I will be up front here and tell you that I am unsure of what to do at this juncture. I continue to hold a position in gold and precious metal miner stocks, representing past gains, but I am on the sidelines wondering if I want to increase my exposure again.
Currently, my precious metal timing model remains in a weaker buy range while the MACD and RSI's are rising for various gold and precious metal miner stock indexes and ETF's. That said, these same said indexes are overbought on the stochastics and the A/D line is trending down, albeit still positive. I also think there is limited chance of a QE3 or QE to infinity program being enacting this coming September.
The above graph is one of models I use gauging the odds of a monetary stimulus action by the Fed. This model takes into account the annualized 13-week change in money supply and the S&P 500. The measure was negative earlier this year (when talk of an expanded QE program began anew and when the Fed expanded the operation twist program), but has rebounded. In my mind, this reduces the odds that another round of monetary easing is in the offing. I guess we will find out come early September. In any event, I am worried that the lack of any monetary stimulus program will take any budding wind out of the gold miner stock sails. As of this writing, I am leaning towards being conservative and give up any potential gains for either a strong buy signal or a sign of significant strength in the indexes.
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