Gold's overbought and Gold Stocks are undervalued

Although I wish I had been holding more gold etf's (PHYS and GTU, not the GLD scam) in the last couple of months, I am still scraping along and beating the market by 6%.  Probably nothing to brag about considering how crappy the market is these days (Dow, S&P, and NAZ), but I'm still beating it.  Down about 3% this year, but I am coming on strong lately.

I have to believe that the play here is to invest in the miners right now rather than gold.  Although I do have my favorite juniors that I am playing (by the way EAS.V, BYV.V, and SSP.V are very oversold right now, and are looking good Billy Ray!), I am sticking with GDX, GDXJ, and SIL lately.  By buying these it helps keep the transaction costs down in the trading accounts.

GDXJ and SIL probably hold more upside potential than GDX, but also carry more risk.  Here's some charts on the oversold juniors I mentioned above.

EAS.V - Positive Divergence on MACD - New low has not resulted in a lower MACD.  Typically this signals a change of direction.

BYV.V - This stock has filled that massive gap from June and is ready to start rallying again.  Miner is next to a large deposit, and will hopefully get a buyout offer at some point.  They just keep drilling and finding more gold.

SSP.V - Looks like a triple bottom to me.  MACD looking to cross to the upside very soon.

Once again, if you are looking to get back into the PM's, I'd be a buyer of silver stocks or gold stocks at this point.  The ratios suggest that these hold a better entry point than gold or silver at this point.

A few other quick thoughts.  Has anyone noticed what the dollar has not done during this market meltdown? It has not rallied like it did in 2008.  In 2008, treasuries and the dollar were the safe havens.  This time, it's been treasuries and gold.  Silver to a lesser extent, but it looks like silver may be making a move back towards the $50 high in the next week to 2 weeks. 

I mean with the Euro soon to be going down the drain, the dollar can't even rally in a market crisis?  That can't be good for the dollar.  Hoping gold and silver stocks won't crash like in 2008, but you need to watch closely and take profits when they present themselves.

First goal - beating the market in 2011. So far so good.
Second goal - positive return.  Working on it, and hope to be there soon.
Third goal - Don't lose capital in massive downdrafts.  Good so far, but be vigilant.

Until the next time...

Fiat Doubter

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 

Looks like meat is back on the menu boys!

OK,

The summer consolidation for the miners is over.  Looks like it ended a little earlier than usual this summer.

Gold is back near its highs, and GDX and GDXJ and many of the junior miners are showing fan-freak-ing-tastic inverted head and shoulder formations, and are trading at a discount based on the fact that most will need to appreciate 20-30% to get back to there May highs.

The euro is imploding, and gold has busted through the old high as priced in Euros and Pounds.  The only reason the dollar will rally over the next couple of months is that the Euro is in serious trouble with the oinkers, and the world will deem the Euro the most worthless piece of toilet paper in grand scheme of worldly toilet paper.

So buy, get back in there and buy, I tell you.

Until the next time...

Fiat Doubter

Dabbling in the silver stocks

Some of the junior and major silver stocks seem to have made a nice tradeable bottom recently.

Bought some of my favorites yesterday and today - SVM, AG, SLW.

This may reverse in a couple of days, so be ready to move once again.  As a couple of guys I really like say, "React to price movement, not what you think should happen." 

And that's it in a nutshell.  I'm thinking we should go lower, but SIL, GDX, GDXJ are all headed up in the near term to correct the vastly oversold levels. 

I'm along for the ride for at least a couple of day.  I hope you all were paying attention and are doing the same.

Until the next time...

Fiat Doubter

TBT I'm dynamite, cause I'm TBT and I'll win the fight!

Time for some perspective on the 20 year inverse bond fund symbol TBT.

I think that this is a great long-term buy point.  Could she hang out around this level some more?  Sure.  But as I like a good entry point on a trade, there is plenty of upside and limited downside.  So, without further ado, let's look at the chart.

