Sunday, November 3, 2013

Precious Metals Parameters

so the chart here is simply the geometric mean of the daily prices for GLD, SLV and GDX. It's a simple way to get a single picture of the precious metals 'complex'.

for much of this year I've been anticipating a major (though perhaps interim) low in gold close to $1145. it dipped below $1200 a moment this summer and I think a minor violation of the previous low will set up a major rebound to the $1500 to $1700 range. the way it looks right now, we'd have to expect mining stocks to follow suit ($HUI below 200 briefly). if silver can hold its prior low (which looks promising at the moment) that'd be a great divergence within the complex, leading me to be very positive on the metals and their stocks into the first half of next year.

the previous low on the chart up top was 36.07 (chart based on closing prices only). I'd look for it drop below 36 in the near term (closed at 40.09 Friday). if that happens, gains of 40 to 90% (depending on the vehicle) look attainable over the next several months. the geometric basket itself could approach 60. mining stocks should do the best, particularly in the early phase of the rally.

contact me if you have any questions.