Here are some thoughts from your favorite “non-gold-bug”.
I’ve been watching the metals like a Peregrine falcon during this 4-month consolidation. We had some great gains in SIL AGQ and other names during that June, July runup. The sector topped last August, then profit-taking kicked in.
Stocks and asset classes trade in “waves”. This is normal.
Our only long exposure to the metals right now is AGQ which will move 2X what SLV does.
There has definitly been some big head fakes in the metals during this 4 month pullback/consolidation. I didnt take the bait although I was tempted many times.
Maybe the move is real this time. The dollar has been diving and that should help the metals. The problem is that the metals have not really cared about the weak dollar and that has definitely defied conventional wisdom.
The playbook says, “down dollar, up for the metals.”
I’ve mentioned things that I like over the last month in the space. Those names include SIL (silver miners) SILJ (junior silver miners), GDX (gold miners), GDXJ (junior gold miners), and NUGT (if you want some juice, this is the 2X ETF for the gold miners-GDX).
It’s a good menu and it saves you the hassle of drilling down and finding individual names. Many individual names look excellent and will make you money, but there are just too many of them. The ETF’s mentioned above will give you exposure and it also eliminates individual company risk because you are diversified in an ETF.
However if you like individual mining stocks you can look at: CDE, HK, AG, and KL just to name a few.
Here are some charts so you can visualize what I’m seeing. As you can see, especially with silver, they are approaching key downtrend line resistance that if broken to the upside, could set the stage for a big move higher. These are key spots. They could also be “rejection spots” too.
SLV– The silver etf is right at downtrend resistance. That’s a honey of a wedge.
SIL– The silver miner etf . As you can see it’s breaking above that bullish wedge. That little pop you see is a reflection of this morning’s pre-market move.
AGQ– (2X SLV) which we own, has a similar look. Very bullish right now. Needs follow-through.
GDX– has broken above and below the wedge over the last few months (fake-outs), but may just be starting a move higher. Another potentially powerful bull wedge on the daily chart.
SILJ– The “junior” silver miner ETF. Another solid set-up.
I may start adding a little soon with 1/2 positions with the idea of adding the other 1/2 on any pullbacks that may result. It’s been a quirky sector lately, to say the least.
Keep you posted.