Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Further Clues Reveal Gold’s Weakness - 26th Nov 20
Fun Things to Do this Christmas - 26th Nov 20
Industries that Require Secure Messaging Apps - 26th Nov 20
Dow Stock Market Trend Analysis - 25th Nov 20
Amazon Black Friday Dell 32 Inch S3220DGF VA Curved Screen Gaming Monitor Bargain Deal! - 25th Nov 20
Biden the Silver Bull - 25th Nov 20
Inflation Warning to the Fed: Be Careful What You Wish For - 25th Nov 20
Financial Stocks Sector ETF Shows Unique Island Setup – What Next? - 25th Nov 20
Herd Immunity or Herd Insolvency: Which Will Affect Gold More? - 25th Nov 20
Stock Market SEASONAL TREND and ELECTION CYCLE - 24th Nov 20
Amazon Black Friday - Karcher K7 FC Pressure Washer Assembly and 1st Use - Is it Any Good? - 24th Nov 20
I Dislike Shallow People And Shallow Market Pullbacks - 24th Nov 20
Small Traders vs. Large Traders vs. Commercials: Who Is Right Most Often? - 24th Nov 20
10 Reasons You Should Trade With a Regulated Broker In UK - 24th Nov 20
Stock Market Elliott Wave Analysis - 23rd Nov 20
Evolution of the Fed - 23rd Nov 20
Gold and Silver Now and Then - A Comparison - 23rd Nov 20
Nasdaq NQ Has Stalled Above a 1.382 Fibonacci Expansion Range Three Times - 23rd Nov 20
Learn How To Trade Forex Successfully - 23rd Nov 20
Market 2020 vs 2016 and 2012 - 22nd Nov 20
Gold & Silver - Adapting Dynamic Learning Shows Possible Upside Price Rally - 22nd Nov 20
Stock Market Short-term Correction - 22nd Nov 20
Stock Market SPY/SPX Island Setups Warn Of A Potential Reversal In This Uptrend - 21st Nov 20
Why Budgies Make Great Pets for Kids - 21st Nov 20
How To Find The Best Dry Dog Food For Your Furry Best Friend?  - 21st Nov 20
The Key to a Successful LGBT Relationship is Matching by Preferences - 21st Nov 20
Stock Market Dow Long-term Trend Analysis - 20th Nov 20
Margin: How Stock Market Investors Are "Reaching for the Stars" - 20th Nov 20
World’s Largest Free-Trade Pact Inspiration for Global Economic Recovery - 20th Nov 20
Dating Sites Break all the Stereotypes About Distance - 20th Nov 20
THE STOCK MARKET BIG PICTURE - Video - 19th Nov 20
Reasons why Bitcoin is Treading at it's Highest Level Since 2017 and a Warning - 19th Nov 20
Media Celebrates after Trump’s Pro-Gold Fed Nominee Gets Blocked - 19th Nov 20
DJIA Short-term Stock Market Technical Trend Analysis - 19th Nov 20
Demoncracy Ushers in the Flu World Order How to Survive and Profit From What Is Coming - 19th Nov 20
US Bond Market: "When Investors Should Worry" - 18th Nov 20
Gold Remains the Best Pandemic Insurance - 18th Nov 20
GPU Fan Not Spinning FIX - How to Easily Extend the Life of Your Gaming PC System - 18th Nov 20
Dow Jones E-Mini Futures Tag 30k Twice – Setting Up Stock Market Double Top - 18th Nov 20
Edge Computing Is Leading the Next Great Tech Revolution - 18th Nov 20
This Chart Signals When Gold Stocks Will Explode - 17th Nov 20
Gold Price Momentous ally From 2000 Compared To SPY Stock Market and Nasdaq - 17th Nov 20
Creating Marketing Campaigns Using the Freedom of Information Act - 17th Nov 20
ILLEGITIMATE PRESIDENT - 17th Nov 20
Stock Market Uptrend in Process - 17th Nov 20
How My Friend Made $128,000 Investing in Stocks Without Knowing It - 16th Nov 20
Free-spending Biden and/or continued Fed stimulus will hike Gold prices - 16th Nov 20
Top Cheap Budgie Toys - Every Budgie Owner Should Have These Safe Bird Toys! - 16th Nov 20
Line Up For Your Jab to get your Covaids Freedom Pass and a 5% Work From Home Tax - 16th Nov 20
You May Have Overlooked These “Sleeper” Precious Metals - 16th Nov 20
Demystifying interesting facts about online Casinos - 16th Nov 20
What's Ahead for the Gold Market? - 15th Nov 20
Gold’s Momentous Rally From 2000 Compared To Stock Market SPY & QQQ - 15th Nov 20
Overclockers UK Quality of Custom Gaming System Build - OEM Windows Sticker? - 15th Nov 20
UK GCSE Exams 2021 CANCELLED! Grades Based on Mock Exams and Teacher Assessments - 15th Nov 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Powerful Reversal and Shakeout in the Junior Gold Mining Stocks at May Lows Around $33

