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Thursday, July 16, 2009

Time to sell Gold Miners and natural resources

I am a huge proponent on natural resource stocks over the next 5+ years, especially precious metals. However, the overall market I believe is nearing a dump. Why? Lets take a look at two charts. First is GDX, the ETF representing Gold miners. This ETF could not break above the bull trend line. The market has been over-the-top strong the last 4 days (up 7%) and the miners could not break above the bull trend line.

GDX may be headed to 26 or worse in short order if the markets turn, as I expect.

I will probably keep my gold miners for one reason, they are the ultimate "oh SH*T" play in the event something horrendous happens. Precious metals could rise significantly overnight, for this reason I will probably keep all my mining positions as a hedge.

HOWEVER, I will mark in my blog that GDX at 38 is a recommended sell, TBD when it is time to buy back. I recommend selling 1/2, but if you have a low tolerance for risk, maybe sell all.

The second chart is TNX, us 10 year treasuries. Gold typically moves with higher interest rates. I have covered before that the US government wants lower rates to finance debt. Well this chart does not look good for interest rates, the government will "support" a market decline to scare people back into treasuries.
From WebSurfinMurf's Financial Blog

From WebSurfinMurf's Financial Blog

List of Gold miner prices as of 7/16/09. NOTE: I am keeping my positions for the long term.

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