CDE and UXG Positioned for Strong Gains

Posted on October 29, 2007 , Filed Under Stocks

These charts and my annotated notes speak for themselves. I took these screenshots in the middle of the trading day last Friday.

CDE October 26 chart

I’ve loaded up on US Gold Inc. [[UXG]] and Coeur d’Alene Mines Corp. [[CDE]]. I expect to see a major 15-20% move in UXG if the Fed cuts the interest rate next week. A cut would mean a weaker dollar and in turn stronger precious metals prices. With gold currently at $780, we may see a rise over $800 before the end of the year. I started loading up on UXG at prices between $4.40 and $5.5. UXG may top mid $5’s very shortly.

CDE has a very good shot at clearing $4.50 levels as we approach a bullish centerline crossover. The last time we saw a bullish centerline crossover, CDE experienced a nice .70 pop.

As you can see with my previous article about the COT report, there is a large looming commercial short position that will need to be covered if the Fed drops rates. The commercial shorts covering their positions will fuel a nice rise in gold and silver prices. The environment is currently there for strong gold and silver. Precious metals equities are in as good a position as ever to gain 20-30% plus before the end of the year.

I’ve also purchased a large number of January 2008 and January 2009 options in the other precious metals stocks that I favor.

*Disclaimer: The author currently owns shares of UXG and CDE.