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Metals Stocks: Rally Time?

Stewart Thomson
Mar 12, 2013

  1. Gold and silver stocks seem poised for a massive rally. I covered all my gold bullion short positions yesterday, and bought silver stocks.

  2. Whether the recent lows represent the “ultimate bottom”, or there is a bit more downside to come, probably doesn’t matter.

  3. Please click here now . You are viewing the daily gold chart, and a near-immediate move towards $1620-$1625, looks very likely.

  4. From a technical perspective, I would prefer to see gold decline to the $1400-$1450 area (roughly a 10% drop).

  5. Many momentum-based trading funds would likely short gold if that happened, believing that major support had “broken”.

  6. Big bull market moves occur with enormous negative sentiment, and it is the liquidity flows of short covering that produce the most violent jumps in price, to the upside.

  7. Those factors are in play now, but they would be “outrageously in play”, at $1400-$1450.

  8. Have no fear of a drop to that price area. I would not sell any holdings now, to avoid such a fall, even if I was 99% sure it would occur.

  9. If the gold price fell to $1432, what would probably follow is a relentless rally, straight to the $2000 area.

  10. In my professional opinion, if gold declines to under $1500, it’s an opportunity for the entire gold community to act as a cohesive unit, and buy this market fairly aggressively.

  11. If the bottom is really already in place now, and gold begins a major rally, investors who have bought this general price area should do very well.

  12. Please click here now . Double-click to enlarge. That’s the GDXJ daily chart. Note the broken black power downtrend line.
  13. That downtrend line has been broken, and huge volume is occurring. Is a “changing of the guard” in play? I think so.

  14. Please click here now . That’s the daily silver chart, and a nice bullish wedge pattern is forming. If silver does well, silver stocks could do even better.

  15. Please click here now . Double-click to enlarge. That’s SIL-nyse, a silver stocks ETF, and it seems ready to make a beeline for the $20.50 price zone.

  16. I expect junior gold stocks to outperform silver stocks at the start of the move, but then silver stocks should take the “pole position” in the race up the price charts.

  17. Moving averages can be helpful in calling a possible turn in the market, but remember that turn calls should be used to indicate what is coming for items that you bought at points of maximum emotional weakness, and sold at points of maximum emotional strength.

  18. Let’s take a 2nd look at the GDXJ daily chart, just using the 5, 15 series of moving averages. Please click here now .

  19. The gold community has nothing to fear on that chart, nor on any other chart, except fear itself.

  20. Championship fighters don’t try to avoid every blow. They absorb them. Approach the market with the same mindset, as a champion.

  21. Throwing big haymaker punches in a fight is like “backing up the truck” in the market, with the mindset that price is about to “get away”. The end result is generally not a good one, with such an approach. Don’t be afraid to buy something here, but don’t be too sure that the “ultimate bottom” is in.

  22. The 5, 15 series of moving averages is very close to producing a substantial bull move signal, for all junior gold stock investors!

  23. Please click here now . That’s the silver stocks ETF, also showcasing the 5, 15 series of moving averages. Silver stocks are more volatile than gold stocks. The red boxes highlight a number of “whipsaw” moves.

  24. My suggestion, to silver stock investors, is follow the gold stock price charts more than the silver price charts, to cut out the noise, anxiety, and to seek maximum profit!

Mar 12, 2013
Stewart Thomson
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