She's just broke a downtrend that has lasted a little over 2 months.  In the short-term, it has to break through 35, and then make an assault on 36, and 39.  Of course, not "if" but "when" the Fed makes QE3 public this puppy could come right back to the level it is now.  When Hanky Bernanky is buying the debt, it tends to drive the price up, and the yield down, so for an inverse bond fund, bond price up bad, bond price down good. 

If you have some dry powder, this could be a good long-term play if you believe that bonds yeilds must rise in the future due to the degradation of the US Federal debt situation.

Until the next time...

Fiat Doubter

Box or Head in a Box?

Well, we do have a heck of a head and shoulders pattern on the GDX and GDXJ recently.  Or are we in the lower end of a box (trading range)?

I guess we'll find out in the next week.  For all you who have the answer, just put it in the comments section.  Don't make me do all the work!

As Judge Smells once said,  "Well....we're waiting."

Oh, by the way, I just bought some DDM (Dow Double Bull), as the market seems to have made a nice botton within this new bear move.  You are always going to have move and counter moves.  Remember, surf the waves and you can make some money either way.  I'm just looking to come out of the next month with my capital in my hands, ready to buy PM stocks again as QE3 gets rolling sometime later this year.

Until next time...

Fiat Doubter

GDX - Stick and Move!

As Apollo Creed's trainer once said, "Stick and move, just stick and move.  That kid's dangerous!"  Boy, he wasn't kidding.  And so is our young phenom GDX.  He's really dangerous too lately.  He gets knocked to the mat, he gets up, gets knocked around again, but he finally wins, or at least ties in the first one anyways.  I stoppped watching after Drago.  The point I'm making today is that I think we are at the point where he gets knocked to the mat, once again.  He'll get up again, but why bet on him for the next 10-30 days or so.

First strike:  It's summertime USA.  And for the past three years all things Precious Metals have gone a little cold even though it's heating up quite nicely in the mid-west.  I won't complain as it was a long hard winter this year.  Usually the bottom has been found somewhere in July or August.

Second strike: The fed is desperate to show that things are under control.  The only thing I can picture in my mind is Kevin Bacon in Animal House in his ROTC uniform saying, "Remain calm, all is well.  Remain calm...."  And then he gets run over by the mob.  Hmm, uncanny, but I say Hanky Bernanky is doing a fair imitation of Kevin Bacon at this very moment.  Him and most of the other government stooges who put out great reports like CPI excluding food and energy.  I drove to work today, and I ate some food.  Makes perfect sense that you would want to exclude things like that.  Why don't they put out one like CPI excluding air or water?  Oh, then we all be dead, and it wouldn't really matter, now would it.  But I digress.

Third strike:  Here's the wicked chart of GDX.  U-G-L-Y you ain't got no alibi you ugly, yeah yeah  you ugly.  That's from the Wildcats movie with unknown Woody Harrelson and Wesley Snipes before they teamed up again in White Guys Can't Jump.  I'm full of bad movie quotes and trivia. 

Not so pretty is it? I've been playing DUST lately.  It's a leveraged (2X) gold miners bear fund to try and hedge the remaining positions in my portfolio.  Been doing pretty well with this one and Put options on SIL.  I wish there were a leveraged bear silver stock fund out there, but I've only found ZSL, which is the physical silver bear fund.  Anyone know of a silver bear fund, leveraged or not?

Remember,  it's all about maintaining capital and remaining solvent in this assault on the precious metals.  Nothing goes up or down in a straight line, and that's where you can make some money on a counter-trend within a bull or bear market.  I'm still bullish LT on PM's, but I'm a growling bear for the 2-4 weeks.  The goal to winning against the bankers is understanding their rules.  They sell when you are greedy, and buy when you are fearful. That's what you have to do as well in order to win in the PM game.  Remember, PM's have a technical aspect, a fundamental aspect, and a third element to deal with, and that's the political aspect.  Most investments don't have to deal with the third one, but we do.  Right now, according to the Fed, QEII is coming to an end.  Until they admit QEIII is on the way, or someone exposes the fact that they are doing it on the sly, I think the PM's will fall here.

Until the next time...

Fiat Doubter