Mining Equities Scoring &
Timing Newsletter
So What's The Catch?
Michael Kilbach
November 8, 2006
With all the difference of
opinions from so called "experts" on how to invest
your capital, how does an investor cut through the "noise"
to get a reasonable return on their investment? Is investing
really that complicated? Can the average person make money in
the markets? In our opinion it can be much easier than most people
think.
How? Through observation and
analysis we have developed a unique scoring system to simplify
investing in equities. Our approach is simple but effective.
We follow a set of time tested rules and disciplines that allow
us to eliminate emotional trading decisions and instead execute
well timed, profitable equity trades.
- We believe all major macro
market trends will not end until an extreme is reached in the
direction traveled.
Once that extreme is met, like a pendulum swinging, the new trend
will start and will not end until the extreme is met in the other
direction.
- We evaluate and determine
the major long term trend in the markets. This requires significant long term data to
clearly illustrate the trend.
- We eliminate the distractions
of day to day "noise" and media hype. In our opinion, daily newscasts and
justification for a particular markets movement is just "noise"
that complicates ones thinking and is generally irrelevant to
the long term trend.
- Once we have identified
a long term bull market, we take positions in related equities
at low risk entry points. We
have a portion of our holdings for long term investment which
we buy and hold. Another portion of our investment we trade in
and out of the bull market for potentially greater returns.
So how does one remove the
human emotions of "fear" and "greed" from
the decision making process when buying in and out of a particular
investment? In our opinion investors must be disciplined and
have a predictive, reliable system. Let us show you ours. We
will display a series of charts and explain our process of trading
mining equities.
1)
Long Term Macro Market Trend
The monthly chart below illustrates
the long term movement of a current major macro market trend.
Using a total of six different market indexes combined into one
gauge, we measure the progress of the long term Precious Metals
(PM) bull market against these various other markets. The Blue
line is our scoring system which measures the long term trend.
When the blue line is trending down, commodities and precious
metals are considered to be in a major bear market. When the
blue line is trending up, commodities and precious metals are
considered to be in a bull market. The thin grey line in the
background is the price of Silver.
Chart 1:
Major Macro Commodities Trend - February 1971 to October 2006
(Monthly)
- Blue Line
= Precious Metals Market Score (1 to 10) Illustrates the commodities market trend
- Grey Thin Line in background
= Silver London Fix Price
You will notice the score peaks
at ten at the top of the commodities bull market in 1980 relative
to these other markets. It then bottoms in 2000 against these
same markets before heading higher again. You will also notice
the recent breakout from the long term downtrend. In our opinion
this confirms that the new bull market will not end until the
gauge reaches the upper portions of the chart. This is an example
of one major trend not ending until the next extreme is reached
in the opposite direction. As a general rule, one should add
to investment positions once the trend turns up from its low
and it is still in the lower portion or green sections of the
chart. We believe as the precious metals bull market matures,
evident when the blue line scoring system nears the upper portion
of the chart, it would be wise to lighten up significantly on
invested positions. This approach helps investors ignore the
"noise" and disregard the media hype of the exciting
nature of a maturing bull market spike.
As illustrated above, the long
term trend in precious metals is in the very early stages of
a bull market. According to our strategy, this is when to purchase
precious metal investments.
2) Ignore The "Noise" And
Take Positions
We then created a timing system
for entering and exiting investments that benefit from the Precious
Metals bull market. How?
- We pick equities that profit
from the mining and exploration of mainly silver and some gold.
- We make sure these equities
have enough trading history to effectively break down their data
into our scoring system.
- We then overlay our customized
scoring system on top of the equity and use it as our guide to
add, lighten up, hold or sell positions.
- Basically we add to positions
when the score is near or at the bottom of the chart and lighten
up or hold onto positions at the top of the chart.
- Generally we do not think
one should exit positions entirely until the major trend is nearing
the end of its bull market. As illustrated in our first chart
above, we think this bull market has a very long way to run yet.
In the following charts please
take note at how profitable a trade would have been if you had
taken positions when the gauge was in the green area and lightened
up on those positions when the gauge was in the red area.
Chart 2:
Silver Bullion Market Scoring System - November 6, 2006 (Daily)
- Blue Line
= Silver Bullion Score (-4 to +4)
Illustrating buy and sell signals
- Grey Thin Line in background
= Daily Silver London Fix Price
Chart 3:
Our Custom Silver Equity Index, Market Scoring System - November
6, 2006 (Daily)
- Blue Line
= Silver Equities Index Score (-4 to +4) Illustrating
buy and sell signals
- Grey Thin Line in background
= Our Custom Silver Equity Index Value
Chart 4:
ASM.V, Avino Silver and Gold Mines, Equity Scoring System - November
6, 2006 (Daily)
- Blue Line
= Investment's Score (-4 to +4)
Illustrating buy and
sell signals
- Grey Thin Line in background
= ASM.V, Avino Silver and Gold Mines Price
Chart 5:
SSO.TO, Silver Standard Resources, Equity Scoring System - November
6, 2006 (Daily)
- Blue Line
= Investment's Score (-4 to +4)
Illustrating buy and
sell signals
- Grey Thin Line in background
= SSO.TO Silver Standard Resources Price
So What's The Catch?
Every trading system
requires some degree of human discretion and common sense. We
are "straight shooters" and admit there are a few times
where less than ideal signals may be given. However, as a general
rule we have determined that our timing system can greatly enhance
an individual's probability of outperforming the market. But
our performance speaks for itself. Take a close look at the charts
above and note just how accurate and profitable our trading system
has been. Our strategy is not to buy or sell an investment position
all at once. Instead we buy in stages and average into our investment
when the timing score is in the green area and sell in stages
as we near the top of the scoring system. Using our customized
scoring system we greatly increase our odds of consistently buying
low and selling high. We have found this strategy exceptionally
profitable. Simply look at our charts and ask yourself, 'could
my investment decisions benefit from this insight both from a
long term and short term perspective?'
This article is a trial run
to determine if readers would like to know more about our system
and possibly use it as part of their investing strategy. We need
your feedback. Would you like to view these charts and other
mining equities that are updated on a regular basis according
to our customized scoring system? If you like what you have read,
please provide your feedback to article.feedback@hotmail.com.
In the event we receive a significant number of positive responses
we will create a low cost, bi-weekly newsletter that will post
a series of precious metals equity charts for our subscribers
viewing. The strategy of the service is to ensure it is low cost
and affordable enough that one small, well timed trade can easily
pay for the six month subscription fee. Please reply as your
feedback is invaluable to us. We look forward to hearing from
you.
Good luck and all the best
in investing and in life.
November 7, 2006
Michael Kilbach
email: article.feedback@hotmail.com
Disclosure
and Disclaimer Statement: The author of this article advises that he has
personal investments in silver and gold mining and exploration
companies in addition to and including the companies listed in
this article. The author does not claim any of the opinions expressed
in this article are to be considered complete, absolute and/or
exact but rather general beliefs. The author does not accept
responsibility for possible errors in calculations, data presented
on charts or loss of investment using the trading system. Attempting
to time an investment does not guarantee results. The author
is an independent analyst and not a qualified investment advisor.
It is recommended investors conduct their own due diligence on
any investment including seeking professional advice from a certified
investment advisor before entering into any transaction. The
author has neither been paid or received any other compensation
to write this article.
321gold Inc
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