Central Banks will Drive Gold, Mining Stocks Higher in 2009

February 3, 2009

In January, we told our readers to look out for January 26 as it would signal the beginning of a new uptrend in the precious metals markets. The week of the 26th pushed gold and mining stocks prices to highs unseen since fall 2008. Most importantly, prices smashed through previous resistance levels.

Over the next few days, we're looking for prices to settle near $840 to $860 for gold and $ 1.05 to $1.15 for RBY on or near February 9, 2009, near the time of a full moon.

On a positive note, world central banks and treasuries have been increasing their gold holdings. In fact, the German Finance Minister made it clear last week that it would be unwise to sell gold reserves. Furthermore, China and Russia have long stated their intentions to add to reserves, leading us to wonder if central banks will be helping to drive this year's commodities bull market.

Mining and exploration companies will indeed have a market for their extracted minerals. After major market corrections like that of late 2008, the mining companies most poised for future development are the ones that perform the best. Yesterday Rubicon Minerals Corp, which has prime, unmined property near mineral-rich Red Lake, Ontario announced that it received a necessary dewatering permit. We considered this a crucial step in developing the property. The permit was the only thing holding big money from attracting to RBY; now that it's behind us, we can confidently continue trading RBY this year.