K

K, Kinross

Hamilton

k apr 2012

Kinross is another “favourite” stock that has not worked as a calamity hedge and or inflation hedge. It is now trading well below the levels it was at prior to the 2008 financial debacle. During that year, by the way, the stock lost 85% of it’s value despite the implosion of the US financial infrastructure. Now the Europeans are doing their utmost best to upstage the Americans by making their own, arguable, much bigger mess. So far the stock is down roughly 50% , sort of replicating the earlier experience and yet it is impossible to find  more than half a handful of “analysts” that are not absolutely sure that more gold stocks are what is needed.

From an EW perspective, the 50% was well within the range of reasonable expectations, wave 4 is just a little higher and 50/62% is a perfectly normal retracement, regardless of whether one looks at the entire sequence as a single bull move, or starts anew in 2008. In fact in the former case the normal target would be wave 4 of previous degree, in this case at $2.50 or so! Should we trade below about $11 the idea that we are only in a wave 4 with 5 still to come will have to be rejected due to overlap. Should the stock ultimately drop in proportion to the 2008 situation in response to what is going on in Europe it would end up at about  $3. Unthinkable given the present mindset which is exactly why it might happen. First we should get a bounce.

K , Kellogg

Hamilton

k b k s

Kellogg is in the process of double topping. It may already have made it’s high, or it may do so in the very near future. At best it could add a dollar or two to it’s value (to $58 ). In the past 5 years it may have spent 4/6 months all told at these lofty levels. My bet is that the next big move is down.

GIS

General Mills is in the same business, that is they put a little wheat and a lot of air in boxes of cornflakes and charge a fortune. The count I put on this chart is, obviously, incorrect. Given the enormous overlap this entire pattern would have to be an expanding diagonal (wedge), or wave 5 is not wave 5 but B. Whatever.  What is more interesting is that the upper trend-line has been reached 4 times already and each time the stock gains less and less. This one is done as well.

K , K wt C update

Hamilton

kmay2011 kwtcmay2011

See earlier blogs. Kinross keeeps dropping  nicely and could, arguable, be completing the complete pattern. Do not buy the stock , buy the warrant instead. The stock could reach the $13 level, perhaps, but in this market stocks tend not to reach the bottom all that easily. For the warrants this matters very little as most of the value is time value which does not erode that fast anymore. Under $1 the warrants present a reasonable gamble on this stock.

K, Kinross , Kwtc , Gold, FX etc.etc.

Hamilton

K aprl 2011 k.wt.c

Lets suppose you like gold and more than anything else you like Kinross simple because it has been going down for the better part of two years , and now , appears to provide you with that missed opportunity. For the sake of argument, lets suppose you are absolutely correct. The next question would be why would you buy Kinross stock (left) if the warrants (right) provide a much better return? (see also previous blogs).

The argument to buy Kinross is a good one. The stock is down from $25 to $15 or, give or take 40% while gold is up by about;

GLD apr 2011 Can $ apr 2011

45% or so , as the Can $ rose by about 15%, for a net of about 30% (notice that I do not take the math too seriously) So, if Kinross was ever attractive, would it not be more so now that the stock is down 40% and the “stuff” up by about 30% , a net discrepancy of 70% (again, never mind the math)

  So, to get to the point, DO NOT EVER (at this time) buy Kinross , buy the warrant instead! You will lose a lot less if you are wrong, and make a lot more if you are right; and that is what investing nowadays is all about.