This continues the why buy gold theme. I recently had a position in African Barrick Gold purely on a value basis. Their price seemingly collapsed towards the back end of July and having missed the previous dip in mid May I took a position at aroudn 315p. This was remarkably well timed - one of my best ever in fact. The price then climbed to the late 400's in a matter of weeks on news that China Gold were looking to buy African Barrick Gold (see article here). As is often the case it appeared overbought and I set a stop loss in place at 452p to lock in profits. Whilst this was potentially viewed as a keeper looking for the gold exposure it could be hugely volatile (as most gold mining stocks can).
My stop loss got triggered whilst I was away sunning myself in rainy Devon on holiday (giving me a return of arount 43% in about 3 months). Whilst the talks between African Barrick Gold and China Gold seem to be progressing nicely (further report here) the price got battered due to a pretty awful trading update with pretty much everything falling below expectations with little positives that could be drawn. I think the price will recover, but likely in line with the gold price when that moves. As a result I'm keeping my beady eye on this but will be looking for a price far nearer 350p before I get back in. Again another example of China loading their coffers with gold a good reason in my view as to why buy gold currently.
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