Close X Cookies are necessary for the proper functioning of By continuing your navigation on our website, you are accepting the use of cookies.
To learn more about cookies ...

Time to Buy Precious Metals Now

IMG Auteur
Published : February 25th, 2013
843 words - Reading time : 2 - 3 minutes
( 5 votes, 4.2/5 )
Print article
  Article Comments Comment this article Rating All Articles  
Our Newsletter...
Category : Technical Analysis

Since the end of December we've been writing about the coming bottom in precious metals. Our forecast for 2013 was to see a low in Q1 and then continued consolidation until the end of the summer in which Gold could be in good position to break $1800. That forecast remains largely intact, although it appears the mining stocks will bottom quite a bit lower than we thought two months ago and even five months ago. Three weeks ago we noted that a potential final bottom was on the way. After beating around the bush we are ready to say that now is the time to begin buying and we'll show you why.


In our article three weeks ago we noted this major trendline support for the gold stocks. The market is about 6% from this major trendline which also coincides with the 62% retracement of the 2008 to 2011 cyclical bull.

24hGold - Time to Buy Precious...

Let's zoom in on the short-term for GDX as we prefer it to the HUI above. We already know the major support trendline (for the sector) is nearby. The sector is approaching that support in an extreme oversold condition. GDX has shed 31% in the past five months and 18% in just 21 days. Moreover, note the three open gaps and how they've occurred following an already substantial decline. Hence, these gaps are a reflection of emotion which leads to panic. If we see a final gap then it is likely to be an exhaustion gap which would signal a reversal is imminent.

24hGold - Time to Buy Precious...

For Gold & Silver I show weekly candle charts as they give us an idea of the bigger picture. That picture is one of long consolidation after significant gains following the 2008 low. Recall the price action from 2009 to the 2011 peaks. Gold gained from $950 in the summer of 2009 to a peak of $1923 in the summer of 2011. In the same period Silver went from $13 to $49. Folks, these are massive moves that take time to be digested. By time we mean quarters to years, not weeks or months. As we sometimes try to decipher every wiggle, it's easy to forget that point. Turning back to the present, pay attention to how the metals close this week and the next few weeks. There is major support at these levels and we expect to see the metals hold the ranges denoted on the chart.

24hGold - Time to Buy Precious...
Larger Image

Let's throw in the S&P 500 for a little intermarket analysis. We have the gold stocks extremely oversold and Gold and Silver at major support while conventional equities are nearing major resistance. Which side seems to be a better buy right now? Moreover, note how each subsequent advance is getting weaker as well as shorter. Mainstream pundits like to laud this as a great bull market. The S&P rebounded 105% in the first two plus but in the 22 months since it is up only 8.8%. This is hardly a resemblance of a new secular bull market. Go look at 1942 to 1946 and 1982-1986 to see how secular bull markets actually begin. The S&P 500 has a cyclical bear market in between now and the start of the next secular bull.

24hGold - Time to Buy Precious...


Jason Goepfert the brilliant creator of, notes that Gold's public opinion is at its second lowest reading in a decade. Gold has declined in price since this data was updated. Perhaps it could reach the lowest in 10 years?

24hGold - Time to Buy Precious...
Larger Image

Meanwhile, in other sentiment news, Dan Norcini notes that hedge fund short positions in Gold are at a 5-year high and Bloomberg noted that bets on higher Gold prices fell to the lowest since 2008.

I stumbled upon this chart which I think is from Option Strategist. It shows the weighted put-call ratio for GDX. It's at a 27-month high.

24hGold - Time to Buy Precious...

Another from is data from the Rydex Precious Metals Fund. This is a fund focused on mining stocks. Assets in the fund have declined 50% in just the past four months! From Q1 2011 to Q2 2012, assets gradually declined. Recent action shows panic and capitulation. Relative to all sectors, this fund's assets are inches away from reaching a minimum of a six-year low.

