Archive for the ‘gold stocks’ Category
Collapse of Shanghai Index Pushing Price of Silver Higher?
By Michael Lombardi, MBA for Profit Confidential
Precious metals markets are witnessing a slight pullback, but their long-term outlook remains positive as far as I’m concerned. Pullbacks in the prices of the precious metals are simply buying opportunities for me.
My two favorite precious metals—gold and silver—have marginally declined in price over the past few days as the U.S. dollar has been increasing in value against other world currencies.
In these pages, I have rigorously said that gold will keep climbing, but other precious metals, especially silver, may outperform it. Central banks can print more money and manipulate their currencies, but they can’t make more gold and silver.
According to Beijing Antaike Information Development Co., silver demand for China will increase 10% next year. (Source: Business Week, October 25, 2012.) The reason: Chinese investors are buying silver because their economy is slowing down and their wealth is declining. Key stock indices in China have relentlessly declined since 2011.
Below is the chart of Shanghai Stock Exchange Composite Index, which should give you a very good idea of what’s going on right now.
Chart courtesy of www.StockCharts.com
Together with increased demand from investors in China, silver holdings in exchange-traded funds (ETFs) have increased 6.5% this year alone to 592 ounces. The world’s largest silver ETF, iShares Silver Trust (NYSE/SLV), holds 9,918.67 tonnes of silver and reported an increase of 30.12 tonnes in its holdings on October 24, 2012. (Source: FXEmpire, October 25, 2012.)
Why are investors starting to prefer silver over gold?
Gold has become expensive for an average investor to own in physical form. But for big players like central banks, it’s still the only way … Read More
Where’s Silver Headed Next?
By Sasha Cekerevac, BA for Profit Confidential
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
Look at These Big Capital Gains in Gold and Silver Stocks
By Mitchell Clark, B.Comm. for Profit Confidential
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
Gold Stocks Lagging the Spot Price—Time to Buy
By Mitchell Clark, B.Comm. for Profit Confidential
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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