Wehaveall heard the saying “buy low-sell high” as the mantra of making moneyin 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 and silveris 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 pricesrise in precious metals so too does confidence. All over the news I amhearing how the world banks are printing money and that gold and silvercould move exponentially higher. Positive news for hard assets includingprevious two weeks 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 confidenceincreases like this, it is time to prepare for profittaking. Risk isbeing increased and “Johnny Come Lately” analysts are advising people tojump on the band wagon. I refuse to follow this mad crowd at this time. Asuccessful speculator knows when to enter atradeat the time when theinvestment is unpopular. Don’t follow the crowd and be prepared for exitsignals as we are reaching technical targets.
Unfortunately, themajority of investors tend to follow the crowd and do not have technicaltargets that will take profits after a reasonable move. Just like inpopular culture there are fads that come and go, so too inasset classes. Be careful of the hype that is accompanying the trade now.
As goldand silver reach over bought territory, I am providing detailed targetsto my readers on where to take profits from our buy points at theend ofJuly. I have recently been focused on some miners which have pulled backand ready to outperform even if gold and silver have apull back. Theseminers will be extremely profitable at significantly lower gold andsilver prices. Miners are just beginning their break outsand many havenot caught up with the bullion price yet.
The movement in gold andsilver bullion is getting extremely emotional. Yesterday’s gap up after asignificant move signals we may beclose to the coming pull back in goldand silver bullion. Don’t get comfortable now if you have considerableprofits and be alert forany reversals.
Even thoughgold and silver have broken into new 52 week highs platinum,copper andother base metals have not broken into new territory. If oneis lookinginto dollar diversification at the moment I would look into other hardassets that have not moved as parabolicallyas silver and goldhas. Platinum and copper are showing strength signaling that the massive printing will encourage the global economy togather steam.Although goldand silver are in vogue now from a technical stand pointother commodities which should also benefit from quantitative easingshould be considered as they should catch up with gold and silver. Platinum andcopper are about to make the golden cross, which is the 50 day crossingthe 200 day moving average to the upside. These two metals may break outand catch up to the other hard assets in performance. As goldand silver reach parabolic levels other hard assets which are not overextended may provide a better risk to reward investment.