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.

Miners outperforming...

Perhaps this is the beginning of the next upleg in PMs that I have been waiting for. I haven't been posting for over a month as I have been in a waiting pattern. Finally last week, the PMs and miners started to catch a bid and I judiciously added to resource stocks that I thought were strong.
The 2 names that I mentioned from the last post (SWC & TIE) have made new highs for the year. EGO is another one that seemed to bounce off key support and is now looking great.
The general mkt has been relentlessly grinding up and looks to me to be overbought. I favor the miners as I hope they will play catch up, having been dead money for a couple of months. Longer term, I think they will outperform the rest of the mkt.
An idea of mine would be to hedge my longs in miners by buying put options on the S&P. S&P is hitting a key resistance level at 1200 soon and I'm looking for a turn down from there. But I will play it by ear, since 1250 is also another potential upside target. Ideally, I would like to see a gap up for me to get better prices and have the mkt close down. Some good earnings news would probably trigger this, followed by selling after the news. This is typical mark up by the smart money who are selling into up moves.

Let see how this plays out.

Oh, here is an interesting article I read on the demand for silver eagles. Makes my ears perk up.
http://news.silverseek.com/SilverSeek/1270840329.php

Miners

I continue to nibble on miners as the market comes in. Yesterday precious metals and miners staged a rally after many days of pounding.
I'm liking ANV and a few juniors like RBI.TO and RMX.TO (Toronto exchange) that are holding up like a champ.
I've also noticed other resource related stocks blasting up and having reasonable pullbacks recently. SWC and TIE namely.
Many have predicted that this is the beginning of a new bear leg in the market. While I certainly don't have a crystal ball, I will focus on what I think is holding up best - gold. Until gold breaks below $1000, I'm still a buyer of gold and miners (and silver of course). I continue to stay away from the general market.

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.

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!