Tuesday, December 31, 2013

All That Glitters Remains Risky

In the last few weeks, the timing models I employ and talk to you about have seen relatively little change. This is as the price of gold equities have trended sideways for most of December and gold prices have trended back toward the lows of the year. In conjunction with these price moves, money supply growth has apparently accelerated over a rolling 3 month time span. All in, this has pushed the timing models deeper into a buy zone. Just see the below.

6-Month Model, -1.8 currently versus -2 last week and last month.

1-year Model, -1.5 versus -1.6 and -1.5

Long-term Model, -1.9 versus -2 and -2

Although the timing models remain in the buy zone across the board, the risk model remains weighted towards higher risk with a measure below -1.

Risk Model

As long as the risk model remains below -1, the risk for gold equities remains weighted towards the downside. Before committing anything but long-term capital to the group, I would wait for a significant sign of strength in the gold equity complex on a price/volume basis and/or an improvement in the risk model to a level above -1.

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