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We don’t hear much about gold
and silver anymore on the news. This time last year you could not go 5
minutes without a TV or radio station talking about them. Why is this? Simple
really, precious metals have been building a Stage 1 Basing Pattern for the
last 12 months. This boring sideways trading range is how the market gets
most of those long holders out of an investment before it starts another move
up. The saying is “If the market doesn’t shake you out, it will
wait you out”.
We all know time is money so the above
statement makes a lot of sense doesn’t it? Instead of having your money
sitting in an investment that has clearly displayed a large sideways range
with month and possibly years before any significant breakout will occur, why
would you want their money in it doing nothing? There are other opportunities
which you could be putting your money into that could generate more gains
until the precious metals sector sets up with a high probability trading
pattern.
The good news is that gold, silver and
precious metal miner stocks are forming a very large Stage 1 Accumulation
pattern on the weekly chart. This points
to a multi month rally in prices if they breakout above our resistance
levels.
Gold
& Gold Miner Stocks Weekly Analysis:
The chart below shows a lot of analysis and to the
untrained eye this may look messy and confusing, so take your time to review
it. In short, what I am showing are sideways price
patterns using the previous highs and lows for support and resistance levels.
The analysis shows the shift in prices from bearish (down), to Neutral
(sideways). The exciting part about this pattern is that a new bull market
should emerge if my analysis is correct. Now, I’m not talking about 5
-10% move here, I’m talking about a multi month and possibly a yearlong
rally in precious metals that could allow some individuals to retire early if
played properly…
A break above our red dotted
resistance lines should trigger aggressive buying in gold miners along with
physical gold bullion.
In the past month I have been giving
out some of my Stage 1 trading ideas which have generated some decent gains
for those who follow along. All but one have generated gains with FSLR 12.5%,
FB 12%, RIMM 54%, AAPL 5%, TLT 2.5%, XLU 1.5%, and KOL down -5.2%. Keep in mind
that you can follow my trading charts live for free and get some of my stock
and ETF trading ideas here: https://stockcharts.com/public/1992897
Silver
& Silver Miner Stocks Weekly Analysis:
This chart of silver and silver miner
stocks (SIL), shows a very similar pattern to that
of its big shiny sister (Yellow Gold). Silver carries a lot more risk because
of its industrial usage. Also this commodity is thinly traded and can move
very quickly on a daily basis compared to gold. Because of these quick price
movements it has attracted a lot of speculative money which also has
increased the volatility. More often than not silver will move 2-3 times more
on a percentage bases than that of yellow gold.
Battle
of the Miner ETFs Weekly Performance:
This chart compares three precious
metals miner ETFS (GDX – Gold Miners, SIL – Silver Miners, NUGT
3x Leveraged Gold Miners).
Silver miners have held up the best
because the herd saw how big the move was a year ago and are front running
the next potential rally. But, depending on how you read the charts and
sentiment it may be pointing to the dormant gold miners for a bigger than
expected rally. But debating which one will breakout
and run the most is a conversation/debate of its own and even I can argue both
sides. The safe play is that even if gold miners (GDX & GDXJ)
underperform the silver miners (SIL), the NUGT which is 3x leveraged gold
miners should be the same if not outperform silver miners.
Precious
Metals & Miners Trading Conclusion:
In short, I favor trading the miners
over physical bullion simply because the charts show much more profit
potential than if one was to buy the bullion exchange traded funds GLD and
SLV.
Chris Vermeulen
Editor, the
Gold and Oil Guy
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