Loading ...Still Not Sure ? Here’s What I would Do
OK, so I’ve shown that gold is breaking out in front of our eyes in all major global currencies. The chart in US Dollars might be the last one to pop. Here’s where we are now…
Lets take a look at gold stocks. I’ve picked GDX, but it’s the same argument for GDXJ and HUI…
So I would be adding to my holdings on the basis we broke above declining resistance in the 21 area. For the record, I went all in when HUI was around 120 in early 2016. Since then I’ve added some Uranium holdings, and a few other random stocks which struck me as good value. As you can see above, gold stocks have a huge amount of catching up to do. They need to rise another 30% to find themselves in a similar position to gold itself. If you are very cautious/bearish, you might wait until we break through that 32 region. A better policy would be to enter when gold clears $1400. GDX should still be well below 32 at that point, but I would view $1400 as a ‘point of recognition’. When we reach that point, I expect PM stocks to make very rapid advances similar to 2016. Here’s a look at the silver chart…
That, to me, is one incredibly bullish looking chart. I see little reason why we can’t be approaching $20 later this year. Seriously, this is unfolding right in front of our eyes and it’s getting little or no attention. That’s good, very good. I would hold tight if you already have a position, or if not, I would start to build a portfolio at the $1400 breakout, and only sell if we were to move back below the ‘turbulence zone’ marked on my chart. In terms of which companies – I would stick to those listed in the HUI/GDX/GDXJ. I study the individual chartology and try to read as much as I can about the way the company is managed. Personally, I would spread risk across at least 20 miners, so that if one were to go ‘tits up’. it’s not the end of the world. Could we see a total failure here, with gold plunging to $1000 or less ? In a word – yes. I view that as very unlikely though. This has all the hallmarks of the next stage in the PM bull. Good luck to you all.
Great Post Northstar
Recognizing each of us has their own risk tolerance and most in this community have been smacked down so often they are gun shy.
Personally I am still a trader at heart…but its time for me to gamble and take a large position and Sit ( as Sir Plunger is urging)…I have done so …and in 20 solid companies as you have stated here….thats my number too
In the past I have had as many as 50 or more….and that was out of control.
I was fortunate to be in early in 2016 with Spock and to sell when things turned bearish in the charts.
I don’t think my psyche could have held all thru this long “consolidation” So many of these things lost ALL their gains
Same in Uranium …there was a nice pop there but all of it fell apart…lots of people got killed in that market calling a bottom.
Calling a bottom in Commodities in general in 2016 has maybe been correct but if you are holding stocks and the complex then it drops to a double bottom 2 or 3 years later….that sucks the life out of you and your account.
So for me…Holding makes sense here …but there IS always vigilance.
Good luck to all however you play it.
Thabks Fully. We each have a different approach to risk and investment. I tend to take a few risks, but am learning to be more cautious.
Thank you NorthStar. I like that word “turbulence”. Good cautionary note not to leverage for the present at minimum.
Hi Trekker. In this particular instance, I believe we need to get through that whole zone – there are a few resistance points in there.
Thanks, Northstar. This is a clear and easily understood “roadmap” – having a hard copy handy can serve to keep the emotions in check while building positions for the breakthrough at $1,400. It seems lately that every time there is a beat down on the price of gold/silver, they rebound admirably, unlike the recent past. While we may not have the dark green light we all want and desire, there is enough evidence to have holdings now, and add to them. Keeping an eye out for a bombshell drop, of course. I doubt there is a goldbug alive who is not gun shy. That, IMHO, will work to make this a stealth bull for quite awhile – the real core of gold bugs has been burned so many times they will flee to the hills at the slightest sign of trouble…and will then have to scramble to get back in. That makes for a very solid bull market base, and some very good times when the cat is fully out of the bag.
I think you’re right there Silverboom. Battle weary Gold Bugs will take some convincing lol.
Northstar, as always, thanks for the charts and keep them coming. I am going to continue with optimism and say based on your thoughts, Plunger’s, Rambus’, others on the site, and Michael Oliver who shows that momentum on gold, silver, and gdx already broke out weeks/months ago from their long-term trends (remember, he argues price technical analysis follows momentum technical analysis) that the point of recognition will be when gold breaks through ~$1365 (the neckline is slanted down from 2013). This is the point when you wake up the next morning and miners start running fast in this initial run up to $1,400. I would not want my core holdings in after that IMHO. The neckline on the gold chart is slanted down, not horizontal. I think is possible gold strikes $1,400 in this run up and then backtests $1365. So I suppose a $1365-ish backtest could be another buy point. With all the signals pointing to a strong move by gold (and especially silver) this is the time to take a risk IMHO. My core holdings are strapped in, and I will look to add to others that haven’t begun moving yet. I think one of the most amazing charts is the 50-year cup-n-handle Rambus has shown us … I think one should hold some very good silver stocks this round.
Very good points Alfasilver, and well reasoned. I agree $1365 is a key point, but $1400 is likey to get more attention in the mainstream. I will breathe easy once we’re past that point.
Global equity markets: $70 TRILLION
Current weighting of gold in S&P 500: 0.08%
Total market cap of global gold producers: <$250 BILLION
Assuming a 1% gold weighting in global porfolios: $700 BILLION capital.
It wouldn’t take much would it.