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Sunday, July 11, 2010

Gold and Gold miners

Since back in the fall of 2008 I have been hot and sometimes luke warm on gold and gold miners. (really any precious metals, silver, etc).

This week I believe we will see by Friday a "tell" of the market, if the market will fail to rally or break out and reach some charting critical levels. I have covered almost all my shorts as a week ago, and converted into GLD, SLV, GDX, GDJX, SIV, and related stocks. The world economy is bleak, pensions are insolvent, states are insolvent, and countries are insolvent.

The next leg down in the market will be a really bad one, breaking the backs of so many. All levels of politicians and money managers know this. Now, I do not believe the economy can be fixed by printing money, covering debts with more debt, nor by inflating the stock market.

So playing in the market, long or short has extreme risk. But I am looking to be "in" the precious metal arena for the next leg up. If markets can hold their ground and rise by Friday, I suspect we may see a significant rally in precious metals.

Why? As hot money needs to find a home, and everything out there looks grim (retail sales, bond yields, corporate profits), the hot money will need to find a home. I am banking the next bubble will be the final bubble, precious metals.

If you think so too, I cannot strongly recommend enough to subscribe to The Smart Money Tracker, a blog and market analysis provided by Gary Savage. In his last email, he said, that bear and bull markets are created by sentiment. I completely agree. Most of the world finance is a confidence game, and it solely valued by perception.

I cannot do any justice to the topic of precious metals, but Gary does. And as always, seek a registered financial advisor.

Good luck. For history sake, the value of these securities as of close of Friday:
GLD - 118.36
SLV - 17.70
GDX - 50.48
GDXJ - 26.82
SIV - 14.83

Some other indicators
SPX - 1077 (A break below 1,000 I now view as very catastrophic sign)
RJA (food, not metals) - 7.28
TYX - 40.40 (US 30 year treasury yields)

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