When the U.S. Dollar started rallying at mid-year 2011, the price of gold
plummeted from $1900 per ounce to $1525 per ounce in September. This was a 20%
price drop in a month! This created a similar fear reaction in gold and gold
mining stocks. Gold finished 2011 at around $1565 per ounce.
However, this fear of a stronger dollar got turned on its head when the Fed
recently came out and announced that not only were they not going to raise rates
any time soon, but they were actually pushing out their time frame to 2014, far
beyond what anybody on the Street had forecast.
At the end of January 2012, gold was trading at $1739 up 11% from the 2011
year-end close. As measured by the Spider Gold Trust (GLD), gold confirmed a bullish trend. GLD rose above the highs of the previous 8 weeks on 1/31/12 and broke out above a 4-month downtrend line on 1/25/12 (see chart below). GLD rose above its 50-day SMA on 1/23/12. GLD remains above its 200-day SMA, and the 50-day SMA has remained bullishly above the 200-day SMA every day
since 2/11/09.
This is important as several mining stocks have pegged their dividend payout to
the price of gold.
See full article on rising dividends on gold stocks,
