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Saturday, April 14, 2012

Time to buy more metal miners?

If you look at the chart below, buying GDX or GDXJ right now is like trying to catch a falling knife.  And if you look back at my blog, when I try to catch falling knives, I don't have a great track record.

But here I am again, trying to catch falling knives.  GDX and GDXJ, among other resources have taken a beating in the last 6 months or so.  And in the last run up of the market, precious metal miners did not fare well at all.

There are plenty of reasons to NOT buy metal miners right now.  There are economic issues in Europe and China, as well as lower issues in the USA.   Outlook looks dicey at best, with many economic indicators swooning.  In a down market, everything takes a hit, it is almost unheard of for one sector to boom while all others bust.
Oil prices are staying stubbornly high, and I can't see them taking a huge hit.  Energy supplies are tight, and USA consumption of gas is at a 5+ year low.  The world needs more cheap energy, it isn't the USA's market anymore.

All of above really makes it hard to say buy miners.   So I don't advocate any major purchases, just  tiny amount, a buy over time to average costs.  Right here and now looks like a decent spot.

Gary of the Smart money tracker is much more nimble, he is in and out at first sign of trouble.  If you want to be nimble, please read his advice.

I am trying to look for buying opportunities for metals and energy over time.  Miners have taken a beating, maybe much more of a beating ahead.  But eventually, the global political pressures and eventually the next economic upswing, both will apply pressure to resources and bring these sectors back with a vengeance.

To me its a guarantee that resources will be up in 2+ years, in a big way. The only question is, how long to sit and wait to get better pricing for the ride ahead.  Is now the time? If you can tell when the right time to catch falling knives, put a comment below.  For me, buy low, sell high, and there is no dispute, prices are on the lower side historically for these ETFs.

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