ENERGY
According to the Sydney Morning Herald:
‘Linc Energy has released estimates its shale resource in South Australia is up to 223 billion barrels of oil equivalent, sending its shares up more than 10 per cent in morning trade.’
It has been a good six months for Linc Energy [ASX: LNC] investors. The share price has gone from 55 cents to $2.70 this week. Linc Energy was an Australian Small-Cap Investigator stock tip in 2007. We tipped it at 65 cents, and at the peak it hit $5.
The shale boom worldwide is huge. Oil giant BP even says it will lead to the US becoming a net exporter of energy by 2030. That’s a big deal for the US, which has relied on Middle East oil for the past 40 years.
GOLD
What’s happening to the gold price? Not much is the simple answer.
It’s floating around $1,600 (that’s in Aussie dollars). At this price level it’s pretty much where it was at the start of last year, so it hasn’t been a great year for gold investors. But what do the charts say?
Your editor isn’t a technical analyst so we asked Slipstream Trader, Murray Dawes for his take on the gold price. Here’s the chart, followed by what he told us:
Source: Slipstream Trader‘The current set up in the gold price is the most interesting I’ve seen for many months. I don’t have any gold stocks in my portfolios at the moment but I think the time is fast approaching to pick up a few beaten up gold stocks.
‘All the indicators point to a strong resumption of the uptrend in gold above US$1700.
‘My long term trending indicator is the 35 day/200 day moving average, and that shows gold is still in long term uptrend although the trend is weak at the moment. A close in the gold price back above the 35 day moving average while in long term uptrend will be a long term trending buy signal now that the price has retested the 200 day moving average.
‘Also there is an ABC set up which points at a buy signal above US$1700 when the price overlaps above ‘A’ in the chart.
‘The Point of Control of the past year and a half’s trading is also around US$1700. A close back above the point of control is another sign that the gold market is strengthening.
‘So from here there is a nice chance of a chain reaction above US$1700 in the short term.’
To be honest, we think gold is always a buy. But technical analysis is a great way to help you choose entry points. And based on Murray’s current analysis, buying gold now appears to be as good a time as any.
TECHNOLOGY
You can make a lot of money betting on technology stocks. We’ve tipped six technology stocks (and two others that cross into the technology sector) in Australian Small-Cap Investigator. But technology stocks can hurt investors too…even the biggest of companies.
This week US technology and fashion accessory company, Apple [NASDAQ: AAPL] did something it hadn’t done in a long time – it disappointed investors. Although you sometimes have to wonder at the fickle market. Apple reported revenue of USD$54.5 billion…for the first three months of its financial year.
But that wasn’t the disappointment. What disappointed the market was Apple’s forecasts for the current quarter. The company figures it will rake in revenue of USD$41-$43 billion. Sounds great? Sure, but it’s not great enough. Wall Street analysts had banked on revenue of USD$45.6 billion.
The outcome was investors crushed Apple’s stock in after-hours trading on Thursday morning. The shares sank 10% to USD$463. That’s the lowest share price since February last year.
The question for investors is whether Apple is now a bargain – it’s down 34% from the peak. Before you pick up the phone to your broker, one word of warning. According Jeff Gundlach, CEO of Doubleline Capital, he told CNBC:
‘I think $425 represents fair value, but since when do broken asset classes and stocks stop at fair value…’
Gundlach is an Apple bear. He even figures the share price could go much lower, perhaps below USD$400 towards USD$300.
If Gundlach is right, it’s much too early to think about bargain-hunting for Apple stock.
HEALTH
Here’s more potentially exciting news in the health world. Australian Life Scientist reports:
‘Cellmid (ASX: CDY) has completed its first animal trial of its anti-midkine antibodies (MK-Ab) in a mouse model of diabetic nephropathy.‘The antibodies were able to reduce kidney damage and preserve kidney function in the treated animals…’
According to the report:
‘Midkine has been discovered to play a key role in inflammation and damage in a variety of kidney diseases and injuries. Cellmid’s antibodies are also under development for the treatment of cancer, and the company plans to commercialise midkine as a biomarket for cancer diagnosis.’
Like all medical research, there’s no guarantee anything will come of this testing. Medical companies have to go through so many regulatory hoops it can take years for a drug or medical product to hit the market.
That said, this looks like a great first step.
MINING
In Wednesday’s Money Morning, Diggers & Drillers editor Dr Alex Cowie nailed his colours to the China boom. He told readers:
‘It amazes me how anyone can be bearish on China’s economy when it has grown FIVE-FOLD in the space of ten years.‘That’s right. My name is Alex Cowie – and I’m bullish about China.’
Alex goes as far to say that the ‘big trade of 2013 is to buy the best of the Australian resource market’s beaten up junior mining stocks.’
While we’re not entirely convinced on the China story, we have to admit that Alex makes a pretty compelling point on resources stocks. One index we’ve followed with interest for some time is the Metals & Mining Index:
This index has gained more than 20% since the middle of last year – outperforming the benchmark S&P/ASX 200 index. But Alex isn’t someone who just talks the talk. This week he released his January issue of Diggers & Drillers, and true to form he’s backed a stock that’s exploring for one of the most economically sensitive commodities – copper.
Looking at the chart above, it’s hard to argue with Alex’s view that small-cap mining stocks are trading at rock-bottom prices.
From the Archives…
How to Find Stocks for Troubled Times: Keep Scalable Businesses in Mind
22-01-2013 – Nick Hubble
Why It’s Still Not time to Buy the Japanese Stock Market
21-01-2013 – Murray Dawes
Hey, Give The Mining Guys a Break
19-01-2013 – Kris Sayce
Here’s Another Reason to Buy Gold at the ‘Bottom’
18-01-2013 – Kris Sayce
CBA Shares ‘Priced for Perfection’: Sell Now
17-01-2013 – Kris Sayce
