Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold And Silver Stocks Correction Almost Exhausted, Time To Buy

Commodities / Gold & Silver 2020 Oct 04, 2020 - 07:00 PM GMT

By: Bob_Kirtley

Commodities

Introduction

Today, we will take a look at the damage inflicted on this sector by the recent sell-off and try to ascertain just what lies ahead for the precious metals stocks involved in gold and silver mining.

We will commence with look at the charts for gold and silver prices followed by a comparison of gold’s progress versus that of the Gold Bugs Index (HUI) and conclude with what lies in store for the Precious Metals stocks in the medium term.


The 12-Month Gold Chart

The Coronavirus capped golds progress early this year however it recovered quickly to trade at higher levels than before this nasty virus struck. The technical indicators, the RSI, MACD and the STO are now in the oversold zone suggesting a near term bounce is on the cards and that this correction has ran its course.

Those investors that rely purely on chart analysis they will see this set up as an opportunity to acquire gold at a discount to what gold was a few months ago and venture back into this market sector with the view to acquiring a bargain.

 

The 12-Month Silver Chart

The technical indicators were overbought in August however, as the chart below indicates they are now firmly in the oversold zone due to the price of silver falling approximately $5.00/Oz in a few short months.

Silver is now positioned below its 50dma and above its 200dma which suggests that there is plenty of room to move higher.

It should also be noted that both of these moving averages are heading north which I view as a positive indicator as they suggest that there is support for silver going forward.

 

A Comparison Chart Of Gold And The Precious Metals Stocks

What we can glean from the chart below is that gold has increased in value by 26.14% over the last 12 months and the PM Stocks have increased in value by 57.82%, so the PM stocks have increased at a speed which is 2.2 times faster than the price of gold

The Gold Bugs Index: The HUI

The chart below shows that the HUI may have found a base at 320, however, these are volatile times and wild fluctuations are to be expected. The technical indicators on the chart below are now a tad oversold so we could get a bounce from this point.

 

It should also be noted that that Q2 has just ended which coincides with the Quarterly Options trades expiring on 30th September 2020. The price of gold can be volatile in the lead-up to this expiry date as traders try to position themselves to generate a profit from such price oscillations.

Conclusion

A visual inspection of the above charts suggest that the PM stocks have not suffered as badly as they could have done, which is a sign of their underlying strength.

Gold and silver have been sold-off hard in a correction that was warranted. However, they are both now positioned to consolidate and form a new base in preparation of a resumption of this Bull Market.

Central Banks continue to print money at an unprecedented speed in turn they are diluting the value of their currencies and so investors will rotate out of currencies and into a form of hard assets. My preferred hard asset is gold; however, some investors prefer Land and Property as an alternative investment, a subject I will leave for better informed writers than myself, but nevertheless worthy of your consideration.

In Q3 gold was on average about $190/Oz more expensive that it was in Q2 so this next round of financial results should be sparkling and give the PM stocks a real boost.

During this dip I did managed to acquire one stock that has been on my Watch List for some time and I am actively searching for the next bargain to add to my portfolio of PM stocks.

For the record, I am long physical gold and silver and own around 19 open positions in this sector, including Wheaton Precious Metals Corp. (WPM) SSR Mining Inc. (SSRM), Kirkland Lake Gold Ltd. (KL) and Sandstorm Gold Ltd. (SAND).

I am of course biased towards this sector of the market so please do your own due diligence.

Take care.
Bob Kirtley
Email:bob@gold-prices.biz
www.gold-prices.biz  
URL: www.skoptionstrading.com

DISCLAIMER : Gold Prices makes no guarantee or warranty on the accuracy or completeness of the data provided on this site. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This website represents our views and nothing more than that. Always consult your registered advisor to assist you with your investments. We accept no liability for any loss arising from the use of the data contained on this website. We may or may not hold a position in these securities at any given time and reserve the right to buy and sell as we think fit.

Bob Kirtley Archive

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in