Unfortunately the majority of investors tend to foUnfortunately the majority of investors tend to follow the crowd
We have all heard the saying “buy low-sell high” as the mantra ofmaking money in the market. To apply this cliche is much easier saidthan done. Adhering to this rule is not an easy task and without the useof technical tools to determine buy points and targets, an investor canget caught up with the hysteria of a parabolic move. Now gold andsilver is making huge advances as it continues the trend into new recordterritory. 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 too does confidence. All overthe news I am hearing how the world banks are printing money and thatgold and silver could move exponentially higher. Positive news for hardassets including yesterdays massive quantitative easing by Japan and theUnited States commitment to keep on flooding the markets with cheapdollars is making gold and silver investors very comfortable.
Whenever confidence increases like this, it is time to prepare forprofit taking. Risk is being increased and “Johnny Come Lately” analystsare advising people to jump on the bandwagon. I refuse to follow thismad crowd at this time. A successful speculator knows when to enter atrade at the time when the investment is unpopular. Don’t follow thecrowd and be prepared for exit signals as we are reaching technicaltargets.
Unfortunately, the majority of investors tend to follow the crowd anddo not have technical targets that will take profits after a reasonablemove. Just like in popular culture there are fads that come and go, sotoo in asset classes. Be careful of the hype that is accompanying thetrade now.
As gold and silver reach overbought territory, I am providingdetailed targets to my readers on where to take profits from our buypoints at the end of July. I have recently been focused on some minerswhich have pulled back and ready to outperform even if gold and silverhave a pullback. These miners will be extremely profitable atsignificantly lower gold and silver prices. Miners are just beginningtheir break outs and many have not caught up with the bullion price yet.
The movement in gold and silver bullion is getting extremelyemotional. Yesterday’s gap up after a significant move signals we may beclose to the coming pullback in gold and silver bullion. Don’t getcomfortable now if you have considerable profits and be alert for anyreversals.
Even though gold and silver have broken into new 52 week highsplatinum, copper and other base metals have not broken into newterritory. If one is looking into dollar diversification at the moment Iwould look into other hard assets that have not moved as parabolicallyas silver and gold has. Platinum and copper are showing strengthsignaling that the massive printing will encourage the global economy togather steam.Although gold and silver are in vogue nowfrom a technical standpoint other commodities which should also benefitfrom quantitative easing should be considered as they should catch upwith gold and silver. Platinum and copper are about to make the goldencross, which is the 50 day crossing the 200 day moving average to theupside. These two metals may break out and catch up to the other hardassets in performance. As gold and silver reach parabolic levels otherhard assets which are not overextended may provide a better risk toreward investment.