This past ( June – September ) rally, is over. Oh, there will likely be another mini-rally to test the $1,800 high, but I would not recommend participating! The reason “WHY” is my insistence on the absolute need for Fundamental - Valuations to be clearly improving and they are Not! Nor, is the Technical picture all that bright
The longer-term horizon appears to be declining and my more near-term (fundamental / valuation) work / analytics does not support the prospect for a near-term / meaningful rally. My (technical / chart) analytics suggests a testing rally and then another pull-back.
For the longer-term only a handful of Mining Companies are forecasting decent earnings growth. Even fewer are giving year over year quarterly earnings that are noticeable positive. This situation may change in the coming weeks but I tend to doubt it.
Much is written about the “WHAT” and the “WHEN” – you may have noticed that in my articles I insist on also knowing the “WHY!” If – I cannot tell myself and my Clients a compelling answer to the question “Why” – I just hold Cash until I can! It is just that simple. You might want to have a look at “My Methodology.”
F + C = R Accurate Forecasting (plus) Precise Confirmations (equals) Results (Consistent Profits)
My focus for the analytics of precious metals is focused on: Gold & Silver & Copper Indices, the ETF, SPDR Gold Shares (GLD) and just 17 Mining Companies. Another couple ETFs I like are (GDX), its junior partner (GDXJ) and (SLV). Typically, gold and silver along with the above securities all move in sync. I am in the midst of pulling away from that theory and treat Gold and Silver separately.
You are likely well aware, the highs in Gold were registered way back in August of 2011. I took my Clients to Cash early in November 2011. My decision at that time was largely based on my matrix of the individual Gold Mining Companies and the above referenced ETFs.
My current recommendation for Gold is to continue to hold Cash.
Gold / Inflation and the “How to Profit”
We all know that Investors in Gold lean heavily on their position that gold, over time, works as an inflation hedge. This position or thought carries with it some meaningful time periods of argument.
This “argument” presents an example and is perhaps as important to your being a consistently successful and profitable Investor as I can share. I highly recommend you read these several paragraphs and ponder the Long-Term Chart below. I hope you do. It is all about “How to Profit.”
The below chart / graphic (1974 to recent date) clearly shows two positive exponential gains and one very long declining period that convinces me that gold is not what you are lead believe by many authors and gold bugs. I suggest that ANY investment that goes up more than inflation can be considered an "inflation hedge." Obviously, as with any other asset, it matters greatly at what levels you buy it. Perhaps even more important is when you sell it. At the tail end of a giant bull market, Gold as in any other over-inflated asset does not hedge inflation properly. Misconceptions and distortions of Facts and Data can be very expensive! “Misconceptions” are created by Very Poor Advice coming from those who fail to look at the Big (Longer-Term) Picture.
Long-Term Chart for Gold
The above very Long-Term graphic of Gold's performance, offers an important perspective of why there are Never Any Sure Bets, to lean on for making money any more.
Investors who bought Gold in late 1979 or early 1980, spent 20 years absorbing Losses. Not only did Gold NOT compensate for Inflation, it compounded its negative effects on purchasing power and your portfolio had some meaningful hurt.
More recently, Gold has been a disappointment to many Investors while it has been mostly ebbing south. Gold is trading well beneath its all-time high of $1,924 an ounce on September 6th 2011 and well above its subsequent low near $1,520 in late December 2011. With the continued hype by supposed advisors, most Investors expected higher prices for Gold this year. Since November when I sold, based on my previous Forecasts the price of gold has declined and I expect more down-side.
If you need some encouraging news, I suggest you stay tuned to my future articles, or Email me, on Gold. I do see some positive and profitable possibilities.
ETFs: Rating / Direction / Guidance / Forecast – October 23rd.
GLD: $167.00 -- 69 / D+ / Descending / Hold Cash / Up and then Down again
GDX: $52.00 -- 69 / D+ / Descending / Hold Cash / Up and then Down again
GDXJ: $27.00 -- 67 / D+ / Descending / Hold Cash / Up and then Down again
SLV: $31.00 -- 69 / D+ / Descending / Hold Cash / Up and then Down again
Note: Forecast is for 3 – 6 months. Near-Term rallies and pull-backs will eventually present a Buying Opportunity. Most Mining Companies will be following this Forecast for the coming weeks and months.
SLV: $158 -- 69 / D+ / Descending / Hold Cash / the next move is Down
Two Year ETFs Chart for Gold & Silver -- October 19th.
The below 20-year Chart provides an excellent picture of both Gold and Silver. Taking time to study it just a bit will prove to be worth your time. Note the meaningful pull-backs.
To enlarge this chart – Click Here.
Currently, the above Data and Charts present a clear and not-so-positive account of these ETFs Mining Companies as well as for Gold and Silver.
It is a fact that, the stock market cycles endlessly, both fundamentally and technically, from bullish to bearish and then back to bullish again. Unfortunately, this is a pattern that is not well-understood or taken advantage of by most Investors. Just so you don't miss my point; Gold does the same thing as the stock market, only it often has a different pattern. That “pattern” is both fundamental and technical and the two must be in sync for you to profit.
Within this current Bearish time frame, there is nothing (longer-term) wrong with these ETFs, Gold, Silver and their supporting Mining Companies. It is simple what happens when the precious metals cycle turns bearish, and is just the on-going "cycling / rotation effect" of the way the stock market and Gold / Precious Metals works.
It won't be long before I can offer you a Bullish and up-beat Forecast once again for the General Market and for Gold / Precious Metals.
I preach patience and discipline for “Investing Wisely” in the stock market. I am currently Bearish on the World Economies and the General Stock Market and Gold / Precious Metals. I suggest that it is vitally important for you to understand that holding Cash during questionable time frames in the marketplace is a much wiser choice than holding many of your present security's positions. I can assure you that; this is definitely a "questionable" time frame!
My Email Address is: email@example.com
Smile, Have Fun - "Investing Wisely,"
Dr. Steve Bauer