Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Waiting to Pounce on Gold and Silver Profits

Commodities / Gold and Silver 2012 Feb 09, 2012 - 06:26 AM GMT

By: Adam_Brochert

Commodities

Best Financial Markets Analysis ArticleLet me start by re-iterating that I am a secular permabull on physical precious metals, particularly Gold. When you're dealing with the end of the road for the current international monetary system (a la the 1930s and the 1970s), there's only one asset that is a complete no-brainer to own. As a hint, that asset is shiny and owned by every central bank in the world "just in case."

However, I also like to trade. When trading, I would sell or buy anything if I though there was a profit to be had. For example, my subscribers and I have been short senior Gold stocks as a "scalp" trade over the past week. Does this make me a traitor? I don't think in those terms, as I am a more practical Gold bug/bull. The more paper I make, the more metal I can buy.



However, once the current short-term correction finishes, it is back to bull mode. Gold, silver, and Gold and silver stocks - they're all going to go higher. The only real conundrum is which of these items to buy as a bull trade once the correction is complete. In another week or so, we'll hit bottom and find out which of these items will outperform.

I like the prospects for the entire precious metals patch. From a trader's perspective, I think silver has an obvious minimum target when using the SLV ETF. Here's an 8 month daily chart of the SLV ETF thru today's close to show you what I mean:



Once we correct a little (likely in a scary fashion over a few days for silver and senior Gold stocks, as they both seem to enjoy volatility as much as Bernanke likes creating money out of thin air), a decent 15-20% move higher is likely. After that, we'll have to see. All precious metal bulls know that we'll ultimately make new highs in silver above $50/oz., but the exact timing is uncertain from a trader's perspective. This is why it is best to simply buy physical metal and hold on for the volatile ride. However, some of us like to speculate with a portion of our capital and this message is for you fellow punters out there in the PM patch.

Now, the senior Gold stocks are the basket case of the PM sector. All this crap about Gold stocks leveraging the price of Gold and having bullish fundamentals doesn't mean anything if they won't perform here and now. And I'll be honest, I'm very concerned about their recent performance. That doesn't mean there isn't money to be made trading the senior Gold stock indices like the GDX ETF, but I am not impressed with the move off the late December bottom so far. Here's an $HUI:$GOLD ratio chart to show you what I mean:



A permabull will tell you that any minute now, Gold stocks are going to blast higher and if you don't buy right now (yesterday, in fact), you're going to miss out on a quadrillion dollars. Me, I don't think so. I think this warning signal should be taken seriously. It means that the senior Gold stocks could be headed for something like this over the next few months (2 year daily chart of GDX thru today's close):



This is not a prediction, by the way, but if senior Gold stocks don't start outperforming Gold soon, don't be surprised if something like this happens. I trade Gold stocks, I don't own them. I prefer to own physical metal and then speculate in stocks and paper metal (as well as anything else that looks like it might be good for a winning trade). Investing and trading are very different and require a different type of focus and attitude. With physical Gold, I never worry about the price on a day-to-day or week-to-week basis (unless I am looking to buy more). Why? Because I understand the secular bull market in Gold and why it won't be over for some time. I never lose sleep or worry if Gold drops 10 or 20% when priced in my local currency (i.e. US Dollars). Wake me when the Dow to Gold ratio gets to 2 (and we may well go below 1 this cycle).

The bottom line is that we're going higher in the PM sector. Exactly how we get there, only Mr Market knows for sure. But I believe there are profits to be made speculating in the paper markets. After calling the exact day of the bottom in the PM patch for my subscribers and I in late December, we sold our long trading positions in senior Gold stocks 2 weeks ago in anticipation of the current correction. We went short senior Gold stocks on February 2nd, catching the high that day. In a week or so, we will be going long again in the PM sector. If you'd care to join us in the dark jungle known as the paper markets, a one month trial subscription is only $15. But please, don't even think about subscribing until you've secured a core investment in actual physical metal held outside the banking system.

Adam Brochert
abrochert@yahoo.com
http://goldversuspaper.blogspot.com

BIO: Markets and cycles are my new hobby. I've seen the writing on the wall for the U.S. and the global economy and I am seeking financial salvation for myself (and anyone else who cares to listen) while Rome burns around us.

© 2012 Copyright Adam Brochert - 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