Archive for the ‘gold stocks’ Category
Silver prices have had an extraordinarily strong move over the past few weeks. With the anticipation of a new monetary stimulus plan by the Federal Reserve, many investors piled into this commodity and ran up silver prices. According to the U.S. Commodity Futures Trading Commission, bets on higher silver prices jumped almost 10 times over the last couple of months.
According to Bloomberg, hedge funds are the most bullish on silver prices than at any time over the past seven months. With more money printing, the answer, it seems, is easy and many hedge funds have piled into this commodity, hoping for higher silver prices. However, in life there are no easy answers.
This idea of everyone is piling into this space and pushing up silver prices so quickly worries me. Usually when so many people are bullish or bearish, it signifies a top or bottom. Let’s see if my technical analysis of silver prices can give us a better roadmap.
Technical analysis initially tells me that, by looking at the Relative Strength Index (RSI), the move in silver prices has become quite overbought. However, this does not mean that silver prices have to go down; in fact, technical analysis is telling me that as long as the support level of approximately $32.00 holds, we should see silver prices move up. If that support were to fail, the technical analysis of silver prices would then indicate a pullback to $30.00 and, more worrisome, a broken uptrend.
Chart courtesy of www.StockCharts.com
Another worry is that small retail buyers are not accumulating this commodity. The U.S. mint has sold approximately 25 million … Read More
Gold and silver prices are going up, and it’s a great time to be back in the precious metals sector. Gold and silver stocks corrected significantly, along with spot prices this year, and a lot of value developed among the best stocks in the sector. Both gold and silver prices were due for a correction; gold more so than silver.
Gold and silver stocks corrected significantly more than the percentage change in spot prices and then, like magic, the entire sector turned around on a dime, due to the market’s hope for a third round of quantitative easing (QE3). And while the global economic reality is beginning to set into the minds of investors, the fundamentals for both gold and silver continue to be excellent.
No matter what happens to the U.S. economy in 2013, the U.S. dollar is very likely to be under continued pressure because of all the fiscal headwinds. While no policymaker will admit it, a weaker U.S. dollar is exactly what the Federal Reserve wants, in the hope of stimulating exports and keeping liquidity high. And, as we all know, a weaker U.S. dollar compared to other benchmark currencies is a boon to gold and silver prices. The U.S. dollar outlook is the biggest near-term catalyst for higher precious metal prices. There are so many other fundamental factors that favor $2,000 gold and $40.00 silver, and Wall Street is starting to jump on the bandwagon.
We just had a great new entry point for new positions in gold and silver stocks this past summer; countless good mining companies hit 52-week lows, as the entire group … Read More
On the stock market, gold stocks recovered from their recent correction, but they are still lagging the recovery in the spot price of gold. The same goes for silver stocks, whose stock market performance is even more behind the spot price action. Institutional investors have lost a lot of their affinity for gold stocks, even though they still might like gold’s long-term prospects. In many ways, speculating in gold stocks is higher risk than just buying gold if you believe the spot price is poised to advance. Of course, the stock market return potential is greater with gold mining companies, but there are a lot of factors at play beyond your control as an investor.
There are a lot of options now if you want to express a position in gold, for example. There are all kinds of leveraged funds, which can double the returns (or losses) generated by the changes in the spot price. Many of them trade in the form of exchange-traded funds (ETFs) on the stock market, and they aren’t a bad way to go if you believe the spot price is going to move.
The actual number of attractive gold mining companies that trade on the stock market is very small, in my view. (See “Gold Stocks Becoming a Great Value in This Market.”)
Everything within the sector becomes more attractive when the spot price is soaring, but if you own gold mining companies, you want the ones that hold up on the stock market when the spot price doesn’t. There aren’t that many of them around.
The reason for this is … Read More
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