All that glitters- Still not gold/precious metal stocks.

I feel like I am broken record and just keep repeating the same thing over and over and over. My precious metal timing models continue to point to slightly negative to flattish future returns for gold/precious metal stocks. That said, the timing indicators are moving more positive. The 1-year timing indicator is presently 0.37, the 6 month model is 1.2, and the 3-month model is 0.73. Each is off levels suggesting significantly negative returns for the Phily Gold/Silver Index relative to its own average.

The following are the charts of the three models showing the directional change we have seen in the timing model.

1- year model



6-month model



3-month model



I remain on the sidelines as it concerns precious metal stocks- this is despite having a short trading call on gold. My precious metal stock positions represents past gains and are essentially free. I will consider ramping up my position in precious metal shares as the timing model indicators get more constructive.

The question you may be asking is where would I get more constructive? I modeled out a number of scenarios to gauge those levels. All else constant, I modeled out both a mutual exclusive increase in money supply and a decline in gold prices. I would begin to get more constructive on gold and precious metal shares after a 2%+ increase in money supply or a 5%+ decline in the price of gold.