Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Try The “Compounding Capital Gains” Strategy Today - 26th Oct 20
UK Coronavirus Broken Test and Trace System, 5 Days for Covid-19 Results! - 26th Oct 20
How the Coronavirus is Exacerbating Global Inequality, Hunger - 26th Oct 20
The Top Gold Stock for 2021 - 26th Oct 20
Corporate Earnings Season: Here's What Stock Investors Need to Know - 25th Oct 20
�� Halloween 2020 TESCO Supermarkes Shoppers Covid Panic Buying! �� - 25th Oct 20
Three Unstoppable Forces Set to Drive Silver Prices - 25th Oct 20
Car Insurance And Insurance Claims and Options - 25th Oct 20
Best Pressure Washer Review - Karcher K7 Full Control Unboxing - 25th Oct 20
Further Gold Price Pressure as the USDX Is About to Rally - 23rd Oct 20
Nasdaq Retests 11,735 Support - 23rd Oct 20
America’s Political and Financial Institutions Are Broken - 23rd Oct 20
Sayonara U.S.A. - 23rd Oct 20
Economic Contractions Overshadow ASEAN-6 Recovery - 23rd Oct 20
Doji Clusters Show Clear Support Ranges for Stock Market S&P500 Index - 23rd Oct 20
Silver Market - 22nd Oct 20
Goldman Sachs Likes Silver; Trump Wants Even More Stimulus - 22nd Oct 20
Hacking Wall Street to Close the Wealth Gap - 22nd Oct 20
Natural Gas/UNG Stepping GAP Patterns Suggest Pending Upside Breakout - 22nd Oct 20 -
NVIDIA CANCELS RTX 3070 16b RTX 3080 20gb GPU's Due to GDDR6X Memory Supply Issues - 22nd Oct 20
Zafira B Leaking Water Under Car - 22nd Oct 20
The Copper/Gold Ratio Would Change the Macro - 21st Oct 20
Are We Entering Stagflation That Will Boost Gold Price - 21st Oct 20
Crude Oil Price Stalls In Resistance Zone - 21st Oct 20
High-Profile Billionaire Gives Urgent Message to Stock Investors - 21st Oct 20
What's it Like to be a Budgie - Unique in a Cage 4K VR 360 - 21st Oct 20
Auto Trading: A Beginner Guide to Automation in Forex - 21st Oct 20
Gold Price Trend Forecast into 2021, Is Intel Dying?, Can Trump Win 2020? - 20th Oct 20
Gold Asks Where Is The Inflation - 20th Oct 20
Last Chance for this FREE Online Trading Course Worth $129 value - 20th Oct 20
More Short-term Stock Market Weakness Ahead - 20th Oct 20
Dell S3220DGF 32 Inch Curved Gaming Monitor Unboxing and Stand Assembly and Range of Movement - 20th Oct 20
Best Retail POS Software In Australia - 20th Oct 20
From Recession to an Ever-Deeper One - 19th Oct 20
Wales Closes Border With England, Stranded Motorists on Severn Bridge? Covid-19 Police Road Blocks - 19th Oct 20
Commodity Bull Market Cycle Starts with Euro and Dollar Trend Changes - 19th Oct 20
Stock Market Melt-Up Triggered a Short Squeeze In The NASDAQ and a Utilities Breakout - 19th Oct 20
Silver is Like Gold on Steroids - 19th Oct 20
Countdown to Election Mediocrity: Why Gold and Silver Can Protect Your Wealth - 19th Oct 20
“Hypergrowth” Is Spilling Into the Stock Market Like Never Before - 19th Oct 20
Is Oculus Quest 2 Good Upgrade for Samsung Gear VR Users? - 19th Oct 20
Low US Dollar Risky for Gold - 17th Oct 20
US 2020 Election: Are American's ready for Trump 2nd Term Twilight Zone Presidency? - 17th Oct 20
Custom Ryzen 5950x, 5900x, 5800x , RTX 3080, 3070 64gb DDR4 Gaming PC System Build Specs - 17th Oct 20
Gold Jumps above $1,900 Again - 16th Oct 20
US Economic Recovery Is in Need of Some Rescue - 16th Oct 20
Why You Should Focus on Growth Stocks Today - 16th Oct 20
Why Now is BEST Time to Upgrade Your PC System for Years - Ryzen 5000 CPUs, Nvidia RTX 3000 GPU's - 16th Oct 20
Beware of Trump’s October (November?) Election Surprise - 15th Oct 20
Stock Market SPY Retesting Critical Resistance From Fibonacci Price Amplitude Arc - 15th Oct 20
Fed Chairman Begs Congress to Stimulate Beleaguered US Economy - 15th Oct 20
Is Gold Market Going Back Into the 1970s? - 15th Oct 20
Things you Should know before Trade Cryptos - 15th Oct 20
Gold and Silver Price Ready For Another Rally Attempt - 14th Oct 20
Do Low Interest Rates Mean Higher Stocks? Not so Fast… - 14th Oct 20
US Debt Is Going Up but Leaving GDP Behind - 14th Oct 20
Dell S3220DGF 31.5 Inch VA Gaming Monitor Amazon Prime Day Bargain Price! But WIll it Get Delivered? - 14th Oct 20
Karcher K7 Pressure Washer Amazon Prime Day Bargain 51% Discount! - 14th Oct 20
Top Strategies Day Traders Adopt - 14th Oct 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Gold Stocks Bear Market Phase Isn’t Over Yet

