pulling back to long term support and is able to be purchased at a discount.
Investors may be seeking riskier assets due to fears of inflation and higher
interest rates. Right now industrial metals such as copper/ nickel, oil and
blue chips are outperforming due to their value of being hedges against
inflation and represent the riskier assets.
Gold and silver which has in the past
represented risk off is still in consolidation mode. Eventually investors
will realize that the monetary metals can do well in both a deflationary risk
off environment as well as an inflationary risk on environment and the trend
will turn significantly higher as it has for the past decade. Gold is
actually finding support and presenting a potential discount buying
opportunity. It is important to accumulate when the public is disinterested.
Right now, Pandora, Facebook and Apple are the current fads, while gold is
being overlooked and placed on sale by Mr. Market.
In 2011 the European leaders come up
with a deal that may save the day for now. The European leaders have come up
with a last minute Greek bondholder rescue and a $1 trillion dollar bank
bailout, which apparently has saved the 2011 market crash from being a depression
and just a mild recession.
Gold Stock Trades is heaving a sigh
of relief in concert with the rest of the financial world. Behind the scenes
in this current crisis of capitalism our Chinese colleagues may be playing
the role of Victoria's Messenger making a timely entrance on the current
stage to play a cameo role in lending validity to the Eurozone QE3.
To paraphrase Ben Franklin,
"Gentleman, we must all hang together or else hang separately."
Gold Stock Trades has written extensively regarding China's role in the world
financial crucible which bears persistent observation. They hold copious
amounts of American and European debt and can not
divorce their partners.
The point of all this to our
subscribers is that the world has a new incarnation of QE3. This means
stoking the boilers anew to percolate the Eurozone as America did in
2009-2011 with the TARP, Obama stimulus, two rounds of QE and Operation Twist
with the recent $1 trillion Long Term Refinancing Option.
It is indeed fitting that the
printing press invented in Germany by Gutenberg in the 15th century be once
again called into service in the production of fiat paper.
Remember that Gold Stock
Trades on October 4th signaled that a stronger than expected risk on rally
was in the cards. We advised that a bottom was being established and that
patience and fortitude was our mantra. While others were running for cover,
Gold Stock Trades was reiterating maintaining a strong hand in a panic driven
market. We also called
the top in tissue paper U.S. treasuries in late December and we are now
witnessing a breakdown in that marketplace.
Many were the icons purporting to
have the inside track on commodities and precious metals who were intoning
that commodities, gold and silver, rare earths and uranium had formed a
bubble and should be shorted. Moreover, they sounded the death knell of the
uranium and rare earth sectors. Paraphrasing P.T. Barnum's admonition,
"There is a sucker born every minute...Every second round the clock,
like dandelions up they pop." The naysayers were wrong. Gold Stock Trades nailed
the bottom in the junior miners.
We are continuing to witness strong
upward moves across the board in our natural resource selections vindicating
our consistent and resolute stance to keep an eagle's eye on staying the
It is increasingly possible that we
may have seen the bottom in our chosen sectors and our mantra should be
reflected commensurate with a powerful, unexpected upward rally which is the
mirror image of the recent downswing. This may be a characteristic
"V-Shaped Reversal" which technically is the hardest to forecast but
among the most profitable and powerful of all chart patterns. We are
encouraged by this upmove, but we must remember
there will be volatility and profit taking as resistance
levels have to be regained.
Gold is finding support at its
uptrend and 52 week moving average.
An important news item surfaced in
2011, in which attention must be paid. Cristina Fernandez flushed with a
landslide victory in the Argentinian election, announced plans to repatriate
the assets of mining companies in Argentina. At this stage of the game, the
definitive scenario is a work in progress. What will be the effect on the
proposed merger on Argentinian miners? We have also been concerned about
lawlessness down in Mexico due to the drug cartels. How will this affect the
gold and silver miners in these two countries? Listen to my recent interview
with Rob McEwen where I posed these questions by clicking here...
GLD, SLV, GDX and MUX