Gold and Miners - Positioning Yourself for the Inevitable
Overview:
Whether it happens next month, next year, or 2022 eventually gold' and silver' will rally again. History will surely repeat and failure to plan will leave one scrambling to jump on board after the ship leaves port. This does not mean we can not have a few margaritas on the main deck before setting sail.
Technical:
In our last article we mentioned that 1305 would be a likely level to look for a reversal and the market did not disappoint. This was only brief as buyers came in on the news of the Trump Tariffs were released. However I am not convinced that the news really mattered. Yesterday the market resumed its rally so clearly this is more likely being used as a negotiating tool then a significant market event. Regardless if we see a Trade War or not, gold', silver' and the miners will eventually rally.
Short term we have a target of 1339-1349 and will assess once we get there. I am not a personally a buyer of physical unless it is at an extreme low 1265 to 1286, but this does not mean there are not opportunities. In the midterm we still feel we test the 1400-1450 level this summer as we head into the midterm elections but will get one more buying opportunity before we rally. The level we need to break and hold is 1360 and as strong as the stock market is we more likely see a triple top.
We mentioned last week that there was a slight divergence between the gold 1.05% miners (GDX) and gold' 1.05% itself. As gold' 1.05% has continued to trend in an upward channel GDX' has been trading in a wide channel between 21 and 25. Thursday we bought a 1/2 position of GDX' at 21.52 and on Friday we bought at 21.74 taking advantage of GDX' trading near the bottom of the channel as gold' 1.05% in the long term trends up. The strategy is two fold.
1) To start accumulating the miners which are undervalued to the price of gold'.
2) We also want to use our cash and stock position with a more complex strategy to have our money and shares work for us in reducing our overall positional costs.
Summary:
We have a target of 23.30 to 24 on GDX' where we will implement a more advanced' strategy to keep our stock and money working for us. The intent here is not to lighten up on our position but to increase our position over time until gold' rallies which will inevitably lead to a rally in miners. This is only part of a broader positional strategy.
Whether it happens next month, next year, or 2022 eventually gold' and silver' will rally again. History will surely repeat and failure to plan will leave one scrambling to jump on board after the ship leaves port. This does not mean we can not have a few margaritas on the main deck before setting sail.
Technical:
In our last article we mentioned that 1305 would be a likely level to look for a reversal and the market did not disappoint. This was only brief as buyers came in on the news of the Trump Tariffs were released. However I am not convinced that the news really mattered. Yesterday the market resumed its rally so clearly this is more likely being used as a negotiating tool then a significant market event. Regardless if we see a Trade War or not, gold', silver' and the miners will eventually rally.
Short term we have a target of 1339-1349 and will assess once we get there. I am not a personally a buyer of physical unless it is at an extreme low 1265 to 1286, but this does not mean there are not opportunities. In the midterm we still feel we test the 1400-1450 level this summer as we head into the midterm elections but will get one more buying opportunity before we rally. The level we need to break and hold is 1360 and as strong as the stock market is we more likely see a triple top.
We mentioned last week that there was a slight divergence between the gold 1.05% miners (GDX) and gold' 1.05% itself. As gold' 1.05% has continued to trend in an upward channel GDX' has been trading in a wide channel between 21 and 25. Thursday we bought a 1/2 position of GDX' at 21.52 and on Friday we bought at 21.74 taking advantage of GDX' trading near the bottom of the channel as gold' 1.05% in the long term trends up. The strategy is two fold.
1) To start accumulating the miners which are undervalued to the price of gold'.
2) We also want to use our cash and stock position with a more complex strategy to have our money and shares work for us in reducing our overall positional costs.
Summary:
We have a target of 23.30 to 24 on GDX' where we will implement a more advanced' strategy to keep our stock and money working for us. The intent here is not to lighten up on our position but to increase our position over time until gold' rallies which will inevitably lead to a rally in miners. This is only part of a broader positional strategy.
Comment:
