AU

It is probable that if you are considering purchasing AU, you want to profit on the increase in the price of gold. Therefore, you would most likely prefer to see if AU does indeed move along with gold, and how strong gold's influence really is. In other words - you want to know how much exposure does AU have to gold. The answer differs depending on your perspective. After all - if you want to hold your position for just a week or so, AU's performance in 2006 doesn't matter to you. Conversely, if you want to purchase stocks for a year or so, then taking older data into account is essential. Either way, if you want to check AU's performance relative to gold, one of the best approaches is to create a trendline that best describes stock's performance, and examine it. The more it "fits" the data, the more gold "determined" the price of AU in the past (thus is likely to do so also in the future).

How can you measure and compare to other stocks the way trendline "fits" the data? With the R-square coefficient - the bigger it is, the more trendline "fits" the data, and consequently the more exposure AU has to gold. Therefore, the stocks with higher R-square value are generally preferred to those with lower R-square values. How high R-square value is "high enough"? There are several rules on that and we implemented them for you, so that you can read the whole analysis. All of the above may sound complex, and the calculations behind our models and charts certainly are, but that doesn't mean that it can't be easy to use! In fact, the idea behind this section was to make sophisticated analysis as understandable and usable, as possible.

There is one more thing that needs to be covered before presenting our charts to you - the analysis of the AU and gold would not be complete without mentioning the leverage factor. Generally, I believe that you want your gold stock to magnify gold's gains. Fortunately this can also be inferred from the trendline analysis. Based on the shape of the trendline, we can estimate if AU does indeed give you the biggest bang for the buck in your preferred time-frame. Again, although the simulation is a sophisticated process, we do it for you and provide you with an easy-to-use interpretation.

Here's how you can enjoy this cutting-edge analysis in just a few super-easy steps:

1. Decide if you wish to buy-and-hold (use the first chart) or trade (use the second chart)
2. If you decided to trade, choose which time-frame describes your trading style (the solid trendline describes the medium term, and the dashed one describes the short term)
3. Check out the chart for an overview of AU's performance relative to gold. Click on the chart to enlarge it.
4. Read the description/interpretation of the chart below it, and decide if AU meets your requirements.
5. Compare it to other stocks and make appropriate investment/trading decisions.

Naturally, you are welcome to analyze these charts in any other way.

The above charts are great if you want to focus on AU's historical performance to decide whether to own it or not. Although they contain also this information, it is not very convenient to use them to check if a particular stock is under- or overvalued with regard to its historical performance relative to gold. In other words - the trendline from the above charts describes the AVERAGE values of AU at given gold prices, so when AU trades above the value from the trendline, one can say that it is overvalued. Conversely, when AU's price is lower than what one would expect it to be based on the trendline and today's gold price, then one can say that AU is undervalued.

One of the strategies to use this information and make the most of your gold investments is to purchase stocks when they are undervalued, and sell when they are overvalued. Another strategy (if you're risk averse and want to stay in the precious metals market at all times) is to switch from overvalued gold stocks to gold and re-purchase them once they become undervalued to the metal. It is advised for buy-and-hold Investors to rebalance their portfolios on a regular basis - selling overvalued stocks to buy undervalued ones might be a very profitable idea.

Not only do we provide you with a convenient way to check current status (under- or overvaluation) of AU and other gold/silver stocks, but we also tell you what will the "fair" (meaning the one from the trendline, that is not over- nor undervalued to gold) value of AU be if gold moves up or down to a certain level. And yes - all calculations/charts are updated on a daily basis.

What's next?

Answer

Simply tell the truth :-). Extraordinary precious metals stock charts along with their interpretation updated daily and no payment required. There is also free, 7-day, full-access trial, and all we ask you is your first name and your e-mail address (kept confidential), so we know where to send our free updates.

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Answer

Yes, given that you do not change our charts in any way, and that you provide a link to our website (not to a picture) next to the chart. You may use up to 3 of our charts per week. You may not link directly to our charts (to graphic files) - instead, if you wish to use our charts on your website, copy a static version of the chart and post it from your own server. Naturally, in any case our charts are copyrighted by us and we retain full rights. Please contact us, if you have specific reprint requirements.

Answer

Yes, our Premium Subscribers have been enjoying these rankings for many months now. We provide them in the form of interactive Java programs; they are called The Leverage Calculators. Apart from the abovementioned functionality, our calculators provide you with the list of best stocks for a particular trade in mind. You enter the price of gold at which you want to purchase your gold stocks, and the price at which you want to sell, and our calculator tells you which stocks to use to make the most of this trade. We invite you to try the sample version of the Gold Leverage Calculator.

Gold Stocks
ABX	AEM	AU	AUY	BVN	EGO
FCX	GFI	GG	GOLD	GSS	HL
HMY	IAG	KGC	NEM	RGLD