Monday, June 16, 2014

Precious Metal Market Machinations and the Potential Long-Term Buying Opportunity

It has been a while since I updated the following publicly, but if you follow the precious metal markets you have undoubtedly noticed interesting dynamics going on the trading of gold, silver and the related equity names. Aside from rehashing commentary you can read elsewhere, lets jump in to the timing models and what they telling us here.

6- month model: current reading -0.7, last month 0.2, three months ago 1.2

1-year model: -1, -0.6, -0.1

Long-term model: -1.1, -1.1, -1.2

Currently, the 6-month, 1-year, and long-term timing model calculations are firmly in the negative. This is after the 6-month model flirted with positive indicators a few months back. Remember, negative results in these models indicate a more positive climate for buying opportunities and the more the negative the results the better opportunity. To me, the models (with the differences between them being timing diffrentials from more short-term to more long-term) suggest a cautious buying opportunity exists in the precious metal space at current prices. I say cautious as the risk models I also employ (not shown) suggest downside risks do remain- more so in the short-term than the long-term. That said, as long the money supply continues to expand, any pull back in the precious metal space should probably be viewed as an opportunity to add to long-term positions.

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