $8.96 on October 24, 2008 |
| correlation of gold stocks to the price of gold is a | | | | and a high of $24.66 on January 20, 2009. Taking |
| topic of interest for people trading gold stocks. An | | | | profit would yield $15.70 per share. An investor may |
| item of importance is the HUI Gold Bugs index on the | | | | choose not to take profit and continue to hold for |
| AMEX (American Stock Exchange). | | | | long-term investment. |
| If you tried to buy gold stocks in August or | | | | What if the predictions on the price of gold do not |
| September of 2008, you undoubtedly would have | | | | turn out? What if there is a correction in the price of |
| found yourself being stopped out as gold stocks | | | | gold? What if Kinross Gold diverges from its |
| were on a decline searching for a bottom. The HUI | | | | correlation with the price of gold, and suffers a |
| was around 300 in September and bottomed around | | | | pullback on its own? Do you take profits now, wait |
| 150 at the end of October. Near the end of January | | | | for the correction and then buy back later? |
| 2009, the HUI was back up to 300. | | | | As an alternative, trading K on the basis of stock |
| Supposing you did your due diligence and managed to | | | | price trends (rise and drop cycles) can be equally |
| buy gold stocks in the October/2008 timeframe and | | | | profitable and allows for profits to be realized in real |
| held it, you would be confronted with an interesting | | | | terms with continuing ability to react to the price |
| situation in February/2009. Having seen your | | | | movement of the stock. It is vitally important to use |
| investment double, what should you do? Should you | | | | a good technical analysis method with the capability |
| take profit on your investment now and wait on the | | | | to react to price trends. Buy at the "valleys" and sell |
| sidelines in anticipation of a correction in the price of | | | | at the "peaks" in the stock chart. |
| gold and gold stocks? Should you continue to hold in | | | | StockTradersPlace analysis indicates a profit of |
| anticipation of a further rise in gold? The $1000 | | | | $17.43 per share of K would be possible based on |
| ounce mark is on the horizon for gold with predictions | | | | long and short positions traded during the period |
| abound on how high gold will reach, and when. | | | | from October 24, 2008 to January 20, 2009. |
| Let's take a particular gold stock as an example for | | | | |