Current times have once again brought into focus the importance of gold stocks in any well-diversified portfolio. In the first two week of 2008 GOLD has delivered, and it is poised to have a strong run as the fiscal year continues.
Yamana Gold (AUY) is my absolute favorite gold stock primarily because the company’s focus on growing its operations and producing gold at cheap levels is well poised to benefit from the rising gold prices. AUY has gained more than 20% since the start of the year and the current volatility in the market demands a look into the future.
Financial analysis employing Moving Average Convergence/Divergence (MACD - a trend following indicator) and Money Flow Index (MFI - a momentum indicator) reinforces the positive outlook for AUY. The recent rise of MACD above the reference MACD-signal and the zero level signals a BUY sign. Moreover, the fact that there is no divergence between the AUY prices and the aforementioned indicators (MACD and MFI) indicates that the reversal in current upward trend is not expected.
Bottom line, AUY is well poised to shine.
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