Monday, August 26, 2013

All that Glitters- Growing Cautious But Letting the Winner Ride

I have grown more cautious on the near-term potential performance of gold and precious metal stocks. This while the Gold Trust SPDR ETF (ticker GLD) and gold stocks (as exemplified by the the Market Vectors Gold Miner ETF -GDX) trade into their respective high volume down drafts seen last April. Additionally, volume levels, although expanding on the upside remain less than the April swoon.

That said, a number of positive in the gold investment complex suggest, in my opinion, the potential for further gains. For one, the shares of Royal Gold (ticker RGLD and the company most levered to the price of gold) are trading above the April downdraft. This makes me think that the price of gold and the remainder of the complex may follow. Additionally, the equities and the yellow have been acting better following more clarity (or lack there of) concerning the Fed's tapering plans.

Lastly, I am holding my hat on that the timing models remain in a buy mode. More so, the slope, risk metric also remains positive. The following show the latest results of the timing models, which take into account rising gold and precious metal stocks amongst little to no growth in money supply.

6-month model, -0.38

1-year model, -1.09

2-year model, -1.69

Risk Control model, Positive

Without a sign of significant weakness in trading, I anticipate holding my gold/precious metal stock holdings until either the models turn decidedly negative (a demarcation above 0) and /or the the risk control metric begins to turn over.  

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