24hGold - Time to Buy Precious...
Larger Image


The technicals show the precious metals complex as extremely oversold and nearing strong support. This coincides with extremely negative sentiment which is bullish from a contrary perspective. Anecdotally speaking, I am amazed at the explosion of negative press in just the past few days. I can't remember anything like it since I began following this market in 2002. Some stocks may have already bottomed while the HUI/GDX could have one nasty day left. We have begun to layer into a few positions and will continue to next week. If you have cash, now is the time to use it on both the metals and the stocks.

Good Luck!

If you'd be interested in professional guidance in uncovering the producers and explorers poised for big gains then we invite you to learn more about our service.

Companies Mentionned : Metals X | Signal |
<< Previous article
Rate : Average :4.2 (5 votes)
>> Next article
"Trendsman" is the proprietor of Trendsman Research, which provides financial and investment related research to private and public entities. Trendsman Research provides: a subscription based newsletter to individuals, personalized research to individuals and institutions and occasional reports available to the public. Trendsman is an affiliate member of the Market Technicians Association (MTA) and has successfully completed the CMT Program (awaiting certification) which certifies professionals in the field of technical analysis.
WebsiteSubscribe to his services
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
06 OctS W.
Good Call. I am saying the same on nearly all his articles. To wit, he has been and remains totally wrong about the PM's for years.
05 Octovertheedge1
"To wit, the “sixth sigma” similarity of Tuesday, Wednesday and Thursday’s silver and “Dow Jones Propaganda Average” charts." When you tro...
Not Enough Gold To Pay All Holde...
03 OctDirk
Have a look at this
Another Case of Market Manipulat...
02 OctDirk
I have studied manipulation by central banks and cannot find any strong evidence that there is manipulation.
Gold and Silver Update
29 Sepjustatrader
Hi Florian, good analysis. But don't you think have a stop at 1120 would be detrimental to the longer term upside bias? It is a great level of supp...
Congress and the Fed Refuse to L...
29 Sepsonora691
Great idea!! Audit the Fed, and while we're at it, let's get someone to audit the gold vaults in Fort Knox and at the Federal Reserve's gold storag...
In Defense of Gold
29 Sepsonora69-1
In 1933, President Roosevelt outlawed the ownership or possession of monetary gold by any US individual, partnership, association or corp...
29 Sepsonora69
In 1933, President Roosevelt outlawed the ownership or possession of monetary gold by any US individual, partnership, association or corp...
Most commented articlesFavoritesMore...
World PM Newsflow
Mining Company News
Azimut Expl.(Gems-Pl-Ag)AZM.V
Azimut acquires Duquet Property, Nunavik
CA$ 0.10+0.00%Trend Power :
Corporate news
Section H Drilling 135 m South of Heberto Gold Discovery Hits Gold-Bearing Heberto Style Zones
CA$ 0.08-16.67%Trend Power :
Corporate news
Teryl Res.(Ag-Au-Gems)TRC.V
CA$ 0.02+0.00%Trend Power :
Corporate news
Northern Superior Resources(Gems-Ur)SUP.V
Northern Superior Reports Additional New Showing, Grizzly Property, West-Central Quebec
CA$ 0.03+0.00%Trend Power :
Corporate news
Integra Gold(Gems-Ag-Au)ICG.V
Integra Gold Announces Discovery of New Gold Bearing Zones at Lamaque South and Discloses Significant Drilling Results from No. 6 Vein including 22.64 g/t over 2.59 meters*
CA$ 0.30+3.51%Trend Power :
Corporate news
Teck Announces Silver Streaming Agreement with Franco-Nevada
US$ 6.70+12.61%Trend Power :
Corporate news
6:02 am Teck Resources enters long-term streaming agreement with Franco-Nevada Corporation (FNV) linked to production at the Antamina mine; FNV to make a $610
US$ 6.70+12.61%Trend Power :
Exploration and drilling
Vale do Rio(Coal-Cu-Fe)RIO
Rio Tinto’s Aluminum Production: Is There an Upside?
US$ 37.93+7.09%Trend Power :
Corporate news
Gold Road ResourcesGOR.AX
2015 Annual Report
AU$ 0.44+0.00%Trend Power :
Corporate news
2015 Sustainability Report
AU$ 6.10+1.84%Trend Power :
Corporate news
Comments closed