QE3 is now a done deal and gold/precious metal shares are ripping. Just to provide a quick update on the precious metal timing model...... the model remains in a negative range and indicates significant underperformance for precious metal stocks on a forward basis. Provided an estimated range of money supply around 10.1 trillion suggests a 6-month timing indicator over 2 and a 1-year indicator of 0.8.
Historically, gold and precious metal shares have underperformed the buy-and-hold scenario by 175 basis points on a weekly average period basis and by nearly 500 basis points on an average three month period. In addition, the batting average for precious shares, when the indicator is over 2, is less than the buy-and hold average. The historic batting average shows precious metal shares up 46% of the time and 43% over time when the indicating is greater than 2 versus a batting average in the mid-50% range for the buy-and-hold case.
The following are the latest 6-month and 1-year timing models......
If you are asking, what about increased money supply due to QE3? Looking at historical results, the greatest month-over-month increase in money supply was 4.4%. Assuming this rate of increase on forward basis results in a 6-month timing model of 1.45 and a 1-year model of 0.11. Still suggesting underperformance on go forward basis. Despite the euphoria with QE3, I am staying with the discipline and maintaining the positions I have in gold shares, which as a reminder represent gains from past positions.
Historically, gold and precious metal shares have underperformed the buy-and-hold scenario by 175 basis points on a weekly average period basis and by nearly 500 basis points on an average three month period. In addition, the batting average for precious shares, when the indicator is over 2, is less than the buy-and hold average. The historic batting average shows precious metal shares up 46% of the time and 43% over time when the indicating is greater than 2 versus a batting average in the mid-50% range for the buy-and-hold case.
The following are the latest 6-month and 1-year timing models......
If you are asking, what about increased money supply due to QE3? Looking at historical results, the greatest month-over-month increase in money supply was 4.4%. Assuming this rate of increase on forward basis results in a 6-month timing model of 1.45 and a 1-year model of 0.11. Still suggesting underperformance on go forward basis. Despite the euphoria with QE3, I am staying with the discipline and maintaining the positions I have in gold shares, which as a reminder represent gains from past positions.
No comments:
Post a Comment