Thoughts on Markets

Tuesday, May 06, 2008

Could Be a Buying Opportunity - Use Caution

Gold has moved higher off the 850 level to 881.20 (now). This appears to be a strong move; however, we must wait and see if it will be sustained. Yesterday, I took advance of the opportunity to add to my holdings of two core stocks which follow, below.

DRD Gold (DROOY) is one of my long term holdings. From time to time, I have been stopped out of a portion of this stock. This is not a beautiful graph as DROOY is below both the 50 and 200 day averages. It takes a risk taking investor to buy at these prices. Yesterday, I was able to get a few shares at 7.01. I believe it is still in a buying range depending upon one's comfortable risk level and the balance of his portfolio.

Harmony (HMY) is a stronger company which I like. I was able to get a few shares yesterday at 11.79. There have been strikes, low electrical power, and even attacks at some of HMY's mines. But it is a sound company with a low cost per ton in mining operations.

Both of these companies are primarily in South Africa and face the power shortages which will take some time to solve. Building new and improved power generating and distribution systems is an expensive process, as is all infrastructure. Mining is critical to South Africa's economy, so there will be as rapid as possible improvement in this area.

The last trade for DROOY was at 7.64 and for HMY 11.94. These are still reasonable buys for me, and I may dive in for a few more shares of each. You must make your own decisions in accordance with your own portfolio and risk tolerance.

Remember, we can gain inference of the future and make educated guesses, but only the Sovereign God of all knows for certain what the future holds. It is not because He can look into the future, but because He is in absolute control of everyone and everything. That gives those whose God is King Jesus Christ get peace and comfort.

Best to each, Doug


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