Commodities / Gold and Silver Stocks 2014 Oct 13, 2014 - 06:45 PM GMT

By: Jeb_Handwerger

Commodities

Summary

  1. Three years ago in early 2011, I cautioned my readers to be careful to chase gold and silver higher as it was moving parabolic. Now it is oversold and ignored.
  2. Be careful now of parabolic rises in the S&P500 (SPY), Long term US Treasuries (TLT) and US dollar (UUP). Investors are scared and looking for liquidity.
  3. Silver (SLV) is trading below $17, Gold (GLD) is testing major support at $1200. The GDXJ has been outperforming and has not violated 2013 lows.
  4. If $1180 does not hold, gold (GLD) may test lower prices near $1050 as that is the approximate 50% retracement of the 2001-2011 bull market.
  5. Some smart traders are expecting a triple bottom at $1180 on gold with a bounce off current oversold levels with a small pullback in December for tax loss selling.
  6. Junior Gold Mining ETF (GDXJ) Makes Bullish Reversal at May Lows around $33.

Over three years ago on April 28, 2011 at a time when investors were piling with two fists into gold and silver ETFs, I wrote in this popular article published on Seeking Alpha, "The virtues of gold (NYSEARCA:GLD) and silver (NYSEARCA:SLV) are being addressed far and wide. My readers know the steady drumbeat of praise that is reaching a crescendo for the white metal scares the hell out of me. A parabolic rise has formed in silver and gold… Please note that at these times of extreme optimism volatile pullbacks become more prevalent. Parabolic rises must be approached with caution." At that time all over the mainstream media huge gold predictions of $5000 were forecasted as Central Banks became net buyers of gold for the first time in many years.

The Chinese and Russians were some of the largest acquirers of physical gold. Also large hedge funds, some managed by industry giants such as Paulson, Soros, Rogers and Einhorn, began buying ETFs and junior miners. This led to a parabolic and overbought move in precious metals, which I cautioned my readers about in the referenced article above. It should be noted that a few days after this article was published, silver topped at $50 and gold rolled over a few months later at $1900.

Now silver is trading below $17 at prices not seen in years below its 2010 breakout price. Silver does look like it is approaching a major support uptrend at the $15 level. If $1180 does not hold, gold may test lower prices near $1050 as that is the approximate 50% retracement of the move from $300 in 2001 to $1900 in 2011.

It is evident that both precious metals are in a long term secular uptrend, yet the mainstream is completely ignoring gold and silver, the exact opposite of what was happening in 2011. Now we hear the steady drumbeat of the shorts who say deflation is here to stay with low interest rates. They say stick to financial assets like the dollar and large caps which brings music to my contrarian ears. Low interest rates and low inflation do not last forever. They fuel asset bubbles which burst.

Notice the recent bullish engulfing outside reversal in the junior gold miners on high volume.  Major support may be entering the junior gold miners at May Lows at $33.  This powerful reversal day could be a harbinger of a bullish change in trend.

The best investments are found with real assets in neglected sectors such as the junior miners which are trading at historic discount valuations. The junior mining sector has grown completely out of favor which gives me excitement in continuing my search for the best real assets in the world when there is not much competition.

The junior gold mining sector (NYSEARCA:GDXJ) is completely overlooked by the retail public, which makes contrarian investors who accumulate real assets content as they can find the best deals at big discounts. Now the same momentum funds that were piling into gold and silver in 2011, have been buying real estate (NYSEARCA:XHB), the dollar (NYSEARCA:UUP) and S&P500 ignoring mining and commodities.

For the past three years, the US economy has had low interest rates with supposedly low inflation. How long can that last when governments all over the world are using the printing press like never seen before? The financial markets are 100s of trillions of monopoly money not backed by anything. Remember, all the gold ever mined is under $7 trillion. The US government alone has a $17 trillion debt.

I will continue to search all over the Earth for the best real assets to hedge against inflation and decline of paper currencies. The worst way to hedge against inflation is by buying inflated assets. Right now, the S&P500 and dollar are historically overpriced, while real mineral properties can be bought for virtually pennies of a penny on the dollar. Despite record demand for gold and silver coin sales, the price continues to drop because of the strong dollar providing deeper value for acquirers of the most reliable form of money known to man.

On another note, the dollar is very strong right now moving parabolically, but that could be a trap. There are many potential black swans to change this trend of rate hikes. Ebola, Jihad Terrorism, Ukraine, Iraq and now China crackdown on Hong Kong protestors could spiral foreign exchange and commodity markets out of control. Gold and silver is the best financial hedge against war, uncertainty and instability. It may be time now if you are sitting on cash to diversify into physical gold and silver and the highest quality junior gold and silver miners (NYSEARCA:SIL) which have top properties, strong treasuries and experienced management teams.

Sign up to my premium service to stay up to speed.

By Jeb Handwerger

Disclosure: Author owns no stocks mentioned.

http://goldstocktrades.com

© 2014 Copyright Jeb Handwerger - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules