Fireworks

Wow, what a show today. Silver, gold, miners all exploding in tadem! Does anyone still doubt that bull mkt?

Still waiting for a pullback which I am expecting to happen any day now. If not, it's just a sign of how strong the sector is. Regardless, I am happy with what I have.

Market outperformance

The time has arrived in which I believe precious metals will now make a new bull leg. This past week has showed that gold/slv has diverged from the negative correlation associated with the dollar. Dollar has rallied, yet gold/silver has also rallied. This buying has been in the face of loss of confidence in the euro. The dollar is no longer the safe haven that others seek. I believe people are starting to realize that the dollar is just as vulnerable as the euro and any other fiat currency. People want hard assets that will maintain its value in any currency devaluation.
Better yet, the miners has showed signs of life. Many miners I mentioned in the past has broken out strongly and look to continue to rally in the months ahead despite a general market downturn. Look at EGO, ANV, SLW to name a few. The miners look a bit overbought at this point, but the next dip must be bought. This might be the last opportunity before gold takes out it's prior highs.
Here is some late breaking news that the Dept of Justice will investigate the silver mkt for alleged manipulation by JP Morgan. This will just add fuel to the fire. Click on link below to listen to the news.

http://www.kingworldnews.com/kingworldnews/Broadcast_Gold+/Entries/2010/5/1_Ted_Butler_on_the_Metals_Market.html

I hope you are as prepared as I am to ride this bull mkt to new highs!! Woohoo!!

Waiting to exhale

The expected pullback in precious metals is finally here. I foresee gold retesting $1000 just b/c that is the number everyone is focused on. Silver will over correct as it is more volatile than gold. I would expect a bottom in silver only after gold has bottomed. Along those lines, I would like to see gold firm up at $1000. If not, a retest of $960-970 is possible within the scope of a longer term uptrend.

I already have a list of miners that I will pick up when gold looks like it has bottomed. My favorites at the moment are SLW, CDE, AUY.

I'll go out on a limb here and say that this might be the last dip into $1000 territory before we have a new bull leg up in gold.

Gold and silver train

The gold and silver train are slowly pulling out of the station. Are you on board? I am looking for every opportunity to purchase gold/silver related stocks. I'm hoping we will get a pullback... It would not surprise me that we drop from here to shakeout the jonnie-come-latelys only to resume its uptrend.

Looking at the behavior of the GBP lately has me really excited. Despite all the bad news for the dollar and other major currencies rallying against it, the GBP has stagnated. It has the smell of a good short. Two ways that I envision playing it out. One an outright short of it (or puts). The second way is to initiate a bearish spread trade with options.

How I made $2,000,000 in the stock market

This is the title of a book I read a long time ago. The author, Nicolas Darvas, followed a system of buying stocks that won him a fortune. It's particurlarly amazing as he was a dancer and wasn't an expert in stock investing like Buffet or Soros. Also considering the fact that he started with $25,000 and turned it into six figures in the 1950s is even more amazing.

Nicolas happened to apply a strategy of buying as stocks went higher. Another words, he bought strength. When stocks proved that they were being accumulated, he bought more and continued buying at higher prices. Reminds me of the trend following strategy employed by the Turtles. This obviously only works in a bull market where prices continue to trend far longer than most people believe.

This brings me to the point of my blog today. I believe we are coming to the point where this strategy will work again in the stock market. No I'm not talking about the market in general. I'm talking about resource stocks - particularly mining companies. With gold testing $1000, we are entering a new era in which miners will zoom onward and upward. Are you ready?

This book is a good read and offers insight to how anyone can systematically build a fortune in a bull market.

Till next time.

All aboard! The gold train is taking off!

A colleague of mine has been quite happy with trading resource stocks - in particular the gold miners. He said that he's been buying a particular stock at a price of $33. As soon as the stock reaches $36, he sells. He waits for the stock to fall back to $33 and repeats the process. He's been quite successful at this and has been ringing the cash registers a couple of times this past year as the stock has been bouncing around like a yo yo.

This strategy will obviously work in a sideways market. Gold has been range bound for the last year. However, I believe this will change going forward. Gold is finally testing the big psychological price of $1000. This is the final hurdle before it takes off to new heights. Anyone not recognizing this and continues to execute strategies according to a range bound market will be left behind when this train leaves the station. They will look at the price of gold in frustration as it continues climbing higher without them.

Be forewarned... We are entering a new phase in this bull market for resource stocks.

All aboard!