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Base Metals vs. Gold and Silver - 4947 views
We have all heard the “buy low, sell high” mantra of making money in the market, but to apply this cliché is much easier said than done. Adhering to the rule is not an easy task, and without the use of technical tools to determine buy points and targets, an investor can get caught up with the hysteria of a parabolic move.
Now gold and silver are making huge advances as they continue the trend into new record territory. Previously, I discussed the original buy on gold as it came to long-term support, as well the coming breakout in gold and silver from the cup-and-handle pattern. Since then, gold and silver have made historic and powerful moves.
As prices rise in precious metals, so does confidence. All over the news I am hearing that the world banks are printing money and that gold and silver could move exponentially higher. Positive news for hard assets, including yesterday's massive quantitative easing by Japan and the U.S.'s commitment to keep on flooding the markets with cheap dollars, is making gold and silver investors very comfortable. And whenever confidence increases like this, it is time to prepare for profit-taking.
Risk is being increased, and Johnny-come-lately analysts are advising to jump on the bandwagon. I refuse to follow this mad crowd at this time. A successful speculator knows when to enter a trade when at the time the investment is unpopular. Don’t follow the crowd, and be prepared for exit signals as we are reaching technical targets.
Unfortunately, the majority of investors do tend to follow the crowd and do not have technical targets that will take profits after a reasonable move. Just like in popular culture, where fads come and go, so too in asset classes. Be careful of the hype that is accompanying the trade now.
As gold and silver reach overbought territory, I am providing detailed targets to my readers about where to take profits from our buy points at the end of July. I have recently been focused on some miners that have pulled back and are ready to outperform even if gold and silver have a pullback. These miners will be extremely profitable at significantly lower gold and silver prices. Miners are just beginning their break outs and many have not caught up with the bullion price yet.
The movement in gold and silver bullion is getting extremely emotional. Yesterday’s gap up after a significant move signals we may be close to the coming pullback in gold and silver bullion. (Make sure to check out my free newsletter to find out key technical signals.) Don’t get comfortable now if you have considerable profits and be alert for any reversals.
Even though gold and silver have broken into new 52-week highs, platinum, copper and other base metals have not broken into new territory. If one is looking into dollar diversification at the moment, I would look into other hard assets that have not moved as parabolically as silver and gold have. Although gold and silver are en vogue now from a technical standpoint, other commodities that should also benefit from quantitative easing should be considered, as they should catch up with gold and silver.
Platinum and copper are showing strength, signaling that the massive printing will encourage the global economy to gather steam. Platinum and copper are about to make the golden cross, which is the 50-day crossing the 200-day moving average to the upside. These two metals may break out and catch up to the other hard assets in performance.
As gold and silver reach parabolic levels, other hard assets that are not overextended may provide a better risk-to-reward investment.
Gold Stock Trades Editor Jeb Handwerger is a highly sought-after stock analyst syndicated internationally and known throughout the financial industry for his accurate and timely analysis of the equities markets, particularly the precious metals sector. Subscribe to his free newsletter at GoldStockTrades.com .