The recent rebound in gold price has taken it very close to crucial levels. $1300 is within reach, and it will be interesting to see how the prices move next week. Most stocks, including Randgold, have rebounded strongly. A 8% rise of gold prices from the lows has resulted in about 16% rebound in Randgold. Some stocks have moved 25% from the recent lows. The volumes in Randgold have been very good which indicates that the technical rebound has been strong. If gold can move another 5% from here, then the technical reaction in gold stocks may be even stronger. In fact, a part of the recent move has been in anticipation of short term positive movement in gold. The sentiments remain weak, and economists and analysts have their own theories about how gold will move from here. There are several negative voices, but the positive voices are increasing. Legendary investors like George Soros and Jim Rogers are a bit more positive on the sector at current levels. Jim Rogers had stated that he would buy gold if it touches $1300 and buy more if it reaches $1200. Marc Faber had stated that a 20% rebound in gold could lead to doubling of some specific gold stocks. As mentioned in a SA article, the average cost of mining gold is around $1200. There are some mines, like development stage company Pershing Gold (PGLC), which have much lower expected cost, but the major producers are likely to cut production if the price falls below below $1200. RandGold has already take steps in reaction to the fall in gold prices. It has reviewed its operations and projects and reduced the capex /opex. So a price below the recent lows may lead to some supply / demand adjustments. If things stabilize and the gloom recedes, it may be a stock picker's market.
