We have all heard the saying “buy low-sell high” as the mantra of making money in the market. To apply this cliche is much easier said than done. Adhering to this rule is not an easy task and without the use of technical tools to determine buy points and targets, an investor can get caught up with the hysteria of a parabolic move. Now gold and silver is making huge advances as it continues the trend into new record territory. I wrote an article that discussed the original buy on gold as it came to long term support and also wrote articles discussing the coming break out in gold and silver from the cup and handle pattern. Since these moves gold and silver have made historic and powerful moves.
As prices rise in precious metals so does confidence. All over the news I am hearing how the world banks are printing money and that gold and silver could move exponentially higher. Positive news for hard assets including yesterdays massive quantitative easing by Japan and the United States commitment to keep on flooding the markets with cheap dollars is making gold and silver investors very comfortable. Whenever confidence increases like this it is time to prepare for profit taking. Risk is being increased and “Johnny Come Lately” analysts are advising to jump on the bandwagon. I refuse to follow this mad crowd at this time. A successful speculator knows when to enter a trade when at the time the investment is unpopular. Don’t follow the crowd and be prepared for exit signals as we are reaching technical targets.
Unfortunately the majority of investors tend to follow the crowd and do not have technical targets that will take profits after a reasonable move. Just like in popular culture there are fads that come and go, so too in asset classes. Be careful of the hype that is accompanying the trade now.
As gold and silver reach overbought territory, I am providing detailed targets to my readers on where to take profits from our buy points at the end of July. I have recently been focused on some miners which have pulled back and ready to outperform even if gold and silver have a pullback. These miners will be extremely profitable at significantly lower gold and silver prices. Miners are just beginning their break outs and many have not caught up with the bullion price yet.
The movement in gold and silver bullion is getting extremely emotional. Yesterday’s gap up after a significant move signals we may be close to the coming pullback in gold and silver bullion. Make sure to check out my free newsletter at http://goldstocktrades.com/ to find out key technical signals. Don’t get comfortable now if you have considerable profits and be alert for any reversals.
ETF Daily News Notes These Related Gold ETFs: PowerShares DB Base Metals (NYSE:DBB), ELEMENTS Rogers Intl Commodity (NYSE:RJZ), iPath DJ-UBS Ind Metals TR Sub (NYSE:JJM), PowerShares DB Base Metals Dbl (NYSE:BDD), iPath DJ-UBS Tin TR Sub-Idx ET (NYSE:JJT), PowerShares DB Base Metals Sho (NYSE:BOS), UBS E-TRACS CMCI Industrial Mt (NYSE:UBM), PowerShares DB Base Metals Dbl (NYSE:BOM), PowerShares DB Base Metals Lon (NYSE:BDG), UBS E-TRACS Long Platinum TR ETN (NYSE:PTM), Market Vectors Gold Miners ETF (NYSE:GDX), Market Vectors Junior Gold Miners ETF (NYSE:GDXJ), iShares Silver Trust (NYSE:SLV), SPDR Gold Trust (NYSE:GLD).
Even though gold and silver have broken into new 52 week highs platinum, copper and other base metals have not broken into new territory. If one is looking into dollar diversification at the moment I would look into other hard assets that have not moved as parabolically as silver and gold has. Platinum and copper are showing strength signaling that the massive printing will encourage the global economy to gather steam. Although gold and silver are en vogue now from a technical standpoint other commodities which should also benefit from quantitative easing should be considered as they should catch up with gold and silver. Platinum and copper are about to make the golden cross, which is the 50 day crossing the 200 day moving average to the upside. These two metals may break out and catch up to the other hard assets in performance. As gold and silver reach parabolic levels other hard assets which are not overextended may provide a better risk to reward investment.
Disclosure: Long gold and silver bullion and mining stocks.