Commodities / Gold and Silver Stocks 2015 Feb 11, 2015 - 01:56 PM GMT

By: Bob_Kirtley

Commodities

Background
This year has started brightly with gold, silver and the miners all posting sharp gains. This sudden move upwards brings with it much jubilation with many believing that the illusive bottom is now in and therefore behind us. One day they will be correct with this synopsis and the precious metals sector will take off generating huge profits for its participants.


However, as with all investment success it is all about timing your entry and exit points. This is of course easier said than done and we will all be wrong footed by the markets from time to time. The precious metals sector is as volatile as they come and this current phase is particularly treacherous. The first 10 years of the bull market in gold was in hindsight plain sailing allowing us to generate profits by sticking with the trend. Alas all good things come to an end and so they did in 2011 when gold peaked at $1900/oz. Silver, despite having numerous industrial uses also caught a cold and fell dramatically along with the mining sector which lost approximately 70% of its value during a 3 year period of pure carnage.

Gold Mining Stocks
On the back of falling precious metals prices the miners have been battered as this chart of The Gold Bugs Index (HUI) clearly shows:

The HUI has fallen by 70% since making a high at 630 and has re-visited its lows of 2008, an important support level, but it has managed not to fall through it and now stands at 192. The question now is can the HUI hold above this support level and form a good base from which to rally into the next bullish phase of this bull market.

The tail winds for gold always read well and make sense such as the money printing that is the central planners answer to all of our economic woes. The latest bank to join the party is the European Central Bank via the introduction of a large programme of quantitative easing (QE), in order to boost inflation in the euro zone and to prevent their economy heading into deflation. From March 2015 until September 2016 the ECB will buy around €60 billion ($68 billion) of assets each month, committing a total of €1.1 trillion.

We have always held the view that liquidity is not the remedy for insolvency and so this move may mask the structural problems of the economy in the near term, but sooner or later they will have to be faced. The cure for insolvency is bankruptcy as this process removes those that can’t hack it from the market place. Banks have been going bust since banking began and this idea that we can keep the non-performers afloat with an infusion of electronic cash derived from thin air is doomed to fail.

The road to prosperity is to work your socks off and save a little each week. This requires discipline and is something that every household is aware of, though this necessity has gone largely unnoticed by the powers that be.

The United States has recently terminated its programme of QE and the dollar has been the major beneficiary and has outperformed gold over the last year or so. However, if you are a European then gold would have been a very good investment as it has outperformed the Euro dramatically. From this we can deduct that gold is not a ‘one size fits all’ investment, a lot depends on your geographical location and the currency that is used in your daily lives.

Assuming that you are an American and you can see that the dollar is on a roll, it makes sense not to be in gold or gold mining companies. Will this roll continue you ask? Yes it will as long as the data; such as the non-farm payroll jobs report remains solid, inflation starts to move up and earnings improve, etc., then in the eyes of the Fed a mid-year interest rate rise could be the cards. This would only serve to strengthen the dollar which would in turn hamper gold’s ability to rise in dollar terms. Conversely if the ‘cat hits the fan’ then the Fed could easily re-introduce QE and that would catapult gold to new all-time highs.

Conclusion
In terms of what to do at this stage of the proceedings if you reside in the US we would recommend the following;

Keep the lion’s share of your investment funds in cash for now. Wait for the data to confirm that the economy is either going well or falling apart. Watch the Fed for what they say and what actions they take. Do not assume that this is the time to buy the producers because they are cheaper than they have been, cheaper does not necessarily mean cheap. Watch for a final capitulation in this sector as most bear markets end with the throwing in of the towel and severe fall in prices.

This recent bounce in prices could be another false dawn and we have had enough of those over the last three years to at least be a little weary of this market.

At the moment we have 70% of our funds in dollars and are happy to be in cash as it is strengthening; giving us more spending power when the time comes.

Stay flexible and don’t be afraid to short this market if a rally looks to be overbought and go long when the stocks have been flattened. These trades are not long term investments and should be considered on a hit and run approach, taking small profits quickly and hopefully minimizing the risks. Finally, only deploy small amounts of capital until the new bull is confirmed, we all need to live to fight another day.

Got a comment, then please fire it in whether you agree with us or not, as the more diverse comments we get the more balance we will have in this debate and hopefully our trading decisions will be better informed and more profitable.

Go gently.

Bob Kirtley

Email:bob@gold-prices.biz

URL: www.silver-prices.net

URL: www.skoptionstrading.com

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. Winners of the GoldDrivers Stock Picking Competition 200

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

© 2005-2019 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

6 Critical Money Making Rules