Be skeptical of lofty price targets for Canadian gold stocks
November 5, 2007
Greetings investors!
We’re going to see lots of targets being set on gold stocks by financial institutions in the weeks to come.
Investors need to be careful here.
Institutions which have large positions often issue a target on a stock which is just slightly above the market price. But chances are the price will never arrive, or at least not in the short term.
Why? Because the institution itself is practicing a little risk management. In other words, they’re ’shorting’. The recommendation will bring the retail volume in, they’ll sell, and when the price drops, they’ll short. They’ll make it coming and going.
I’ve been observing this pattern for at least a year. They all do it … the big Canadian chartered banks … everybody.
Not that there’s anything wrong with doing that. It just prudent. Institutions have entire departments which do nothing but map out risk strategies just like it.
Just don’t get sucked in .. don’t let these price targets set by Canadian financial instutitions guide your investment strategies. Buy on fundamentals, buy on weakness. Sell on strength.
Careful out there!
Kb
The BarkerLetter on November 5th 2007 in Commodity investing
