Janus - The two faces of the current PM situation

Well,

Did you miss the current run up in the precious metals?  Oooh, let's take a look shall we?

Looks like the bottom may have been in late June, and now the technicals are getting a bit stretched, and as an investor, you are not looking at an optimum time to buy as your risk of losing if you enter here is much higher than 2 weeks ago.  If you buy correctly, you can eliminate a great deal of risk of losing your principal.

However let's examine the other side of the coin shall we?  Not only should you look at the daily charts when doing tech analysis to determine low risk entry points, but also the weekly charts, especially when you are dealing with a long-term trend.

So, here goes.

Well, if you like to look at the weekly charts, you've barely missed a thing.  And honestly, that's probably where you need to add your core positions, on the weekly charts.  It's OK to trade on the daily charts, but core additions are what's going to make you real money in this PM bull market.

Note the arrows at the bottom where MACD has crossed to the positive.  There were nice run-ups on the two prior crosses, and I have a feeling that this time is going to be no exception.  Also, note that this MACD dip made it below the zero line, as the prior 2 did not.

So, if you are adding to your core, buy some positions on Monday.  If you are adding to trading positions, wait for a better opportunity.

On a personal note, I am beating the GDX and SIL indexes (50/50 weighting) this year by 3%.  If I was a hedge fund manager, I'd be rolling in the dough charging my client fees for that outperformance.  I attribute my success to technical analysis, and buying at low-risk opportunities and hedging when things have looked wildly overbought.  Can this strategy backfire on me?  Sure, but for now it has been working like a charm.

I'm back in the markets (PM's mostly), and I am about 85% invested.  Always a good idea to keep some cash around to scoop up any short-term opportunities in wildly oversold stocks that have great fundamentals.

Until the next time...

Fiat Doubter