|
It
was a wild week to be sure and we’ve hit a tentative bottom in US
equity markets with the S&P printing a double bottom pattern as I’d
hoped would occur.
We’ve
been avoiding trading in the markets since the early part of August when we
took some large short positions and made a killing in only a few days.
Then we were market watchers as there were no great chances to trade in my
opinion.
We
saw another great chance last week, Thursday to be exact and we went heavily
short once again. We took profits as markets and our stocks positions
tanked and then we covered all late on Tuesday as markets appeared to have
bottomed and so far they have.
We
all but doubled the swing trading account in those 4 trading days which is
great, but as many of you well know, mining stocks have taken some huge hits
and we were not immune to it.
In
hindsight perhaps we should have sold them all early in August when we saw a
larger move lower on the horizon for the markets but alas, we
didn’t. Many of the stocks are smaller anyhow and the last thing
I wanted to do was amplify the moves lower.
It’s
not easy owning junior mining companies and even harder owning the odd
exploration company. When you decide they are a company you believe in
you have to take the long haul approach.
The
mania is coming for mining stocks someday, I think.
It's
been a long wait but until the mining stocks mania we’re having fun
swing trading when the opportunities appear and making some good coin while
we’re at it!
Let’s get right to the charts.
Metals review
Gold
stabilized somewhat this past week and rose 0.98% but the moves were still
sharp and relatively large for gold. Last week I said I thought the low
was in but after this weeks action that thought is
now highly contentious as it’s building a sloppy bear flag pattern here
which often turns the price lower.
That
being said the pattern could also be the makings of a slight U pattern which
would be bullish.
I
really have no idea at this time other than some type of base is being built
and once gold moves one way out of it then that should be the new trend for a
week at least.
What I do know is that gold is much cheaper today than a few weeks ago.
It’s on sale!
The
good news is that gold has done nothing than trade the opposite way than it
should during this bull market. We’ve seen a variety of patterns,
from this bear flag to head and shoulders patterns,
show a breakout in the right direction only to quickly reverse the other way
catching traders off guard.
That’s
been the major reason that I’ve avoided trading gold and silver.
They just don’t do what they are suppose
to. And in gold’s case, it just moves too slowly to trade in my
opinion.
Silver
rose a solid 4.17% for the week and looks much better than gold as this base
that is slanting lower is termed a bull flag pattern and often leads to
higher prices.
While we all
know how silver trades wrongly to how it is supposed to I’m hoping that
is not the case this go round. Actually, I’d really like to be
able to buy silver at $20 an ounce, if only for a couple hours.
The
SLV ETF is showing slower volume as this base forms. From all I’m
hearing and seeing the real accumulation is taking place in the physical
market as sales records are falling almost daily at brokers and mints.
With
such accumulation you’d think the price would be moving higher but
it’s not. Its
a paper price, not a physical price as prices are determined to a large
degree in the futures pits and no physical silver ever actually changes
hands. It’s not what the news says the price is that is
important, it’s the actual price you can get or sell your ounces for.
The
premiums will be huge as we move forward and that is the best reason for
owning the actual physical metals.
Platinum
dropped only 1.13% for the week but it was a volatile week with a $100 range
or so. The volume here has absolutely dried up but the PPLT ETF saw
pretty good volume on the low which is more indicative of a bottom.
I
wouldn’t be betting either way with platinum right now, but if you
twist my arm I’d have to think a low is now in.
Palladium
fell 3.89% on the week and it’s lucky to only have fallen that much as
the low of the week was much lower. As with platinum, palladium is
probing for a low here but still far too volatile to consider for anything
other than a quick trade or perhaps some accumulation of the physical bullion.
The PALL ETF saw great high volume on the mid week lows which indicates the low is now in. We
shall see.
Fundamental Review
We saw some downgrades of countries debt ratings this past week again with Italy and Spain feeling
the wrath. Several banks have also been downgraded and many large banks
are seeing their stocks under sever pressure which
really tells the tale.
The real problem is the banks though as they have
the most exposure to these countries through their bonds or treasuries.
I’ve said it many times before and I’ll say it again. Any
bailout of a country is actually a bailout of the banking system and large
banks as they won’t be allowed to fail en mass as they should be.
Sure there will always be some banks who will be
allowed to go under to be made an example of but those will be relatively
small banks and most with any clout will always be
bailed out as we’re seeing now.
Speaking of banks failing we continue to see them
trickle in. We saw only two failed banks
in the U.S. this
past week.
Silver eagle sales are headed for another record
year and the sale on now is doing nothing to subside
demand, in fact it’s increased it dramatically as September saw the second highest
sales numbers for
silver eagles ever!
The best month ever was January of this year and
five of the top ten sales months ever also came in 2011. It seems the
word is getting out that silver represents an easy, safe and sure winner of
an investment.
China’s insatiable appetite for precious metals will somewhat be
quenched as up to 2,000 gold ATM’s are to be installed in the country. As the
late J.P. Morgan said, “gold is money and nothing else”. It
seems the Chinese understand this.
Venezuela is moving forward with their plans to repatriate
their gold and
they expect the first shipment in mid-November. They’re planning
to bring back $11 billion in gold bullion. I’m very curious to
see how this plays out.
I get lots of questions on how to store your
precious metals and my answer is usually in a few different spots. Here
is an article that goes
into a little more depth on the subject. Burying it safely is definitely one route
that should be considered and as always, but especially in that route, keep
it secret and only tell perhaps one other person whom you trust implicitly
where the metals are stored.
If you’re in Canada please to enjoy this long
Thanksgiving weekend and stuff your face with turkey. If you’re
in the U.S., happy Columbus Day. And if you’re elsewhere I still
wish you a great week ahead.
Until next week take care and thank you for
reading.
Warren Bevan
www.preciousmetalstockreview.com
If you found this information
useful, or informative please pass it on to your friends or family. You
can subscribe by visiting www.preciousmetalstockreview.com and adding your email to the
newsletter signup found on the left of every page.
Free Service
The free weekly newsletter “Precious Metal
Stock Review” does not purport to be a financial recommendation
service, nor do we profess to be a professional advisement service. Any
action taken as a result of reading “Precious Metal Stock Review”
is solely the responsibility of the reader. We recommend seeking
professional financial advice and performing your own due diligence before
acting on any information received through “Precious Metal Stock
Review”.
|
